• by Wendy Davis , Staff Writer @wendyndavis, December 5, 2006

Is Google boon or bane to traditional agencies? Maybe a little bit of both, said Martin Sorrell, chairman-CEO of WPP Group. Speaking yesterday at the UBS media conference in New York, Sorrell proposed that Google is a "frienemy" to ad agencies, noting that the search giant wants to work with the agencies' top clients, but at the same time, is competing with agencies by making inroads into print and radio ad sales.

It's not only Madison Avenue that's wondering what to make of Google. Newspapers also have a love-hate relationship with the company--as well as Yahoo, Craigslist and other online-only publishers--though for different reasons.

With newspapers, the most obvious fears are that the Internet companies will eat into their audience and advertising revenue. Consider, this year newspapers garnered around 36% of the local ad market--down from 44% in 2004, according to Borrell Associate estimates. At the same time, online pure-plays like Google and eBay now command 32% of the local ad market, up 17 points from 2004's 15%.

Newspapers also perceive that online companies will build their businesses by leveraging traditional papers' reporting and writing--such as by aggregating headlines a la Google News.

On the other hand, Google and Yahoo can offer newspapers new sources of ad revenue. Yahoo just this week added an eighth newspaper company, Media General, to the roster of publishers it's now serving job ads for, bringing the total to around 200.

Additionally, Google's test to sell print ads in newspapers is reportedly going better than anticipated. In the first three weeks of the test, Google sold all the inventory it had expected to sell in the first three months, James Conaghan, the Newspaper Association of America vice president for business analysis and research, said this week at UBS.

That type of online-only sales effort is exactly what's needed at many papers, Gordon Borrell, CEO of Borrell Associates, added. While many now have dedicated Web ad sales teams, some still simply take their print ads and put them online--a strategy doomed to failure, Borrell said.