Google Print Ads: An SME Strategy for Newspapers

Google’s announcement that its self-serve system will be enabled for print newspapers gives newspapers an easier way to reach small businesses. Newspapers, of course, are famously challenged to apply their relatively limited sales forces to anything smaller than a car dealer or hospital.

Here are some details: 50 larger newspapers, including titles by Gannett, Tribune, The New York Times Co., The Washington Post and Hearst, have agreed to be included in a three month test of the system. Google won’t charge its commission during the test period, but will probably charge normal rates afterwards. Compensation rates to newspapers widely vary, based on usage and market power, but is in the neighborhood of 15-30 percent.

The way it works is that AdWords advertisers will pick and choose which newspapers they want, if any, when they go on to make their self-serve buys. One hundred advertisers have committed to participating in the tests – almost none of which are regular print advertisers.

The print ads won’t be auctioned, like the other ads, since newspapers have the flexibility to rearrange pages – and even add pages – to meet demand. But they will include the open rate, or list price. Ads will be initially smaller than quarter pages, and many will likely be of the hard-to-sell “remnant” variety now found at the bottom of front pages and other places. They can also be contextually placed (i.e. the sports section).

Importantly, the newspapers will retain total control of their space, and can make their own decisions which ads to take, and whether they want the system to sell the larger ads during slow days (Wed.-Thur.), or perhaps, stick to the smaller ads for busy days (Fri.-Sun.).

In my view, this effort will go a long way to getting newspapers to push harder on SMEs, which is a green field opportunity. It is by no means, however, the only SME initiatives. A number of newspapers have launched SME efforts – some, not surprisingly, looking a lot like direct competition for Yellow Pages dollars.

Gannett’s purchase this year of Planet Discover, a local search directory, for instance, may be seen as one big SME initiative. Newsday has been aggressively courting SMEs for its LocalLinks directories. The Boston Globe also has a multi-pronged SME initiative; bringing in Bob Kempf from Gatehouse Media to develop the services on Boston.com. But here’s how the Google deal differs: it is entirely oriented towards print, where roughly 95 percent of newspaper revenue still comes from.

In fact, while there is some interesting discussion by Jon Fine in Business Week that advertisers might use the Google system to directly compare print and online ROI, there is very little, if any, crossover with newspaper’s online operations. If the test works out, however, it ought to strengthen Google’s ties with newspaper’s online operations. Currently, many newspapers, including several participating in the Google test, are using Google alternatives such as QuigoContextWeb and local.com for online placement.

Trivia Department: the Google Print Ads program isn’t being run by your typical Google “genius from nowhere.” Instead, it is being run by charismatic Tom Phillips, who has been involved in a number of high profile Web ventures after co-founding Spy Magazine in the 1980s. He launched Starwave with Paul Allen. After its purchase by Disney, he transitioned to running Go.com for Disney/ABC. (Do you remember Go? It originally was going to be differentiated among the portals by focusing on local). Phillips also tried to transition DejaNews, a leading bulletin board service, to the Web.