February 9th, 2006

Google Chases the Declining Print Ad Business

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It’s entertaining to watch tech commentators, who know next to nothing about the dynamics of print advertising (with all due respect), assess Google’s new print advertising program. Does anyone writing about Google Print Ads today know who the Nielsen of print ad buying is? (hint: it’s MRI — Mediamark Research).

It makes perfect sense that Google should give this print ad program a whirl (details at ClickZ), given that they want to be the broker for all advertising (it’s so Orwe…all right, enough of that). Rex Hammock observes:

As I’ve said over-and-over, the Google business model (as it relates to Adsense ads running on non-Google properties) is the advertising sales representation (agent) model, or, in this case, broker.

I’m not going to predict that Google’s print ad program will flop — that’s betting on the wrong side of history. But Google watchers might benefit from a little old media perspective.

First, I found this from Google Blogoscoped rather comical:

I’ve placed a $30 bid for a 1/4 page at Information Week. By far not enough I guess, but maybe at least that helps me find out what the winning bid was.

Okay, so there’s this thing that Old Media uses called a “rate card” — if you check out Information Week’s “media kit,” you’ll find that the 1X rate for a 1/3 page black-and-white ad is $15,790. Now, I’m sure InfoWeek will let Google “negotiate” a lower price to bring in advertisers they couldn’t otherwise get, but if $30 is a serious test bid, then this is all a big joke.

And if it is a joke, then the jokes on print publishers as much as it is on Google. Here’s the unfortunate trend in print advertising (from Media Life, an “Old Media” publication that I suspect few Google watchers read):

Magazines are starting the year on what looks like a bit of a rocky road.

After what was essentially a flat year in 2005, the Publishers Information Bureau reports that January ad pages, including the weekend magazines, were down 1.8 percent, to 13,756.8 pages, compared to the same month a year ago.

Of the 20 major consumer magazine categories tracked by Media Life, ad pages for the first month of 2006 were up for eight categories and down for the remaining 12. That compares to the 11 categories that saw gains in 2005 versus nine showing declines.

Reported ad revenues for January, based on rate card before discounting, were basically flat at -0.3 percent compared to January of last year, according to the PIB.

In terms of 12 advertising categories tracked by the PIB, seven were down in ad pages in January, while five were up. The biggest gainer was drugs and remedies, which was up 18.1 percent, to 1,068.1 pages, in the first month of this year compared to the same month last year. The biggest loser was automotive, down 24.8 percent, to 1,060.7 pages.

Similarly, last year’s big hurting categories are still hurting: the business and finance, personal finance and newsweeklies categories. Last year these titles were down 7.7 percent, 6.4 percent and 6.2 percent, respectively. This January they were down 4.8 percent, 5.1 percent and 2.9 percent, respectively.

So with all this doom and gloom, why is Google getting into this declining business? And why is the business declining in any case?

Here’s the crux of the issue for Google Print Ads and for print advertising in general: it’s really hard (if not impossible, in some cases) to measure ad performance and return on investment in print.

Google AdWords revolutionized advertising accountability and ROI (despite click fraud issues), by bringing science to a practice that has always been more of an art. Some print ads have a direct response mechanism — a phone number or a URL — but most are pure “branding.” There’s no way to know whether someone took action in response to an ad or even saw it.

AdWords works for so many companies because they can essentially run a P&L on their advertising — they can demonstrate that AdWords campaigns are profitable. But print simply does not provide the kind of response mechanism to allow advertisers to measure the return.

Not to mention that 1/4 page ads can be ugly (especially those that are text heavy), which destroys the appearance, i.e. high production value that is one of the main “benefits” of glossy print ads.

So I have to scratch my head when I heard things like this from Inside Google:

I bid on ¼ page ads in every tech publication on the list, on the off chance the bids are actually low. I might bid higher, but I doubt it, unless people want to take up a collection. I guess we could test if print advertising is actually at all useful.

How exactly would you — or any advertisers who seriously participate in the program — figure out whether “print advertising is actually at all useful”? If all these tech guys can figure it out, then more power to them.

So welcome, Google, to the print advertising game. Good luck. If you want to own print advertising, you can have it.

(For those who have been frothing over my Google/Orwell comments, here’s some more red meat — this morning’s tech.memeorandum might has well have been the Google News Daily, with the headline about “strong competitor” Yahoo desperately trying to buy market share.)

