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Google To Buy Radio Advertising Firm
M3rk1n_Muffl3y writes "According to the BBC Google is buying US radio advertising firm dMarc Broadcasting for an upfront payment of $102m (£58m), rising to a possible $1.14bn by 2009. Interestingly it comes soon after Robert X. Cringely's prediction that Google will soon expand into targetted TV adverts. It looks we are finally beginning to see Google's transition to mainstream media."
I had to stop advertising on the radio last year -- it was declining returns. On my last (contractually required) run of ads, I paid over US$800 per customer earned. Considering I only profited about US$100 per year off of my average customer, radio was a dead form of advertising. This is on a 50,000 watt station in a major metropolitan area. My neighbors in business who kept their ads running this year only do so out of contractual obligation (5 year contracts offered almost 50% discounts). Almost everyone else still advertising on that station is the next batch of businesses ready to fail. The ad-sales people are that convincing.
Google is probably stupid to get into this business. I don't listen to the radio anymore, and I doubt many kids half my age do anymore either -- the iPod is that strong. The frequencies used for public broadcast radio seem wasted to me -- I'd rather see them deregulated and offered for another WiFi band. More WiFi means more access to streamed content as I need it. Hell, I stream MP3s to my PDA already via my Bluetooth-enabled EDGE-bandwidth cell phone (150kbps low latency all over Chicagoland).
So what does Google know that I don't? I'm sure a lot, but I can't see them being right in this situation. Maybe they're ahead of where radio will be in 10 years -- is it possible we'll see the large radio cartels end their regime, replaced with smaller stations all over the place? Could Google perform real time contextual advertising on 5000 watt stations, targeting listenes better?
Google's advertising engines don't work well on pages with too much variety it content. I see 50,000 watt stations having the same problem -- they're targeting too many different customers (and seemingly targeting them with the same generic content on 8 different stations).
How do Google's ads translate to those without sight? Radio only works as an audio mechanism, so Google's visible advertising campaign won't work here, either.
I can see Google's future in buying a company like Clear Channel -- they own most of the billboard advertising in Chicagoland, and they are also advertising in nightclub bathrooms and on the doors of toilets in office buildings. Google can find a way to digitize these ads. Is it possible that dMarc Broadcasting does more than radio (like Clear Channel)?
If it is just radio ads, I don't see it. Wasted bandwidth for a product that can't keep up with what the current customer base needs.
I was listening to an episode of This Week in Tech the other day and Leo kept mentioning someone's theory that Google's true goal is to get AdSense everywhere. This move just seems to back up that claim.
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"Google's transition to mainstream media"
No, we are seeing Google's transition to ALL media.
Think what you will of such things.
My only thought is they are trying to diversify and bring some new experienced talent into their business. Since they are ad driven, this will probably lend itself to pushing into differnet markets. i don't really see where it is going, but i imagine they have other plans for this acquisiton other than radio broadcasting...
Only thing i can think of is voice ads in podcasts...
It looks like google opened op gtalk to the other public jabber networks. It's possible to talk server-to-server now!
afaik the Bitlbee team got the heads up.Actually, you make a very valid point (maybe without realizing it).
The radio ad-sales people are some of the best I've ever met -- in every market I've been in. Is Google buying up this aggressive sales company in order to accumulate the best sales minds and personalities to use to sell AdWords and other tools to advertisers?
If you can't hire them away, buy their bosses out.
"Hell, I stream MP3s to my PDA already via my Bluetooth-enabled EDGE-bandwidth cell phone (150kbps low latency all over Chicagoland)."
Clearly, you're in touch with the same reality that all other US citizens inhabit.
Granted, not as many people listen to radio nowdays. But it's not completely dead. It's still everywhere, and everyone has access to it. Believe it or not, even having a broadband connection at home puts you in the minority, buddy.
Han shot first.
It's still everywhere, and everyone has access to it. Believe it or not, even having a broadband connection at home puts you in the minority, buddy.
Of course I am. I don't want to get into my usual anti-copyright debate today, but copyright gives the content cartels control of the media schemes use to publish content -- keeping streaming companies from being as competitive as the radio cartel.
If streamers had the ability to offer content as cheap as the radio can (in terms of paying off the content thugs), you'd better believe we'd have lobbyists trying to shut radio down and bring in more wireless bandwidth.
