Maybe it's no surprise that Google's effort to help small and medium-size advertisers buy offline media such as newspaper space and radio spots appears to be working.
What is surprising, however, is that the newspaper and radio folks aren't sounding the least bit spooked by it. In fact, Google may have finally built what years of complaining by media-buying agencies couldn't: a viable, scalable, e-business approach to buying local media.
If the early success with newspapers and radio keeps up, moreover, Google may prove itself worthy of entry into the biggest ad market it hasn't touched: TV.
TV executives are closely watching these trials for proof of success-for all parties-before handing Google the keys to their $68 billion business. Executives say they need to know whether Google really can bring new small and medium-size advertisers to offline media and add efficiency to archaic buying processes. For better or worse, depending on your outlook, Google is beginning to be able to say, "Yes, we can."
After some early, limited and very manual experiments with newspapers and magazines over the past couple of years, Google began a serious alpha trial of its Print Ads system last November, letting more than 100 advertisers bid for space in more than 50 daily newspapers. Early results suggest Google is in newspapers' $46 billion ad market to stay.
New York Times
"We were really hoping to generate incremental revenue from an advertiser base that we don't usually get revenue from," said Denise Warren, senior VP-chief advertising officer, New York Times Media Group. "And it's worked."
At The Seattle Times, the test has already produced six-figure incremental ad revenue, said Mike Lemke, the paper's senior VP-sales and marketing. "After the test, we think that it's a viable new channel that meets the specific needs of certain advertisers who probably would not otherwise give our products a try, just because they're either out of market or they don't tend to use newspapers."
It's central to all the tests that Google has built relationships with exactly those advertisers, such as health-insurance provider eHealth.
"We haven't participated in print advertising for about five years," said Bruce Telkamp, senior VP-business development and marketing. "We found other media to be more effective for us. This is the first time we've reintroduced ourselves to it."
Test in 12 markets
EHealth spent $100,000 on newspaper ads in 12 markets including Los Angeles, Salt Lake City and Chicago. "We specifically designed the test so we could measure lift in website traffic," Mr. Telkamp said. "We are very pleased with the results. We definitely felt that the platform made buying print media across a broad array of alternatives convenient. It was easy to enter, modify and place bids. Plus, we were able to upload our ads to the platform, so no additional work was required. The platform's tracking tool was also very good."
"For the next stage," he added, "we're going to bump up the spend."
Google plans to bring the test into beta this spring, said Tom Phillips, director of Print Ads. "Beta will be a real, functionally complete product which will allow us to significantly expand the universe of both advertisers and publishers," he said. "There continues to be lots of bad press about the newspaper industry. We're very excited about it."
Of course, part of the reason newspapers are comfortable with this new system is that, for the moment, they are still in control. Print Ads also allows publishers to maintain relationships with their biggest advertisers, such as Macy's and Verizon, and to reject ads that come in with too low a bid or would interfere with an existing advertising relationship.
900 radio stations sign on
The radio effort has only been in beta since December but already has signed up more than 900 stations to participate, the company says. And radio executives, nervous or not about the ad leviathan crouched on the doorstep of their $20 billion market, seem to like what they've found so far.
Eric Mastel, president of Max Media in Virginia Beach, Va., was a skeptic when he signed a deal two years ago with dMarc Broadcasting-a company Google bought in January 2006 for its automated radio-advertising platform. But after he tested the system in two small stations in North Carolina, it impressed him with its efficiency and, even better, by delivering ad rates triple that of the regular networks in the market.
"We all live under pretty strict inventory standards in terms of how many ads run per hour and how we can hold our pricing," Mr. Mastel said. "It's a reassuring and comforting feeling to have a system so efficient and easy."
Mr. Mastel plans to renew his contract with Google for Max Media's 37 stations in eight markets for another two years.
For radio advertisers, attractions include the ability to change creative on the fly and getting real-time air checks and billing, according to Drew Hilles, a Clear Channel and CBS radio veteran who joined dMarc before the acquisition. Old-school radio affidavits can take months to arrive. Google says its radio-sales product can tie back to return on investment: If a piece of creative seems more effective in Kansas City than in St. Louis, advertisers can adjust in real time.
That's not to say everyone has grown to love Google.
"Radio stations are scared to death of that company," said an executive for a competing radio-sales company. "They are so big and have taken so many dollars away from radio in the minds of broadcasters that it comes down to trust."
All of this poses a question to the TV industry as it ponders alliances with Google: Are you feeling lucky?