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Google to shut newspaper ad business

Bloomberg News / January 21, 2009
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SAN FRANCISCO - Google Inc., owner of the world's most popular Internet search engine, will close a business that sells advertising space in newspapers, saying the effort failed to deliver the impact it wanted.

The program, which had attracted more than 800 US newspapers since it began in 2006, will stop selling ads on Feb. 28, Google said yesterday on its blog. The ad sales will continue until March 31 for customers that already had campaigns booked.

"Some advertisers have seen good results," Spencer Spinnell, director of Google Print Ads, wrote on the company blog. "But as we grow, it is important that we focus on products that can benefit the most people and solve the most important problems."

Google, which gets most of its sales from Internet-search advertising, has sought to expand beyond the Web by selling print and television ads. The recession has curbed overall marketing spending, forcing the company to slow expansion plans. Google said last week it's cutting about 100 jobs from its recruiting department as it scales back hiring.

Google, based in Mountain View, Calif., dropped $16.92 to $282.75 in Nasdaq Stock Market trading. The shares tumbled 56 percent last year. The company will report its fourth-quarter results tomorrow.

Newspapers face crumbling demand for print ads as advertisers shift dollars to the Internet. The Minneapolis Star Tribune filed for bankruptcy last week, joining Tribune Co., which sought protection from creditors on Dec. 8.

Google's print ad customers included many of the biggest US newspaper publishers, such as The New York Times Co., Washington Post Co., Gannett Co., and Tribune Co. Times Co. is the parent of The Boston Globe, which also was part of the program. The program took bids from advertisers for newspaper space, with Google getting a cut of the sale. The company's goal was to make print ad prices more fluid, letting publishers charge rates that better reflect demand.

Google will continue to devote a team to newspaper companies, seeking ways to help them make money online.

The company has been pulling back on services that aren't performing. It disclosed plans last week to end development of Google Notebook, which lets users post content from various sources to one site. Google also decided to close Dodgeball.com, a mobile social networking service, and Catalog Search, which helped users locate items in catalogs.

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