More on Google ads going to print: BusinessWeek takes a look at Googgle’s experiment in brokering ads for magazine publishers.
While I am quick to bash Google on several fronts, I’ve gained a reputation as a defender of Google in their relationship with publishers as I view their role in this transaction as one of an advertising sale agent — a well-defined business model in magazine publishing. As the majority of the billions in revenues they are generating is being distributed into the pockets of publishers, big and small, it’s hard for me to view them as “the enemy” until they are publishing themselves. (And yes, they create content and are a media company, but a significant portion, perhaps the largest, portion, of their business is brokering advertising for other publishers.)
Likewise, I view their experiment with serving as an independent advertising broker for small space ads appearing in print magazines as an opportunity for magazines, not a threat. Rather than a situation like Craigslist where newspaper classifieds have dried up as a result of the introduction of a new free, force, this new Google experiment brings in advertisers to the magazine that would likely have not appeared. (Note to newspapers: it would be like Craigslist serving as your sales agent.)
The Google experiment is just that, an experiment. According to BusinessWeek:
“Google appears to be reselling ad spots without making money itself. For PC Magazine’s Oct. 18 issue, Google resold a one-page ad to seven advertisers. BusinessWeek reached four of those, who paid an average of $2,750. Assuming that average for all seven advertisers, Google generated $19,250 for the ad, leaving scant room for profits since its cost was about $20,000.
“Still, Google isn’t backing away from the market. Co-founder Sergey Brin lauded the ad program during Google’s third-quarter conference call in October. And ad-sales chief Armstrong says Google is working hard to improve its performance. “We view this as a long-term project,” says Armstrong, who wouldn’t comment on specifics about pricing. “We’re not as concerned with profitability right now as we are with finding value for publishers, advertisers, and customers.”
Google certainly has the cash and patience to sustain a lengthy effort to penetrate the magazine advertising arena. But based on this assessment of Google’s initial foray, don’t expect it to replicate its online successes anytime soon.
I am not so dismissive of Google’s ability to succeed in this venture as they are bring in new advertisers to fill some of the hardest to sell space in a magazine. It’s space that is often sold in a near self-service fashion by independent telemarketing firms that do it with a wide degree of success. It is these independent telemarketing firms that should be concerned, not the magazine publishers.