July 27, 2006 4:00 AM PDT
Google rides the radio waves
Google-powered ads, which have become a mainstay on Web sites, are now being played on at least one radio station in Detroit. And like so many other Motor City radio products, it won't be long before they go global. Google Chief Executive Eric Schmidt said in a conference call with analysts last week that the search giant plans to make its radio-ad business generally available within three months.
"We are in the process of introducing AdSense for radio, which is essentially the integration of the DMarc console and management tools into our advertising system. There are a number of very interesting deals being negotiated," Schmidt said. It's a typically ambitious effort for Google, which got into the radio business in January with its $102 million acquisition of DMarc Broadcasting, a company that had an automated radio advertising system.
Greater Media Philadelphia
If Google radio ads actually catch on, they could have significant implications for the way radio ads are sold. That could be a good thing for an industry that saw April revenues, for example, drop 5 percent from a year ago, according to the Radio Advertising Bureau trade association.
"I think DMarc has an opportunity for us to connect with advertisers we don't normally interact with," said John Fullam, vice president and market manager for Greater Media Philadelphia who said this week that Google ads were already being tested on Greater Media radio stations in Detroit. "It's big for radio."
So why the excitement? DMarc automates the process of buying ads, placing them in time slots and tracking them, which is usually done by ad agencies over the phone, experts said. Automation could lead to efficiency, and that means lower prices for advertisers while bringing in more sales for the radio stations.
The Google-DMarc system would be a big change from the current ad-buying system, where ad salespeople establish personal relationships with radio stations, Fullam said. Advertisers could better quantify how well an ad campaign is doing and modify the ads quickly depending on the response rate from listeners, he said.
"It gives advertisers enormous capabilities at the touch of a finger, capabilities that have never existed before for advertisers," Fullam said. "Creating a whole new advertising base and delivering more measurable results is extremely encouraging for advertisers and radio."
More than half of the advertisers DMarc has talked to have never been called on by a radio rep, he said. "That's untapped potential," Fullam added. In addition, Google's DMarc can help radio stations sell ads for airtime that would otherwise go wasted, known as unsold or "remnant" inventory.
Of course, there's no guarantee Google's radio project will take off. Indeed, skeptics say Google's print advertising project has so far had mixed results and, for all its interesting ideas, the Silicon Valley company is still almost entirely dependent on online advertising. While that's not much of a problem right now--revenue in Google's most recent quarter was $2.5 billion, nearly double what it was a year ago--it's clear the search company's executives are looking long and hard for ways to diversify the way the money comes in.
There are questions about the value Google will be able to provide to more-sophisticated advertisers as opposed to what they get with traditional ad buyers, said Maribeth Papuga, senior vice president of local broadcast for media services firm MediaVest.
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