LONDON: The UK's national newspapers should adopt Google's online advertising model rather than focus on free giveaways if they are to boost revenues, warns professional services giant Ernst & Young.

A recent report praises the number one search titan's pay-per-click advertising system which, E&Y argues, is preferable to the cost-per-thousand approach adopted by nearly all the UK's national newspaper websites.

The report posits that had the newspapers used a Google-type approach (and generated the same income per unique user), their online ad revenues could have reached between £120 million ($238m; €154m) and £250m each in 2007.

Under the current model, however, the report estimates that they generated an average of between £15m and £20m in ad revenues, while Google earned £1.3 billion in the UK alone.

The report further suggests that free giveaways, such as CDS and DVDs, have failed to attract younger readers on a regular basis, with around half of those in the 15–44 age group going online when seeking news and information.

Says E&Y media analyst Luca Mastrodonato: "This gap is an opportunity for newspapers as it shows that monetising online services in the UK is possible.

"But to do so, newspapers need to move away from the volume-based cost-per-million model towards more interactive ad models such as cost-per-click or cost-per-lead."

Data sourced from BrandRepublic (UK); additional content by WARC staff