AOL, Google Partnership To Explore Selling TV, Print Ads

by Wendy Davis, Joe Mandese, Dec 22, 2005, 8:00 AM

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Google's deal to acquire a 5 percent stake in AOL for $1 billion is more than just an online play. As part of the deal, both companies plan to explore the sales of so-called offline media like TV and print, Time Warner Chairman-CEO Richard Parsons told his company's staff in an employee memo circulated Wednesday as part of a restructuring of Time Warner's senior management team (see related story in today's edition).

"With this agreement, AOL's sales force will now be able to sell all types of online advertising - including paid search - and we'll explore expanding the partnership into selling television and print advertising," Parsons wrote in the staff memo, which surfaced Wednesday in a report by the Financial Times.

The disclosure comes just one day after Google executives disclosed plans to MediaDailyNews (MDN Dec. 21) that it was entering "phase two" of its test of an offline media buying and reselling test that so far has been limited to extending Google's advertising reach via magazine ad space, but that the powerful online search engine also is weighing moves into the buying and re-selling of other media. In recent weeks, Google has begun posting help wanted ads to recruit experienced traditional agency media buyers.

All of those moves have sent ripples up and down Madison Avenue, and senior agency executives have been expressing increasing angst that Google may be encroaching on their world. Google Head of Agencies Chris LaSala said the moves, including the hiring of traditional media buyers, are actually part of Google's outreach to Madison Avenue, and are intended to come up with ways of servicing agencies better in hopes of getting more of their business.

Meanwhile, Time Warner's Parsons disclosed that Google's strategic alliance with Time Warner would help make AOL "an even more effective player" in the online ad business. "With this agreement, AOL's sales force will now be able to sell all types of online advertising - including paid search," he said.

A big new Google advertiser, coincidentally, may be AOL. As part of the deal, Google is giving AOL an estimated $300 million in "marketing credits" to promote its content on Google, which at least one knowledgeable observer believes may be used for more than just paid search placements on Google's sites. "Google could be looking to test image ads on certain of Google's properties, which is a bit surprising," said Merrill Lynch analyst Lauren Rich Fine in a note sent to investors Thursday morning.

"However, Google is not going to compromise the integrity of its general and paid search results, its primary area of distinction," she speculated, adding, "One could say that Google is redrawing the line of distinction between itself and its competitors and is trying to get as close as possible to it without crossing it."

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