Google to sell advertising for 50 newspapers

November 07, 2006|By Bloomberg News

NEW YORK -- Google Inc., owner of the most-used Internet search engine, will test selling advertising for 50 newspapers starting this week, part of the company's latest effort to extend its reach beyond the Web.

Google will take bids for advertising space in newspapers owned by New York Times Co., Washington Post Co., Gannett Co. and Tribune Co., Google spokesman Mike Mayzel said yesterday in an e-mail.

Advertisers' offers for available space will be relayed to publishers, who will accept or reject them. The trial is an effort by Google Chief Executive Officer Eric Schmidt to tap off-line ad markets such as print and radio and comes as newspapers face declining sales and readership.

"For Google, the goal is to tap all forms of advertising and create a platform that allows advertisers to look at all their media," said Steve Weinstein, an analyst at Pacific Crest Securities in Portland, Ore. He rates Google shares "outperform" and doesn't own them.

Google will start offering newspaper space to about 100 of its advertisers this week in a test that will last three months.

Companies that may bid on ad space include DVD rental company Netflix Inc., health insurers EHealth Inc. and car rental company Avis Budget Group Inc.

Google's shares, up 14 percent this year, rose $5.15 yesterday to close at $476.95 on the Nasdaq stock market.

Newspaper ads sold through the process will start appearing within the next two weeks in papers including The New York Times, The Boston Globe, The Seattle Times, The Philadelphia Inquirer and The Washington Post, Mayzel said. For now, Google doesn't plan to seek a portion of any revenue from space sold through the test.

Tom Phillips, the executive who oversees Google's print ad efforts, said the program is designed to create more opportunities to sell ads and attract new advertisers.

"I can say confidently that it will drive up revenue of newspapers," said Phillips, a former magazine publisher and former chief executive officer of Deja.com, an Internet bulletin board company sold to Google and eBay Inc. in 2001.

He said Google's aim is to make prices for print advertising more fluid, letting publishers charge rates that better reflect demand.

While this test is just in the United States, Phillips said Google intends to sell space in thousands of publications around the world.

Newspapers, hurt by more people switching to read news on the Web, are working with Google in an attempt to mitigate the effects of lost readership, a trend that is accelerating.

Circulation at 770 U.S. daily newspapers declined 2.8 percent in the six months that ended Sept. 30, the Newspaper Association of America said last month, noting data from the Audit Bureau of Circulations. In the year-ago period, circulation fell by 2.6 percent.

The company is also testing a way to sell groups of small display or text ads around a common theme, such as in a food section of a newspaper, Phillips said. For that test, Google will bid for ad space and resell it, although the company intends to hand that process over to publishers in the future, he said.

Google is investigating ways to let clients see how effective their print ads are by analyzing search queries at Google after an ad has run and monitoring Web site transactions.

Print ads may let Google, which makes almost all of its revenue from online advertising, tap markets that are potentially larger in size. U.S. online advertising, excluding spending on Internet-search ads, grew 19 percent to $4.69 billion in the first half of this year, according to TNS Media Intelligence, a market researcher in New York. Local newspaper advertising fell 3.9 percent to $11.6 billion, but national newspaper advertising rose 5.9 percent to $1.77 billion, TNS said.

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