November 6th, 2006

The Upside and Downside of Google’s Newspaper Deal

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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.”

Comments (11 Responses so far)

  1. thirst for ad inventory of any kind, so that it can keep growing at those triple-digit rates the stock market is so enamoured with. And let’s face it: the newspaper business needs all the help it can get. Although Scott Karp of Publishing 2.0 points out that one of the unintended consequences of the Google experiment could be that it only reinforces how disconnected and hard to measure print advertising really is. Ingram’s colleague Mark Evans (one of several bloggers I’m quoting here

  2. The Upside and Downside of Google’s Newspaper Deal 1 day 22 hours old Publishing 2.0 at Web 2.0 2 days 9 hours old The Delicate Balance of Participatory Media 3 days 12 hours old YouTube, Google, and Rumors vs. Truth in the Blogosphere 1 week 20 hours old

  3. I’m handing over the reigns to all blogging on the topic of Google and newspaper advertising to the more efficient Scott Karp, who says, : “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

  4. less ad revenue than Google still pull in billions. Giving Google access to the old-style printing press may give it even more power in its money-printing ad business. Both sides should enjoy a boost to their fortunes. Scott Karp at Publishing 2.0 wrote how newspapers and Google should see “greater than zero” returns. Karp also suggested a downside for each of the parties in this arrangement, too:

  5. The Upside and Downside of Google’s Newspaper Deal

  6. 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 :-)

  7. [...] with del.icio.us   |   Email this entry   |   TrackBack URI   |   Digg it   |   Track with co.mments   |     |   Cosmos Click here forcopyright permissions! Copyright 2006 Mathew Ingram [...]

  8. [...] Google to Use “Faerie Magicks” in Tracking New Print Ads November 6th, 2006 at 6:07 pm by Tony Google is once again in the news getting the blogosphere all hot and bothered because of its new Print Ads service which will debut fairly soon in an “alpha” run, to finish in January.  Several reputable newspapers have signed on, such as the New York Times and Washington Post.  The details of the issue have been discussed elsewhere, so I won’t repeat them.  But what’s quite fascinating is the motivation for newspapers to try this grand experiment.  Businessweek writes: One ad executive involved in the test says the opportunity to tap Google’s vaunted advertising measurement capabilities is a major selling point. “The platform has the potential to allow us to better measure and better understand how our print advertising drives Internet traffic,” said Bruce Telkamp, senior vice-president for business development at online health insurance marketer eHealth. [...]

  9. [...] Google Sees Papers As Next Step For Ads By: David Utter 2006-11-06 Google wants to give an advertiser the option to have ads appear online, on radio, in video, probably on TV soon, and in newsprint. Should they succeed, Google will be a one-stop shop for marketers everywhere. Google (GOOG) has been testing the sale of remnant ads in Chicago in the Sun-Times, filling ad space that did not receive demand from advertisers. That test has now been expanded to 50 newspapers. The New York Times carried news of Google’s latest adventure in print. The company has also tested placing ads in a couple of tech magazines, and tried to auction off space it had purchased in several other publications, but with minimal success. That report noted how, if it succeeds in delivering profits to participating publishers like Gannett, Tribune, Hearst, The Washington Post, and The New York Times, those companies will be strengthened. But Google will gain even more, just as it has at the expense of those same publishers who have been hammered by relatively inexpensive, highly measurable web advertising. Google built a $145 billion market cap on the strength of those online ads. Even companies like Yahoo and Microsoft that generate less ad revenue than Google still pull in billions. Giving Google access to the old-style printing press may give it even more power in its money-printing ad business. Both sides should enjoy a boost to their fortunes. Scott Karp at Publishing 2.0 wrote how newspapers and Google should see “greater than zero” returns. Karp also suggested a downside for each of the parties in this arrangement, too: Google ” AdWords is a direct response marketing vehicle, which is why the magazine print ad program failed; if AdWords advertisers dont get a response, i.e. traffic from print newspaper ads, they wont come back for more. Newspapers ” Handing the reigns over to Googles efficient direct response advertising machine will only hasten the realization that the Web is much more efficient than print at driving action and response. John Battelle has an optimistic take on the deal. “I can see this working well for remnant/backfill, as well as classifieds, where I’m guessing the system will really excel,” he wrote on his blog. — Tag: Google Add to Del.icio.us | Digg | Reddit | Furl Bookmark IFN – View All Articles by David Utter About the Author: David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business. [...]

  10. [...] For the newspaper industry, which failed to understand where its future lay back before Craigslist had a CEO and Google was still run out of a Stanford dorm room, and has been suffering miserably for it ever since, the program is a way to make some money off inventory that would typically be filled with worthless house ads. But it also proffers a dubious bargain: it will bolster the newspapers’ flagging advertising revenues, but it may undercut their existing advertising relationships and, more importantly, rates in the process. Says Publishing 2.0: "Handing the reins 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." [...]

  11. [...] The Irish blogger sees red when he is asked to evaluate a Web site that allows price comparisons in the United States alone. “Hello? It is the World Wide Web – not the US Wide Web. We have running water, electricity and yes, even Internet access in countries outside of the US these days,” he writes. “If you are pitching sites to bloggers, at least have the courtesy to only ask them to look over sites which may be of use/interest to them. And don’t lie about having looked over their site.” Comment Monday, November 6, 2006Google as print ad salesman won’t be about the click-throughsTechDirtThe search engine’s plant to sell remnant ad space draws a number of doubters, including Mike Masnick. “While at least one advertiser was willing to pay a premium just to be ‘associated with Google,’ that seemed like a pretty small opportunity. In fact, a report found that most of the advertisers who participated didn’t find it worthwhile,” he writes. “It’s now been a few months, and Google has tried to expand the program somewhat, but apparently advertisers still find it disappointing, and there weren’t that many interested advertisers in the first place. This doesn’t mean Google won’t figure out some way to revolutionize the market eventually — but the early efforts don’t seem to be exciting very many advertisers.”Publishing 2.0: Print sales aren’t as easy as Google may thinkLucas Grindley: This is the birth of open source advertising [...]

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