Two Weeks Ago Google’s Eric Schmidt Told How He Wants To Help Save Print Newspapers And What Does He Now Do – He Closes Down The Print Ads Program Used by More Than 800 Newspapers

Philip Stone January 22, 2009

Even the high and mighty are being economically squeezed and that means that Google is cutting out what it considers superfluous projects and concentrating on its core revenue producers. So promises of the past – even two week old promises – no longer hold water.

Thus it is that Google has announced the closing of its two-year old Ad Prints service that began with 50 newspapers but has since grown to 800 newspapers, including some of the big names like the New York Times Company, Hearst, and Scripps.

For newspapers the Ad Prints closure means cutting off one more chance of selling advertising inventory. Under the Google program advertisers could bid online for that -- the bids would obviously be low and it was the newspaper’s decision whether to accept. If it did then there was revenue sharing with Google. It was a program where newspapers had little to lose and could gain at selling inventory, even at low rates, that might otherwise have gone unsold.

But apparently although more and more newspapers were signing up – what did they really have to lose? – the revenue was a drop in the bucket in comparison to what Google earns elsewhere and in these tighter financial days such projects no longer are seen in a favorable light at Google which has been busy ridding itself of other projects that produce little income.

“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,” according to Spencer Spinnell, the program’s director who wrote on his Google blog the program would close at the end of February.

Closing the product down seems to go against the corporate thinking as enunciated just two weeks ago in a Fortune Magazine interview with CEO Eric Schmidt.  He was asked if he wanted newspapers to survive and he responded, “Not only do we believe that, but I’ve been outspoken about it because I want everyone to get that. The fundamental question you’re asking is why does Google not write large checks to newspapers? We’re careful at Google with our money. We write large checks when we have a great strategy. And we don’t yet have that strategy.”

He had earlier said in the interview that he saw a solution in “tighter integration” or as he also put it, “merge without merging” – “where you can get the web systems of both organizations fairly well integrated, and you don’t have to do it on an exclusive basis.”

Well, Ad Prints seemed to be part of that strategy – help without buying – but obviously words come cheap but actions …

All is not lost for newspapers since the Yahoo Newspaper Consortium seems to be doing okay.  A.H. Belo, for instance, said last December it expected some $1.1 million in additional revenue in its current fiscal year due to the program.

Under the scheme some 800 US newspapers post their employment classifieds on Yahoo’s HotJobs site and they can use HotJobs technology to run their own online job ads. Many of the major US chains take part and the newspaper industry must like what it sees since, like with the Google Ad Prints, the number of members has quadrupled in two years

There obviously is some crossover of newspapers in both schemes but with Google bowing out perhaps the Yahoo scheme may get more members.

Spinnell’s blog does seem to give some hope that Google has not completely given up on newspapers – but it is clear that philanthropy is not a consideration here – if a project can’t make the financial grade then it’s gone.

“We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy. We remain dedicated to working with publishers to develop new ways for them to earn money, distribute and aggregate content and attract new readers online. We have teams of people working with hundreds of publishers to find new and creative ways to earn money from engaging online content. AdSense, DoubleClick, Google Maps, YouTube, Google Earth, Google News and many other products are a part of our significant investments to innovate in this space,” Spinnell wrote. 

“These important efforts won't stop. We will continue to devote a team of people to look at how we can help newspaper companies. It is clear that the current Print Ads product is not the right solution, so we are freeing up those resources to try to come up with new and innovative online solutions that will have a meaningful impact for users, advertisers and publishers.”

And then came the zinger. “As we grow, it is important that we focus on products that can benefit the most people and solve the most important problems. By moving resources away from projects that aren't having the impact we want, we can refocus our efforts on those that will delight millions of users.”

Google today releases its Q4 results which most analysts believe will show at least a 20% growth over the same quarter 12 months earlier. Google’s problem is that while other companies would kill today for 20% quarterly growth, given its better quarterly performances in prior years there is a fear that 20% will be seen as “slowing down” and there’ll be a sharp sell-off. The fact the company has been busy the past couple of weeks getting rid of projects that basically cost money could well be a hint on what to expect. Search advertising is said to still be holding up well, although there is some softness in rates for keyword pricing.