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Wednesday, January 21, 2009

Google split ends Sale of Ads in Papers After2 Years


Google’s efforts to develop its advertising empire beyond the confines of the Internet have hit their first major setback.

The company said on Tuesday that it would end a two-year-old program to sell ads in newspapers because the effort, called Google Print Ads, had failed to live up to its expectations.

“While we hoped that Print Ads would create a new revenue stream for newspapers and produce more relevant advertising for consumers, the product has not created the impact that we — or our partners — wanted,” wrote Spencer Spinnell, director of Google Print Ads, on an official corporate blog.

Google said the program, which sought to bring Google’s automated method of selling ads through auctions to the newspaper industry, would end Feb. 28.

The program began in November 2006 as a test. Google later expanded it to about 800 newspapers, including large dailies like The New York Times, The Los Angeles Times, The Chicago Tribune and The San Jose Mercury News.

But many newspapers used the program primarily for selling small amounts of ad space they could not sell themselves, newspaper publishers and industry analysts said. The ads were often sold at below-market rates.

“Financially, it was negligible for both Google and publishers,” said Jeffrey Lindsay, an analyst with Sanford C. Bernstein & Company. “None of these deals amounted to much.”

But some publishers, especially at smaller newspapers, may feel the impact of the program’s demise.

“We got some good business out of it,” said Steve Rossi, president and chief executive of the California Newspapers Partnership, which includes more than 30 daily newspapers owned by the MediaNews Group, Gannett and others.

The Google Print Ads program, along with two similar efforts by Google to sell ads on television and radio, were seen as high-profile tests of the company’s ability to bring the efficiencies of its automated marketplace for online ads to large, and sometimes, inefficient advertising markets.

Analysts said that all the programs had faced similar challenges and had been slow to gain traction with advertisers.

In radio, Google initially struggled to secure enough ad space to make the program attractive to marketers. In television, the company’s program has been looked at with suspicion, especially by cable companies that see Google as a competitor to their own efforts to sell targeted ads. The company is selling small amounts of ad space on the Dish Network, and since September, on some cable networks owned by NBC Universal, including MSNBC, CNBC and SciFi.

“If one was to drop out, the first was going to be newspapers, followed by radio,” Mr. Lindsay said. “TV is the one that has got the most legs.”

A Google spokesman declined to comment on the company’s radio and television ad sales programs.

Despite the limited size of Google Print Ads, some marketers were attracted to it, as the program often gave them the opportunity to place ads at prices lower than listed rates.

“It was very easy to use and we got very favorable pricing from many newspapers,” said Bruce Telkamp, executive vice president of eHealth, which runs eHealthInsurance.com. Mr. Telkamp said print ads were a small part of the company’s marketing budget.

In recent weeks, Google has closed several other small products and services that have failed to gain traction as it seeks to reduce costs.

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