/ 17 June 2008

Google has ‘moral imperative’ to assist newspapers

Google chief executive Eric Schmidt said this week that the internet search leader hopes its recently acquired advertising service DoubleClick will aid newspapers as they struggle to corral more online revenue.

”It’s a huge moral imperative to help here,” Schmidt said during a question-and-answer session at an event hosted in San Francisco by Syracuse University’s Newhouse School of Public Communications.

Without providing specifics about how it might be accomplished, Schmidt said DoubleClick’s system for serving up online display ads could generate ”significant” revenue online for newspapers.

Still, he acknowledged the boost probably won’t be enough to restore the hefty profit margins that newspaper publishers historically have enjoyed from print advertising.

Mountain View-based Google completed its $3,2-billion acquisition of DoubleClick in March after an extensive antitrust review that focused on whether the deal would give the combined entity too much power over the $40-billion online ad market.

Google also has a financial incentive to bolster newspapers because the stories, pictures and other content that it distributes online creates more opportunities for the company to make money from short advertising links that appear on millions of web pages each day.

But footing the bill to gather news and other information has become a more daunting task in recent years as advertisers have shifted more of their budgets to the internet in an effort to connect with consumers who are increasingly eschewing newspapers and other traditional media.

The shift has been particularly painful for newspapers, which have been laying off hundreds of workers and trimming other costs as their revenue crumbles.

Newspaper publishers also are boosting their online revenue, but so far those efforts haven’t been nearly enough to offset the decline in print advertising. Last year, for instance, the United States newspaper industry’s overall ad revenue fell by 8% to $45,4-billion, according to the Newspaper Association of America.

Meanwhile, Google’s revenue last year rose by 56% to $16,6-billion, widening the company’s lead as the internet’s most profitable business.

In other comments, Schmidt reiterated his belief that advertising on mobile devices eventually will emerge as Google’s biggest source of profits. The company hopes to be in a better position to deliver ads to people on the go during the second half of this year when it’s scheduled to unveil its new mobile software package, Android.

Google’s plans to make Android available to wide variety of mobile handsets have caused conflicts for Schmidt in his role as a director of Apple, which makes the popular iPhone. Schmidt said he has had to excuse himself from ”one or two” Apple board meetings involving the iPhone, which he said currently accounts for a ”vast majority” of mobile traffic on Google’s search engine. — Sapa-AP