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Google in search to sell its advertising to newspapers

2007.12.30

AFTER colonising cyberspace, Google is going into the newspaper business. The search engine giant is in talks with several newspaper publishers to sell space in their pages to its online clients.

This expansion will worry bosses of rival media companies, including ITV chairman Michael Grade, who has already called for greater regulation on the fast-growing Google.

Google Print Ads is an extension of Google AdWords, the auction system that lets companies bid for a slot that appears alongside specific online word searches.

Instead of an auction, advertisers pick a newspaper online through Google and enter a bid for available advertising space on a given page and day.

But rather than offering to pay the list price, customers say what they are prepared to pay. Publishers can choose to accept or decline the offer.

Google takes a slice of the advertising revenue from every deal struck. It even offers to design the ad if the advertiser does not have the capability to do it alone.

“We believe that online and offline are part of the same melting pot,” Google said. “It is not an ‘either or’.”

Google’s UK advertising revenues rose roughly 40% to about £1.25 billion this year, comfortably overtaking the publisher Trinity Mirror’s income, which includes newspaper sales on top of advertising. Google has already outpaced Channel 4 and beaten ITV1 in the third quarter.

Print Ads, which started in the US in the summer, already supplies 600 titles, ranging from the 3,000-sales-a-day Shelbyville Daily Union in Illinois to the Charlotte Observer in North Carolina, which sells 215,000.

A British newspaper boss said: “It is an interesting development with the prospect of bringing new advertisers into our newspapers.

“If advertisers find it to be an effective channel, then there is the prospect to form direct relationships on a more normal basis.”

Many Print Ads users could be plumbers and electricians who have never advertised in a newspaper before because they thought they might be priced out. But some could be companies that have diverted their cash online in trying to squeeze a better deal out of newspapers.

Phil Stokes, leader of the entertainment and media practice at Price Waterhouse Coopers, the accountancy firm, said: “We can foresee newspaper groups participating in online exchanges for print advertising in the near future, but consider it unlikely that the larger players will automatically gravitate towards a large specialist third-party online provider without looking for other solutions first.”

Google commands around 75% of the market for search advertising in the UK. Because of high broadband take-up, it is one of four countries where internet advertising exceeds 15% of total media spend, putting the squeeze on broadcasters and publishers.

 

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