Ad Deal Between Newspapers and Google Paying Off — So Far

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By: Jennifer Saba

The fact that publishers are not only willing but eager to collaborate with major Internet players could be considered a sign that the Great Newspaper Apocalypse might never materialize. At least not in 2007, anyway. Now comes word that Google wants to extend its newspaper print pilot program because it exceeded the company’s expectations. What those expectations were in the first place is anyone’s guess — Google wouldn’t say — but at least the gentle giant wants to keep banking the experiment.

When it rolled out the program last fall, 50 newspapers got involved. At the beginning of this year, 16 more jumped on board. One hundred advertisers have volunteered to test out the program as well.

Here’s how it works: Newspapers list available inventory, rate card information, and circulation. Advertisers place bids, and it’s up to the newspaper to accept them. “We are turning the whole model on its ear,” says Tom Phillips, director of print ads at Google.

Most of the advertisers are new to running in newspapers, though some are former free-standing-insert buyers. The advertisers are hardly bit players: “They are medium and large businesses,” says Phillips, citing Netflix, Avis, and Budget as participants. “They are not, for the most part, small.”

Phillips is quick to note that Google has no interest in poaching advertisers who have strong newspaper relationships: “We frankly don’t have much interest going after the core clients of the big metros.” Most of the buys, he says, involve multiple cities with extended flights. “What has surprised us is the rate of offers that have been accepted,” says Phillips, who nevertheless declined to disclose that rate or the average amount.

Peter Cobb, co-founder and senior vice president of eBags.com in Denver, says Google’s print program “makes it easier for people like us.” The company, which sells handbags, luggage, and laptop cases online, already uses Google for paid search listings. Cobb was looking for alternatives to keyword search and shopping-comparison advertising, which is increasingly getting more expensive.

On using the tools for the program, Cobb says, “I didn’t have to call up the sales reps for The Denver Post or The Dallas Morning News or the Houston Chronicle. I wouldn’t know where to start.” Aside from a one-stop shop, Cobb appreciated that Google would measure the probability of the acceptance of an ad based on bids.

So eBags advertised in seven cities over a three-week period and spent hundreds of thousands of dollars averaging probably “less than half of the rate card,” Cobb says. One of the company’s brands, Skyway luggage, noticed a spike in business during the ad period.

The Google program is one good way for papers to recover national advertising dollars, notes Bruce Murray, CEO of New York-based research company Corzen: “I think for that reason alone, it’s outstanding.”

Miles Groves, president of MG Strategic Research in Washington, thinks that Google’s alliance with newspapers lends each party added credibility. “Why does it matter? It shouldn’t, but it does,” he says. With Google acting as a middleman, “it’s a strong third party with strong clout.”

Google needs newspapers, too. It’s hard to fathom, but the fast-growing company must expand ever faster if it wants to stay in the good graces of its shareholders. “[Google] needs to look into other areas to see how ad dollars flow and help create value,” says Murray. Perhaps turning to wheezing newspapers, once a fast-growing medium itself, will prove to be a beneficial move for all involved.

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