November 6th, 2006

The Upside and Downside of Google’s Newspaper Deal

by

Unbowed by its failed magazine print ad program, Google has cut a deal with 50 major newspapers to sell remnant print ad space to its enormous roster of AdWords advertisers. Here’s the upside and downside for Google and the newspaper industry:

Upside

Google — Even if newspaper print advertising continues to decline, Google’s share will be greater than zero and will be highly profitable.

Newspapers
— Revenue from Google for unsold ad space will be greater than zero.

Downside

Google — AdWords is a direct response marketing vehicle, which is why the magazine print ad program failed; if AdWords advertisers don’t get a “response,” i.e. traffic from print newspaper ads, they won’t come back for more.

Newspapers — Handing the reigns over to Google’s efficient direct response advertising machine will only hasten the realization that the Web is much more efficient than print at driving action and response.

The likely net effect of the Google/Newspaper program will be increased efficiency and therefore fewer advertising dollars in the system, as is already anticipated:

“I’m hopeful the program will lower advertising costs in the print world,” said Bruce Telkamp, a senior vice president of eHealth, an online insurance agency. “By aggregating a large number of advertisers, Google should get purchasing power.”

  • Good points, Scott -- especially the part about how the project will likely "hasten the realization that the Web is much more efficient than print at driving action and response." So Google pretends to help newspapers, but in reality it is speeding up their inevitable demise. Fiendishly clever :-)

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