Google's New Frontier: Print Ads

With a slew of big-city newspapers on its side, Google sets out to reproduce the success of its online ad programsoffline

Google (GOOG) is rolling out its most ambitious print advertising initiative yet, an online marketplace that will let advertisers place bids on space in more than 50 major newspapers across the U.S.

The search giant will launch an alpha test of Google Print Ads this week. Since last fall, Google has tried at least three small-scale experiments with placing print ads in newspapers and magazines. Some of those earlier efforts were not well received (see, 12/12/05, "Can Google Go Glossy?").

All Aboard

Google Print Ads is notable for both the number of newspapers that have signed on, as well as the participants it's attracting. Among the participating papers are some of the nation's largest and most renowned: The New York Times, The Washington Post, The Boston Globe, the Chicago Tribune, The Philadelphia Inquirer, and The Denver Post. More than 100 advertisers will take part as well. (The test hasn't yet started, and Google declined to release the names of virtually all advertisers.) Tom Phillips, director of Google Print Ads, says he expects the program to be expanded to include weekly newspapers "sooner rather than later." He says weekly magazines eventually will be involved as well.

The move cements Google's central position within the media universe: a ubiquitous entity with which all major media players simultaneously partner and compete.

This iteration of Google Print Ads will run through January. The first bids will be accepted beginning this week, and ads will start running shortly thereafter. In this test phase, Google does not expect to make a profit, though it will when the system launches in earnest, according to Phillips. (It's not clear when the real launch will be.) During the testing phase, ad sizes will be capped at one-quarter of a page.

Google Print Ads differs from Google's AdWords search-term auctions, in which advertisers bid for space adjacent to search results for selected keywords. The new program allows newspapers to set minimum prices. Another difference: In at least one early move into this arena, Google simply bought ad space from publishers and auctioned off pieces to advertisers. But with Print Ads, "rather than create some artificial scarcity by buying [ad] inventory and then auctioning it off," says Google's Phillips, advertisers will "bid on inventory and then allow [newspapers] to decide on whatever makes sense."

Impressive Metrics

One ad executive involved in the test says the opportunity to tap Google's vaunted advertising measurement capabilities is a major selling point. "The platform has the potential to allow us to better measure and better understand how our print advertising drives Internet traffic," said Bruce Telkamp, senior vice-president for business development at online health insurance marketer eHealth (EHTH).

Telkamp says eHealth has used newspaper advertising in the past but was dissatisfied with the tools available from newspapers and media-buying agencies to measure return on investment. Advertising executives have long adored the rich data on customer behavior that Google AdWords provides.For instance, Google allows advertisers to see in real-time which ads get the most clicks. Traditional media ads do not come with such metrics.

The contours of the new Google Print Ads program will likely come as a major relief to publishers. One common, if slightly paranoid, concern of print executives was that Google's auction system would migrate into ad buying, which could in effect allow Google to set publishers' ad rates.

Reassuring Publishers

The new program underscores many of Google's recent public comments, in which the company has promised chary publishers that it was much more interested in partnering than competing. Google being Google, though, there are complexities inherent in a partnership with them. Publishers still feel stung over how Google scans their Web content in searches and then sells ads around those search results. But the declining revenue picture for many newspapers, particularly the big-city ones involved in this test of Google Print Ads, stings worse. "Ultimately we think it will bring in revenue, which is why we're doing this," said Denise Warren, chief advertising officer for The New York Times Media Group, who cited Google's existing relationships with hundreds of thousands of advertisers as a major draw. "There is a scale you can tap into with this kind of system. That is very attractive," Warren explains.

Comments from other media executives suggest that Googlephobia is abating somewhat. Google appears to have decided "they'd like to keep [publishers] well-fed rather than eat us," said Jack Kliger, CEO of Hachette Filipacchi Media U.S. and chairman of the Magazine Publishers of America.

Though Google executives dismiss the notion, Google Print Ads could reduce the role long played by media-buying agencies by essentially offering advertisers a mechanism to deal directly with print publishers—and also offer marketers like eHealth's Telkamp rich ROI metrics that media agencies can't match. One media-buying executive, though, sounded unconcerned. "It might start changing the way we do certain things," says Peter Gardiner, chief media officer for New York agency Deutsch (IPG). "But the whole world is changing right now."

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