Google To Announce New Ad Program With Newspapers

By: E&P Staff Google: friend, or foe? The debate moves to a different level with news that the online search giant plans to start selling advertisements that will appear, in print, in 50 major newspapers.

The official announcement is expected Monday.

Google's auction operation will now take bids for newspaper ads as well as Web ones. Outfits such as The Washington Post Co., Tribune Co., Gannett, Hearst, and The New York Times Co. have agreed to try the system in a three-month test, starting later this month.

"For the newspaper industry, reeling from the loss of both readers and advertisers, this new system offers a curious bargain: The publishers can get much-needed revenue but in doing so they may well make Google -- which is already the biggest seller of online advertising -- even stronger," The New York Times, a possible beneficary/victim, reports.

"Tom Phillips, who runs Google?s print operations, said the company was attracted by the $48 billion spent every year in the United States on newspaper advertising. Google, nonetheless, is trying to position itself as a friend of the newspapers. 'Print adds value the Internet doesn?t have,' he said. Mr. Phillips, the former publisher of Spy Magazine, was hired by Google earlier this year. ...

"The new system will begin a test with 100 advertisers later this month. Google will not earn any revenue during the test, but when the system is formally introduced next year, it will take a cut of the advertising revenue. Google keeps about 20 percent of revenue for Internet ads it places."

The Chicago Tribune has this take:

"The test program is emblematic of Google's strength, and represents a potential new stream of modest revenue for newspapers at a time when they are struggling to find ways to counter the broad-based advertising migration to the Internet. The program also would give newspapers access to a new community of advertisers. ...

"The phase, beginning this week, will involve the sale of small advertisements that might take up as much as a quarter of a page in a large metropolitan newspaper, but probably not more. Newspapers participating include the Tribune, the Times, the Post, the Boston Globe, Seattle Times and Philadelphia Inquirer.

"The system will work similarly to Google's Ad Sense, through which it sells advertising space on thousands of Web sites via online auctions. Typically, small businesses pay for these ads with a credit card.

"In a departure from Ad Sense, where advertisers rarely exercise control over the ultimate placement of their ads, the newspaper program would enable advertisers to pick specific newspapers and even specific sections of newspapers. Newspapers may reject ads that don't fit or do not meet standards of taste and can establish prices on which advertisers may bid.

"Even so, major elements of the Google system will persist. 'This is a system in which advertisers will be bidding for space in the newspapers the way they bid for ads on the Web," said Owen Youngman, vice president of development for the Chicago Tribune. ...

"The newspaper program brings potential new revenue to newspapers, but also a certain degree of risk. The publications hope to attract new advertisers that would not previously have displayed their wares in print. But the new program might prompt established newspaper advertisers -- big retailers, car companies and the like -- to request an online auction system that might undercut the industry's current pricing.

"Google's advertisers, which sometimes have not spent their entire online budgets because not enough advertising opportunities were available through Google, might make their first forays into newspapers. It is believed that many of the advertisers who might use the program were previously too small for newspapers to handle efficiently."