This scoop from Cnet sure caught my eye:
Google is expanding its lucrative Internet advertising network into the print world in a bold attempt to capture traditional ad dollars.
The search king, which makes 99 percent of its revenue from Internet ads, is quietly testing the waters of print advertising sales, according to executives at several companies that have bought the ads. Google recently began buying ad pages in technology magazines, including PC Magazine and Maximum PC, and reselling those pages–cut into quarters or fifths–to small advertisers that already belong to its online ad network, dubbed AdWords.
This certainly has nothing to do with search. An image of the ads is here.
This feels like a revenue diversification play, to be sure – selling directories and marketplace ads is always the next step once a publisher exhausts the low hanging fruit of its core offerings – but I wonder what the real agenda is here. Does Google see an opportunity to, in essence, become the middleman for anywhere from one to ten pages of directory/marketplace ads in nearly every B2B and niche magazine in the world?
Of course it does. And why not? It has the infrastructure in place (as I said in my previous excerpt, the most valuable asset it has after their tech is its network of advertisers). Let’s see. The Cnet piece said that the advertisers paid Google $1000 for their ads in PCMagazine. There were five of these advertisers – so $5K. The manufacturing/distribution cost of that page is probably no more than a grand, so that’s $4K in profit to split between Google and the publishers of PC Magazine. Let’s say the split is 70/30. That’s $1200 to Google, and $2800 to the publisher. As with the online world, this is free money for the publisher, and they probably love it.
Now, $1200 a page, say an average of five pages per B2B magazine, at least 1500 viable B2B mags in the country (probably more, but….), so do the math, that’s $1200 times 5 times 1500, that’s, er, $9 million, and that’s one issue. Say the average B2B magazine comes out 18 times a year (some are monthly, some weekly, some biweekly etc.), that’s $162 million in revenue a year, the vast majority of that pure profit. And that’s just to start.
Yeah, I see how that might be interesting to Google. And to publishers who, in the end, are never very good at monetizing the back of their book.
For now, this feels like a test. But this sure as heck doesn’t feel like a groovy, engineering-driven, throw-it-against-the-wall kind of test. This is a test of a very real opportunity.
Update: Google sent me a statement, thin soup, but here you go:
Google is testing a program to place ads from our advertising network
into U.S. print publications. This limited test is part of Google’s
continuing effort to develop new ways to provide effective and useful
advertising to advertisers, publishers and users.