Cost-cutting Google scraps newspaper ad program
SAN FRANCISCO -- Google Inc. is giving up on selling print ads for the ailing newspaper industry, ending a 2-year-old attempt to extend its dominance of Internet marketing into another medium.
The retrenchment announced Tuesday is part of a cost-cutting campaign aimed at boosting Google's profits as the deepening recession eats away at Google's bread-and-butter business of selling ads on its own website and thousands of other Internet destinations.
Emboldened by its online success, Google set out in November 2006 to help newspapers that have seen their revenue evaporate as more advertisers shifted their spending to the Internet to connect with the Web's growing audience.
Under the program, potential advertisers were allowed to bid online to fill unsold space in the participating newspapers, leaving it up to publishers whether to accept the offers.
But Mountain View, Calif.-based Google concluded that its online expertise wasn't paying off in print, prompting management to pull the plug on its newspaper program effective Feb. 28.
The decision affects about 800 U.S. newspapers, up from the 50 publications that had initially enlisted Google's help.
"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," Spencer Spinnell, Google's director of the program, wrote in a Tuesday blog posting.
Without providing specifics, Google pledged to help newspaper publishers find other ways to make more money, presumably by driving more traffic to their websites and helping them sell more Internet ads. But Google may be hard pressed to address newspapers' biggest problem: Internet ads simply do not generate as much revenue as print ads.
Yahoo Inc., which runs the second-largest Internet marketing network behind Google's, has been trying to help newspapers sell more online ads for the past two years. Unlike Google, Yahoo never strayed into the print side.
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