UPDATE
Andy Beal points out another big problem with Google Print Ads:

One of the biggest problems I see with this comes from the lack of instant placement. When you use an auction style process online, you can change your bid based upon real-time demand, day-parts, inventory, competition etc. With a print ad, you often have to submit your creative and state your “bid” months in advance. Demand could reduce, your product could be out of stock, you may have a new product launch – all in the time it takes to submit your ad and then see it published.

Comments (13 Responses so far)

  1. BMW from Search Index – unwittingYahoo! pagará por utilizar su buscador – Blogueando.com – ¡Actualidad. Ahora con Podcast! Google Chases the Declining Print Ad Business – Pu… ON YAHOO! PAYING SEARCH USERS – *michael parekh on IT*Yahoo devient pathétique – Intercommunication

  2. on ¼ page ads in every tech publication on the list, on the off chance the bids are actually low. I might bid higher, but I doubt it, unless people want to take up a collection. I guess we could test if print advertising is actually at all useful.The Publishing 2.0 blog said they “have to scratch my head when I heard things like this from Inside Google”. Heh. Looks like I was right. The ads did go for far below what they normally cost, at a level I could have afforded, just like I predicted might happen. And my

  3. Publishing 2.0 » Google Chases the Declining Print Business [pingback] – r those who have been frothing over my Google/Orwell comments, here’s some more red meat — this morning’s tech.memeorandum might has well have been the Google News Daily, with the headline about

  4. Discussion:Publishing 2.0, InsideGoogle, Search Engine Lowdown, Andy Beal’s Marketing Pilgrim, Search Engine Journal, Search Engine Roundtable, Rex Hammock’s Weblog, Screenwerk, Bubblegeneration Strategy Lab and Coolz0r

  5. Scott, the purpose of bidding $30 on a $15,000 ad is, just in case Google’s program fails and it can’t find buyers for ad space, some lucky loser could walk away with a huge bargain. Now who doesn’t want to be a lucky loser?

    And as for my comment about print advertising being useful, what I meant was whether or not a quarter page ad in any magazine is ever going to be useful for a blog. I have real doubts that such an ad would bring in enough visitors to be noticeable. If my readers want to help me get my bid up to a reasonable amount, I’m willing to experiment, but I anticipate that no amount of print advertising would be anything but a big waste of money.

  6. Nathan, if you get the ad for $30, there will be plenty of “loss” but not a whole lot of “luck” — I can’t imagine that a print ad would be an efficient or effective means of driving traffic to your blog or any online destination — or that it would be efficient or effective in any of the ways that Google’s online ads are both efficient and effective.

    That said, I think you’re experiment is certainly worthwhile for keeping an eye on this whole thing — what I found comical is that I could imagine you getting the ad for $30 — and that it still wouldn’t be worth it! I’d tell your readers to save their money. You’ve probably “overbid” for the media value as it is.

  7. [...] Google and Its Watchers Don’t Get Print Advertising Google Tilts at Offline Advertising ROI Google Chases the Declining Print Ad Business [...]

  8. [...] The Publishing 2.0 blog said they “have to scratch my head when I heard things like this from Inside Google”. Heh. Looks like I was right. The ads did go for far below what they normally cost, at a level I could have afforded, just like I predicted might happen. And my statement about seeing if print ads were actually useful might have been pretty accurate as well. [...]

