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Google Takes Page From Sunday Newspaper With New ‘Circulars’ Internet Ads

By Brian Womack
October 03, 2011 12:01 AM EDT

Google Inc. (GOOG) is on a quest to make Internet advertising look more like the Sunday paper.

The online-search giant is working with advertisers such as Best Buy Co. and Macy’s Inc. (M) to create Web-based circulars, similar to the ad inserts included in newspapers. The new service will be available starting tomorrow, Mountain View, California-based Google said.

“Retail in general is a large category for us,” Nick Fox, vice president of product management at Google, said in an interview. “They’re trying to understand what the answer is in the digital age to the offline print circular. They’re trying to understand how to get their online visitors into their stores. And this is our answer to that.”

Google, the world’s biggest search engine, is looking for ways to parlay that leadership into new sources of revenue. Search advertising also is increasingly shifting toward using more visual elements, including video and product images, a break from the text-only listings of the past. Almost a third of Google’s search ads now use the newer formats, up from about a quarter at the beginning of the year, Fox said.

Web surfers will find the circular-style advertising, which shows multiple pictures and large type, by clicking on search ads. The service will automatically craft the promotions based on factors such as query topics and the location of users.

More Clicks

Google will grab 76 percent of the U.S. market for search- based ad revenue this year, up from 74 percent in 2010, according to estimates from EMarketer Inc. in New York. Next year, Google may expand to 78 percent, the research firm said.

Another new Google format provides more than one click option on an ad -- for instance, links might go to different products from the same company. This approach increases click- through rates from 15 percent to more than 50 percent, depending on the number of extra links there are in the ad, the company said. Google typically gets paid for the advertising after a user clicks on it.

“It’s becoming a core part of what our advertisers are doing,” Fox said.

The new circular formats also will be available for display ads, such as banner advertising, he said.

Even as it tries to replicate print advertising online, Google isn’t ignoring old-fashioned media. To tout its new ad formats, the company is rolling out a marketing campaign that will include both Internet and print advertising, Fox said.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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