Google Local Links Threaten Newspapers

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NEW YORK ( -- The much-anticipated public offering for online powerhouse Google took its first step last week as the Mountainview, Calif. company filed initial papers with the Securities and Exchange Commission. Google, the preeminent search tool and popular ad vehicle, is looking to raise $2.7 billion in an auction-style stock offering.

One of the new services that will be scrutinized by potential investors is Google's location-targeting feature. Whatever happens in the market, geo-targeting is one of the services worrying old media companies like newspapers.

Jet Rhys, a likely prime target for a local newpaper ad rep, doesn't know much about the Internet. But the San Diego hair-salon owner now gets 90% of her new customers from a novel Web technology-a technology that takes Google's national play local and threatens to take ad dollars from regional newspapers.

Her customers find out about her shop, also named Jet Rhys, by typing in search terms such as "hair weave" or "haircut" on search engine Google. Because Ms. Rhys has purchased these keywords through Google's new location-targeting service, the salon appears in the Sponsored Links section at the top of a search-results page, whether or not the potential customer types in "San Diego." Google discovers the searcher's location by tracking the Internet protocol address of the computer.

Why would a local retailer benefit from using the World Wide Web? "People go down a street and see five or six salons and can't tell the difference," Ms. Rhys said. "But online they are really attracted to a good-looking Web site."

Advertising on Google pays off for a boutique like hers that caters to an elite clientele that researches high-end products and services through search engines, said Reid Carr, president, Red Door Interactive, which manages Jet Rhys' online presence.

Google's location-targeting features, which were rolled out this month, are part of its AdWords program. (Ms. Rhys had beta-tested the service since December.) The localized AdWords service lets companies customize their keywords to be available to people searching in their region, city or neighborhood. The geo-targeting keyword price is based on bidding, as general AdWords are.

Newspapers shaken
Offline, newspaper executives are shaken by Google's entrance into the local space. Michael Fancher, exec VP-executive editor of the Seattle Times, for which he oversees new media operations, called Google "a very serious competitor" for ad dollars. "We operate Web sites, not just newspapers," he said. He compared newspapers' potential unease about Google to what the industry felt when Microsoft began its ill-fated experiment in online city guides, Sidewalk, in the mid-'90s, but with one crucial difference: Google's local ad service plays off "what it does best," while Microsoft had to struggle to learn how to do editorial content.

One newspaper chain plans to start its own competing product. Christian Hendricks, VP-interactive media for the McClatchy Co., which publishes 12 dailies in markets such as Minneapolis and Raleigh, N.C., said his company was finalizing a localized search ad service with a yellow-pages provider and search-engine company he would not identify. He said that service would launch on a McClatchy daily's Web site by the end of May.

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