  9. [...] Lots of articles this weekend about how Google’s print advertising program, where the Goog buys up ad space in magazines and parcels out portions of it to high bidders, didn’t attract the interest Google was hoping for. According to Business Week, CoffeeCup Software wound up getting three ads in Martha Stewart Living, a total of $177,000 worth of ad space, for $4,000 apiece. What a steal! Also, the article says: Several more advertisers spoke with BusinessWeek following the story’s publication, echoing similar sentiments. Carl D. Haugen, president of BluePenguin Software, spent $3,000 on an ad through Google, which ran in the November issue of Budget Living magazine. Haugen offered a 20% discount on its antispyware software to Budget Living readers, so he could better track the ad’s performance. Over one month later, the ad had only generated $181.37 in sales, says Haugen. Now, when I wrote about this in February, I said: I bid on ¼ page ads in every tech publication on the list, on the off chance the bids are actually low. I might bid higher, but I doubt it, unless people want to take up a collection. I guess we could test if print advertising is actually at all useful. The Publishing 2.0 blog said they “have to scratch my head when I heard things like this from Inside Google”. Heh. Looks like I was right. The ads did go for far below what they normally cost, at a level I could have afforded, just like I predicted might happen. And my statement about seeing if print ads were actually useful might have been pretty accurate as well. Keep in mind, I use to be involved with selling newspaper advertising, and I never thought the advertisers were getting their money’s worth. Was the bowling place getting thousands of dollars worth of new business because of some ads on our pages? I didn’t think so. My suggestion to Google: Cut back. Restart the program with much smaller inventory, sell it in a Million Dollar Homepage style, block by block, and don’t add more inventory until you’re making a profit on what you’ve got. This is a market that needs time to grow. Even if it does very little business for the next few years, it can work eventually, if you’re smarter about it. Add to document.write(“Del.icio.us”) | Digg | Yahoo! My Web Technorati: Google Print AdsView All Articles by Nathan Weinberg Receive Our Daily Email of Breaking eBusiness News About the Author: Nathan Weinberg writes the popular InsideGoogle blog, offering the latest news and insights about Google and search engines. Visit the InsideGoogle blog. More blog_talk_blog_talk Articles Contact WebProNews [...]

  10. It’s reassuring to know that you can’t make yourself an overnight success in the print advertising business even with $90B in the bank. Is it a suprise to anyone reading that an ad for virus protection failed in Budget Living? A cheap ad is still wasted money if you fail to reach your target audience, run the wrong creative, fail to compel the reader to take action, etc.

    Our accountable print advertising agency has been closely watching Google attempt – and fail – to do what we’ve been doing for years: successfully turning a healthy ROI in print advertising. It’s not only possible, it’s what we do all day long.

    We solved the print advertising accountability problem over a year ago. Our PrintAd.info service provides online-style real-time response and conversion tracking for every print ad we place.

    The more publisher’s ad revenues drop, the more power that smart media buyers have to negotiate lower rates for their clients, which pushes print ad ROI even higher. Google’s inability to successfully execute a print media advertising program – right out of the gate – simply gives credibility to companies like ours that figured out long ago what Google’s just in the process of learning.

    Don’t take it from me… the MPA offers a very compelling report showing the importance of print, especially to complement a campaign on TV.

  11. [...] News flash: Google is indeed fallible — and vulnerable. I predicted on several occasions (here, here, and here) that Google’s Print Ad program was less than promising (to put it kindly), and sure enough: GOOGLE’S RECENT FORAY INTO PRINT advertising fell short of the company’s expectations, a company executive said Wednesday. Speaking on a conference call with investors and the media, Jonathan Rosenberg, Google’s senior vice president for product management, said the venture to auction off print ads in magazines, which launched in February, has been one of the biggest disappointments in the last six months. [...]

  12. [...] In late 2005, Google was betting that it could translate its success in online sales to the print world. The company started buying pages in magazines, which it then cut up into smaller pieces and sold them to advertisers. The experiment started out with technology magazines, but by early 2006, Google was testing the waters in a wider range of magazines and some newspapers. Following its online ad model, Google held online auctions so advertisers could buy space in magazines, without the need of an intermediary agency. But, just as with the ads in cyberspace, it’s not an open auction where everyone can see how much was paid. Instead, the advertisers would enter a bid saying what is the maximum amount they would be willing to pay for a certain space on a page. In the end, despite all the press and nervous advertising agency executives, the plan didn’t work as well as Google hoped. In December 2005, Business Week analyzed Google’s program, and concluded that “advertisers haven’t warmed up to the program.” Most of the advertisers interviewed said they were disappointed by the response their ads generated.  As several bloggers were quick to point out, it’s much more difficult to measure the effectiveness of a print ad. It’s not instantaneous like it is online. In a conference call with executives in late May, 2006, a senior vice president at Google said their experiment to auction off space in print media had been a disappointment. October 19th 2006 Posted to history, Google, Print [...]

  13. [...] As linked to before in lastminuteadclub.com, some bloggers (link to: http://publishing2.com/2006/02/09/google-chases-the-declining-print-business/ ) believe print media does not lend itself to the online auction process. Just to recap, they argue it is difficult for the auction process to work properly as advertisers are neither comfortable with the lack of control in ad placement, and sellers can simply throw in additional pages for ads and dilute the process.  ………….. [...]

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