The Trojan App Trap


Google's newly launched service to sell print newspaper advertising puts a new spin on its earlier failed effort to sell print magazine advertising. But it's a strategy that apparently plans to charge a lot for doing very little.

Google's prior effort to sell magazine space had all the elements we have come to expect in new Google offerings: innovation, audaciousness and hubris. Google's plan was to buy advertising pages then resell those pages in smaller units to its base of advertisers, using an auction model as icing on the cake. While we suspected Google wasn't going to find the move to the world of offline advertising easy, we did respect the idea. That's because Google was making print magazine advertising more accessible by not only simplifying it, but by carving big expensive pages into smaller, more affordable units. Google was taking risk and adding value. The software that made all this happen was important, but it wasn't the main act.

Contrast this with the new Google program for print newspaper advertising. Auctions? No. Sub-dividing pages to make them more accessible to small advertisers? No. Google taking a financial risk? No. In fact, all we can see here is Google offering a self-service online ordering utility. Pick your paper, pay for your ad, upload your artwork. That's it. While the service is currently free, Google plans to extract a sales commission from newspapers at some point in the future.

What are these newspapers thinking? In exchange for an online application that from a functional standpoint is pretty mundane and could be developed by anyone, major newspapers are poised to hand over control of some of their advertising to Google, and will be on the hook to pay Google a commission to boot.

From our perspective, Google is facilitating sales, not generating sales, a subtle but critical distinction. Do newspapers really think that Google has privileged access to some large base of advertisers who've been yearning to advertise in local newspapers but didn’t know how? We contend the New York Times and the Washington Post (both participants in this program) aren't suffering from a lack of visibility among advertisers. We further contend that neither is difficult to locate or contact. Do these newspapers really think their sales forces are so ineffectual that all it takes is a self-service ordering page to find new advertisers?

There's nothing here that makes print newspaper advertising more attractive to small advertisers. Newspapers are selling existing ad units at full rate card prices. And if this program is really designed to be used by larger advertisers, then Google will probably end up peeling existing advertisers away from the newspapers, and selling them back to the newspapers in exchange for a commission. Not a great business move for publishers, but Google could end up laughing all the way to the bank. If Google can truly generate new sales for newspapers simply by throwing up a glorified online shopping cart, then that is less a victory for newspapers than a huge indictment of their existing sales operations.

There is a lesson here for all publishers: Don't get misled into paying sales commissions for software applications, because you’ll end up paying commissions for new business you could have generated yourself, as well as business you may already have.

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