Google tests plan to take ad overflow to newspapers
CHICAGO - After circling each other as rivals, Google Inc. and more than 50 newspapers nationwide are set this week to launch a test program in which Google will find a home for its overflow of advertisements in newspapers.
Google, so successful that it doesn't have room on the Internet to accommodate all its advertising clients, has proposed redirecting those ads to the printed page. Google will not take a cut of any advertising revenue in the initial test phase of the program, but will split revenue with newspapers if the program continues after its test run concludes in February.
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 program, which Google is expected to formally announce Monday, will mark Google's first widescale foray into the sale and placement of display advertising in newspapers.
"This is money that our advertisers would spend with us if we had the online inventory for them to spend it on," said Tom Phillips, Google's director of print advertising.
Publications including the Chicago Tribune, The New York Times and the Washington Post were among more than a dozen that participated this fall in a small-scale test.
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.
Google Chief Executive Eric Schmidt has said the company is accelerating efforts to sell advertising in newspapers and magazines. Google already is moving into radio advertising, with its purchase early this year of dMark Broadcasting, a firm with an automated system for selling and placing advertisements on the radio.
Success in the newspaper effort is by no means guaranteed. An early effort at selling magazine advertising has faltered. But Schmidt said last month that Google is addressing the problems and is marketing its advertising services to nearly 100 magazines.
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.
"For the small ads that we expect, newspapers aren't gong to put advertising salespeople against that," said Youngman. "You could go to every advertiser using Ad Sense and try to get them to buy advertising with your newspaper, but it would take too much manpower to do that."
For Google, a robust advertiser response would bring in new revenue. But such success also might highlight the power of print advertising at a time when Google is doing its best to lure money away from old media and onto the Internet.
But Google's Phillips is not worried about the competition. "I don't think we have much to fear. We hope our advertisers become big newspaper advertisers. That would be a big success. We don't think they'll abandon online advertising, though," Phillips said.
Newspapers' advertising is under pressure, thanks to circulation declines as readers migrate to the Internet. Google's low-cost online advertising model also is a competitive factor.
"Inevitably, the Internet will be used as a platform for buying advertising in all forms of media," said Greg Sterling, an Oakland, Calif.-based Internet advertising analyst.
The new test comes even as some newspapers have tried to develop alternatives to Google for their Web sites. Tribune Co. is among several big newspaper chains that have contracted with Quigo Technologies Inc., an online advertising vendor that competes with Google, for its Internet editions, and for a small number of advertisements in the print version of its newspapers.
The Chicago Sun-Times recently experimented with a program similar to the one Google is launching with the big newspaper companies. The brief Sun-Times program was disbanded earlier this year.