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News media v giants of search: battle for advertising

There is a growing realisation that print media’s ideas of moving towards a form of internet journalism that could be as profitable as print are doomed. That is unless something can be done about increasing online advertising revenues very substantially.

Peter Cole in the Independent on Sunday writes:

The company [Google] which has made fortunes for its billionaire founders Larry Page and Sergey Brin would laugh at the idea that you cannot make money through advertising on a news website. To which those who are providing the content would ask “Whose news?”

He quotes Alan Rusbridger, editor of the Guardian, who told the Society of Editors that Google was “hoovering up stupendous amounts of money on the back of our content”.

The news on the advertising front looks like getting worse. Earlier this month Merrill Lynch upgraded its forecast for search advertising in the United States this year from 32.2% to 35.2%. The branded advertising forecast remained the same at 24.4%. They estimated that search advertising would continue to grow faster than branded, taking 42-43% of the cake next year.

Peter Cole writes about the need for a “conversation” with Google. In the United States, were these things seem to happen earlier, an agreement between Yahoo and a consortium of 150 newspapers was announced last week.

Members of the Cosortium are: Belo Corp, Cox Newspapers Inc, Hearst Newspapers, Journal Register Company, Lee Enterprises Incorporated, MediaNews Group and The E.W. Scripps Company. The newspapers in the consortium reach 38 states.

The press release says Yahoo will work with the newspapers in these areas:

Advertising: Use Yahoo!’s technology platform to sell online advertising for the newspapers’ Web sites.

Search: Use Yahoo!’s search monetization functionality on newspaper Web sites, such as Web search, downloads of the Yahoo! toolbar and sponsored search.

Local: Offer Yahoo!’s local products such as Yahoo! Local listings, Yahoo! Maps and Event Listings on the newspaper Web sites.

Content: Use Yahoo!’s extensive network to distribute the newspapers’ content in areas such as Yahoo! Search results, Yahoo! News and other content verticals.

Members of the consortium described it as a “transofrmational deal for the newspaper industry”. Merrill Lynch commenting on the agreement said:

We are somewhat mixed about the implications for the newspaper industry, but ultimately believe this is a worthwhile experiment. Not understanding where exactly Google is going with its newspaper ad placement experiment, it is also probably healthy to have Yahoo! in the fray.

They continue saying:

We also wonder if the Yahoo! partnership splinters the newspaper industry, precluding newspapers from forming a national, industry-wide consortium and migrating onto common platforms as some observers have suggested. While we appreciate the participating newspapers’ attempt to tap into local online adv. by partnering with Yahoo!, the partnership also seems an admission that papers have to give up some economics online in order to broaden their distribution. Giving up some economics vs. potentially missing out completely might prove to be a good decision, not to mention that papers will gain access to technology.

That is not exactly a ringing endorsement of the deal. It looks as if mainstream media is going to have to work together on this, and more than “a conversation” will be needed. Perhaps even the BBC, which has commercial services which fall outside its public services, will join in.

It will be tough and the search giants probably understand newspapers better than newspapers understand search: two Yahoo executives, Hilary Schneider and Dan Finnigan were previously senior people at Knight-Ridder.


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  1. Media Blog says

    The argument that Google is getting rich of the content of media is only partly true, especially from a newspaper perspective … most of the content that Google puts ads against isn’t newspaper content or even MSM content, and even if an individual newspaper got every penny that Google gets right now directly from that newspaper’s content, it wouldn’t amount to much money at all. Google makes billions because of aggregation and mass. There isn’t a newspaper company around that can generate sufficient revenue from Google’s advertising model alone — no newspaper has that kind of traffic nor that depth of content (and even aggregating every newpspaper article in the world wouldn’t match Google’s reach).