Why is Google making more money everyday while newspapers are making less? I’m going to pick on The Washington Post again only because it’s my local paper and this is a local example.

There were severe storms in the Washington area today, and the power went out in our Reston office. I wanted to find some information about the status of power outages to see whether we should go into the office tomorrow. Here’s what I found on the homepage of WashingtonPost.com:

This is the WASHINGTON Post, right? So where’s the news about Washington? We just got pounded by a nasty storm — but it’s not homepage worthy.

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Why is Google transcendent and Yahoo a takeover target? Compare the following:

Sue Decker, president of Yahoo! Inc. (Nasdaq:YHOO), addressed the advertising industry during a keynote this morning at the 2008 Advertising 2.0 New York conference.

“Yahoo! is helping to accelerate the transformation of how display advertising is both bought and sold,” Decker told the audience earlier this morning. “First, we are developing the technology, products and platforms that are designed to help advertisers find the right audiences and publishers find the right advertisers. Second, we are partnering with publishers to secure and monetize inventory that advertisers and agencies find desirable. And third, we are partnering with advertisers and agencies to channel demand to the right consumer.”

Yahoo! President Sue Decker Outlines Vision for Online Advertising Transformation in Advertising 2.0 New York Keynote

Over time, the company also looked beyond click-through rates to rank ads. Google now takes into account the “landing page” that the ad links to, and, for example, gives low grades to pages whose sole purpose is to show more ads. Soon, the loading speed of a landing page will also be considered, Mr. Fox said.

These factors contribute to an ad’s “quality score.” The higher that score, the less the advertiser has to bid to secure top billing. For example, an advertiser who offers to pay $1 per click to attract those searching for “vacation rentals in Colorado” may receive more prominent placement than another who bids $1.50 for the same query but has a lower quality score. An advertiser with a very low quality score may have to bid so much for placement as to make it uneconomical.

Quality scores work as an incentive to advertisers to improve their ads, which benefits users and, in turn, benefits Google, Mr. Fox said.

The Humans Behind the Google Money Machine

“An incentive to advertisers to improve their ads.”

Think about that for a second.

Compared to: “help advertisers find the right audiences and publishers find the right advertisers”

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All innovation looks inevitable, except while it’s happening.

Google’s search advertising model didn’t spring forth fully formed. It was iterated, and many of the key concepts were borrowed — something many people don’t realize. But a few key market-defying decisions, and one stunning insight, made it all work. Here is a brief history to inspire, taken from John Battelle’s The Search (required reading for anyone who wants to innovate anything on the web):

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As media companies struggle to figure out their digital future, the elephant in the room is that they have only been able to monetize online audiences for pennies on the dollar compared to traditional media. Here’s why: Traditional advertising formats FAIL on the web. By traditional advertising formats, I mean display ads, video ads, and any other ad whose format and value proposition approximates or imitates that of an offline advertising format.

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The New York Times has certainly embraced blogging, but it was striking to see in this post from The Lede just how much they’ve embraced link journalism:

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I’ve read a bunch of interesting observations the last several days that have me pondering the future of the web — I’ve been trying to put it into a coherent blog post, but as this is my third draft and it still hasn’t gelled, I’m going to try thinking out loud. See if you can connect the dots.

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What’s wrong with the “friends connection” programs announced by Facebook, MySpace, and Google? Many people have been trying to explain the principle of data portability as if it were a new concept, but it’s actually not. It’s been on our PCs for years.

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Newspaper brands like the NEW YORK Times, WASHINGTON Post, BOSTON Globe, etc. face a unique challenge in the online media age — how to value non-local readers.

I received this offer in the snail mail this week from the New York Times:

As I observed previously with my critique of the Washington Post’s circulation marketing, this marketing piece gives me, an avid reader of NYtimes.com, no explanation whatsoever as to the value of also receiving the New York Times in print (with the exception of receiving free access to some premium online services, which has nothing to do with the value of the print edition itself).

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