Exploding advertising

Here are a few news items that reveal the real change occurring to newspapers and it’s not in the newsroom: It’s in the advertising department.

But note well that these changes also have a big potential impact on Google if it doesn’t pay attention (and Google is getting awfully big for its britches).

Quigo announced deals with 130 newspapers to open up ad avails on their sites for auctions…

…turning each site into an auction marketplace where ad placement is up for grabs….

Michael Yavonditte, CEO of Quigo, said, “We’re beginning to see a radical shift in the way newspapers are assessing the competitive landscape of content and online advertising. They’ve quickly grasped the idea that it is the newspapers, not the ad network, who should own the advertiser base. Our auction-style pay-per-click is a great way for the newspapers to become relevant to their local advertisers who have been buying keywords from Google and Overture for years now.”

In short: Newspapers will compete with Google’s AdSense and try to grab the auctioned pay-per-click advertising that is going there. Newspapers are trying to hold onto local in this new ad universe. They are also hoping to grab new advertisers at a lower cost: The bet in hyperlocal is that the small advertisers who could never afford newspapers could now take advantage of ads that are affordable because they are highly targeted and have next-to-no cost of sale and production. Will these ads replace revenue lost in classified? Will advertisers leave print retail for online hypertargeting? What will the total revenue of papers look like in this new world? Who knows?

Separately, read Fred Wilson on his investment, along with The New York Times Company’s [see my Times full-disclosure here] in job search site Indeed.

So, why did we make this investment, beyond the fact that this was one of the sectors that has always interested us?

For one, we are big believers in the fragmentation of the Internet. We don’t believe that there are going to be several large “destinations” where employers will go to list their jobs in the coming years.

I’ve been beating that drum for well more than a year now: With search and tagging, buyers and sellers can be anywhere on the internet and can be found and put together; when you bring organization to our new, distributed world, the need for centralized marketplaces fades. (More on this, probably later today.)

We are a believer in what some of us are calling “sell side advertising”. That’s the idea that advertisers will put their ads on the Internet for anyone to find and display. And if the advertiser gets clicks back, they will pay for the clicks.

Been banging that drum, too.

Job search is one of the first places that sell-side advertising is going to happen because most employers already put the jobs they are currently looking to fill on their web sites. Those jobs are the “sell side” ads. Indeed and others are crawling the Internet, grabbing those “ads” and displaying them.

For newspapers, it’s already clear that the classified marketplace is being replaced. But this also has big mplications for Google. Last drumbeat: I’ve been arguing that specialized search engines — organizing and taking advantage of the distributed world via tagging structure — will do a better job than Google in their areas (perhaps even riding on top of a Google API).