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Google and Newsprint Ads

  • Posted: Thursday, January 29, 2009
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  • Author: pradhana
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  • Filed under: Google

Not even the 800-pound gorilla’s hide is tough enough for the news biz.

Google’s announcement that it would end its newspaper print ad business at the end of February 2009 underscores the industry’s problems. The company started the service in 2006, and more than 800 US newspapers had used it.

The news came against the backdrop of declining newspaper revenues; although online newspaper revenues are still growing, that is not nearly enough to offset losses on the print side. The Newspaper Association of America said newspaper print ad revenues fell more than 9% in 2007.

Bloomberg noted that the New York Times, Washington Post, Gannett and Tribune companies had all used Google’s system. Advertisers bid for newspaper space, with a percentage of the transaction going to Google. In theory, this should have let publishers get a better sense of demand, which would have allowed them to charge prices based directly on market forces.

Google suggested that the program had sporadic success, but not enough.

“Some advertisers have seen good results,” wrote Spencer Spinnell, director of Google Print Ads, on the company’s blog. “But as we grow, it is important that we focus on products that can benefit the most people and solve the most important problems.”

The company said ad sales would continue until March 31 for customers who had already slotted campaigns. It also planned to keep a team focused on helping newspapers make money online.

The search giant’s move shows it is not immune to the recession, said Carol Krol, senior analyst at eMarketer.

“Google tried to make a go of print (both in newspapers and magazines), radio and, most recently, TV, with underwhelming results,” Ms. Krol noted.

eMarketer forecasts online newspaper ad revenue growth will drop into negative territory in 2009, down 4.7% to $3 billion. The recession, the dismal state of the newspaper industry and the quarterly online ad spending trends for 2008 measured against traditional newspaper ad dollars all factor into the projection.

eMarketer also predicts the downward slide in total newspaper ad revenues won’t end anytime soon, with annual drops to continue through at least 2012, when revenues will slip 2.5%. [eMarketer]

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