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Search engine aims to help papers

June 12, 2008|From the Associated Press

SAN FRANCISCO — Google Inc. Chief Executive Eric Schmidt said Wednesday that the Internet search leader hoped its recently acquired advertising service DoubleClick would aid newspapers as they struggled to corral more online revenue.

"It's a huge moral imperative to help here," Schmidt said at an event hosted in San Francisco by Syracuse University's S.I. 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 wouldn't be enough to restore the hefty profit margins that newspaper publishers historically have enjoyed from print advertising.

Mountain View, Calif.-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 they distribute online creates more opportunities for the company to make money from advertising links that appear daily on millions of Web pages.

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 U.S. newspaper industry's overall ad revenue fell by 8% to $45.4 billion, according to the Newspaper Assn. of America.

In contrast, Google's revenue last year rose 56% to $16.6 billion, widening the company's lead as the Internet's most profitable business.

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