NEW YORK/LOS ANGELES (Reuters) - Google Inc will kill a program to sell newspaper advertising because it is not making enough money, a blow to its efforts to expand its ad expertise beyond the Internet.
Google will shut the Print Ads program on February 28, the company said on its blog on Tuesday afternoon. The two-year-old service was designed to help newspapers make money by enticing Google advertisers to expand into print newspaper sales.
“We weren’t providing a meaningful revenue impact to our newspaper partners so we are focusing our efforts on how we can do that quickly and effectively using online tools,” Google spokesman Brandon McCormick said.
Print Ads customers who booked campaigns can place ads through March 31, Google said on its blog.
For Google, which has built its larger-than-life reputation as a master of the online advertising business, shutting down the print program is a rare failure.
Google and newspapers struggle with a poor advertising market exacerbated by the world financial crisis. Google, an ad powerhouse that has expanded its empire as U.S. publishers are losing theirs, said last week it would lay off 100 full-time recruiters and close three engineering offices.
Print newspaper ad sales were $42.2 billion in 2007, down from a high of $48.7 billion in 2000, according to the Newspaper Association of America.
“You can see even someone who is a pure-play newspaper company is finding it difficult to survive in this market, and for Google, there were no near-term material revenue opportunities,” said Sandeep Aggarwal, an analyst at Collins Stewart LLC who covers Google.
A Google spokesman declined to say how much money the search engine company and its newspaper partners expected to make from Print Ads.
“It’s a very small part of our revenue stream,” said New York Times spokeswoman Catherine Mathis.
Newspapers tend to make about 90 percent of their revenue, in varying degrees, from print ads, with Web sales making up the difference.
Finding new ways to increase ad sales is an important factor for U.S. publishers whose survival is threatened by falling paid circulation, ad sales and hundreds of millions of dollars in debt that they have to pay.
Under the terms of the Print Ads program, Google AdWords customers could place newspaper ads in the same way they buy Web page, radio or TV ad space.
Google also has been expanding its ad programs into radio and television, but it is unclear how it those are performing so far.
The Print Ads program includes 807 papers, including: The New York Times, News Corp’s New York Post, the New York Times-owned Boston Globe, Tribune Co’s Chicago Tribune and Los Angeles Times, The Washington Post, Hearst Corp’s San Francisco Chronicle, and MediaNews Group’s San Jose Mercury News, according to Google.
Google remains “dedicated to working with publishers to develop new ways for them to earn money, distribute and aggregate content and attract new readers online,” its blog post said. McCormick said the company has nothing new to announce right now.
Search engine companies such as Google and rival Yahoo Inc have touted their relationships with newspapers and their desire to help papers survive a massive shift of the readership to the Internet.
Some newspaper publishers have criticized Google and Yahoo for depleting their audiences — and by default their advertising dollars — by giving away the newspapers’ stories on their websites.
It is unclear what effect this would have on an advertising consortium that Yahoo has with hundreds of newspapers. Many papers are members of both Google’s and Yahoo’s groups.
Google shares, already dragged down with the broader market, fell 5.65 percent to close at $282.75 on the Nasdaq stock market. Google’s share price is down 53 percent from its 52-week high of $602.45 reached on May 2.
Editing by Andre Grenon, editing by Leslie Gevirtz