By: Carl Sullivan
Consulting group Borrell Associates Inc. has done an about-face on its recommendations for newspaper partnerships with paid search offered by companies such as Google and Yahoo! Previously opposing the programs, Borrell now recommends that local media sites “jump on board the paid search bandwagon,” according to a memo the Portsmouth, Va.-based group sent to its clients this week.
“Our recommendation to newspapers is, if you can’t beat ’em, join ’em,” said President and CEO Gordon Borrell.
His group said a number of factors have caused it to “hop off the fence on this issue,” including:
* An estimate that the Google program boosts online revenue at local sites by 2%-10%.
* The belief that the only real option for local media wanting to play in this marketplace is to sign up with Google’s AdSense or Yahoo’s Overture, or an alternative vendor such as FindWhat or Kanoodle.
* The belief that competitive fears are overblown. “The real action is in getting national advertisers and small service-oriented businesses that don’t advertise in newspapers or on TV stations,” the memo said. Borrell said it reviewed over 1,500 search results for key local advertising categories, and found that, on average, only 5.7% of the advertisers were local.
* Local publishers partnering with Google or Yahoo continue to control which ads appear on their sites. They can turn off any paid search ads that may cause competitive problems with existing local advertisers.
* Contextual ads enhance local media Web sites.
* “The once-miniscule revenue stream reported by many early adopters is turning into a babbling brook, and may soon become a full-fledged river,” the memo said.
* “Competitive pressure between Google, Overture and others may force them to pay higher rates to publishers,” according to the memo.
To maximize revenues from paid search partnerships, Borrell recommends that local publishers increase the number of pages on their sites where the ads appear, consider adding sections with high text ad click-throughs such as travel and technology, and improving page design to ensure that readers will look at the text ads.
Other consultants have previously weighed in on the paid search question. In a 59-page report released in May, “The Geo-Google Threat,” the Neil Budde Group and Advanced Interactive Media Group analyzed how search engines are targeting local advertising, a pot estimated at $22 billion last year.
The report suggested “that newspapers test out AdSense,” said Neil Budde. “But we said they shouldn’t just put the code on their pages and sit back and cash checks from Google. They should use it as a learning experience and monitor it closely.”
Budde pointed out that Google’s code allows publishers to get data on which parts of the site are getting paid-search clicks. “Newspapers should use this to figure out what kinds of content are more likely to be good places for pay-per-click ads vs. banners or ‘Top Jobs’-type blocks,” he said. “Newspapers also should try different sizes, shapes and placements to see what can make the click rates higher.”