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The search marketing and advertising company announced at SES 2005 a newspaper-focused version of its AdSonar Exchange product.

In business, finding a way to cut out the middleman usually means a better deal for sellers and buyers. In the business of online contextual advertising, the middlemen have big online names: Google, Yahoo, and soon joining them will be MSN and Ask Jeeves, both offering keyword ad programs.

Newspapers have traditionally made money through advertising. Their readership has been falling as long-time and potential newspaper readers increasingly turn to other media. First it was the dedicated cable news channels like CNN; now it's the Internet, where news organizations, search engines, and RSS aggregators offer the immediacy of instant access to breaking news.

Losing those readers means a drop in circulation, and that drives down what newspapers can charge for ads. The logical course of action indicates newspapers, the vast majority of which have related web sites, follow those users online and try to retain them through either specific local content or dedicated niche issue coverage.

Making ads part of an online newspaper site would mean dealing with a Google or a Yahoo. As the Wall Street Journal points out, papers have begun viewing these companies as competitors. Why give a competitor more money than they already earn?

One option offered by New York-based Quigo lets newspapers take auction based, pay per click (PPC) advertising in-house with a privately-branded solution called AdSonar Exchange. Quigo observes in a press release that their solution lets papers concentrate on local advertisers and own the ad inventory and design.

It sounds like a sensible solution, and Quigo already lists Newsday and Scripps Howard among its clients. A newspaper can price a local solution more competitively than a search engine's ad service. For local advertisers, a newspaper site makes a lot more sense for targeting a demographic in a given region like a city or county.

With deals like Quigo's available, maybe the newspaper business isn't quite dead yet.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.