I read TFA, but im still not clear on how they plan on using the radio to target listeners in a way which would be different from the current advertising schemes. Obviously, when you search on google, they can use your query to deliver targeted relevant advertising results. However, with radio, the only information they have is that a quantity of people are listening to a specific frequency.
Clearly, I must be missing something. Right?
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It gains the general mistrust and status of any other huge corporation. I love google, it's my gateway to the internet. I've always joked that Google==Research when doing assignments. I find it exciting and I really am happy for those involved in the immense success of Google, but on the other hand I can't help thinking that maybe it's getting too big now.
is my guess to the main reason, besides diversification of their services as to why they are doing this. podcasting is going to be here for awhile, it won't remain ad-free for very long. so they are getting into the market...
To suggest that the internet isn't mainstream only means that someone is showing their age.
Watching the Nightly News is simply a chance for me to discuss the day's events with other people. I've already read all the 'big' stories of the day by 6/7 o'clock and I usually get more details to boot.
The newspaper does a bit better, as they can dedicate more space to details and they have much more local information, but even then, I'd still rather scan two or three online articles to get a variety of viewpoints.
Because of the internet, I get a much better idea of what's really going on.
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Google tried getting into the glossy advertising business and didn't do so well.Magazines are more than willing to sell advert space to Google, but if you RTFA I linked, few of the advertisers are finding it to be worth their money.
I suspect it is a matter of finding the right format before this takes off. Maybe Google needs to group complementary products together, or simply put fewer small ads per page.
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While I agree that iPods and other personal media players are becoming the norm, I'm 18 and I strongly disagree with the opinion that radio is becoming a dead medium. While I listen to my MiniDisc player at the gym, on the bus, etc, I still listen primarily to the radio while driving to and from work every day. Apart from the music my favorite station plays, I also find invaluable the traffic and weather reports, news, concert info and also the contests they offer. Car radios are basically the only ones I use, but when in a car (especially alone,) the radio is still an excellent broadcast medium. Many radio stations are now allowing listeners online through their websites in real time, and I believe this only enhances their listener base. Google must have some faith in this, or they wouldn't be investing with that amount of money.
Google ads sandwiched by pay-to-play music and infotainment talk radio, sounds like a bad business model to me. But since they have tons of money to spend, what do they have to lose?
PS anything that says 'targeted' immediately brings up privacy concerns.
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Anyone who spends enough money on Google ads can tell you the first name of their sales rep at Google. You know, the person who helps you fine tune for AdSense keywords, and offers you swell deals. How about if that person, who is already also helping you with localized ad placement through AdSense, could guarantee you some airtime in your local market, as well? Or, how about making sure that people sitting in their cubes at work listening to the radio and typing in some regionally interesting search term ("pizza delivery Sterling, VA") could be shown normal AdSense ads that, for the window of time that Joe's Pizza is running broadcast ads in that ZIP code, give extra weight to his AdSense ads for localized search?
Come on, folks, there's more to this than meets the eye. And don't forget the side-band stuff that handles traditional pager traffic, too. That can be used for all sorts of exotic ad-related things.
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Actually dMarc is actually a good fit for Google. What dMarc's RevenueSuite does for commercial broadcasters is offer an automated way to fill unsold inventory. At the end of the day the Sales office at a radio station will close the ad logs, and the RevenueSuite software will schedule their client's ads into any unsold spaces in the logs.
There's no work for the station staff, and everyone makes a few extra bucks.
That's really not dissimilar to what Adsense does.
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Also a good point to note, is that with the advent of Satellite radio with no commercials, who's going to put up with radio for that much longer. If you listen to the radio more than 1 hour per day, it's probably worth it. At $15 per month, it comes out to $0.50 per day. I think that most people would gladly eat that cost for the thought of radio without commercials. I don't listen to the radio, but the reasons I stopped is because there was too many commercials, songs were repeated too much, and DJs were just as bad as the commercials. I think that Satellite radio has cleared up every reason why I don't listen to radio, and I am thinking of getting one. I wonder when the same will happen with TV. How much a month would you pay for advertisement free TV?
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
I agree. The best ad-sellers come from radio.
I disagree with the idea that radio is dead. Talk radio in the Boston Metro area is stronger than ever, and there are two stations in particular that get a decent penny for ad minutes (AM 1060, news and traffic, and AM 850, sports talk.)
Although, local radio stations are all running their own ads taking a not-so-subtle jab at satellite radio...
2 Words. "Educational Programming" Maybe then, the average person wouldn't be so oblivious to the world around them.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
Before continuing I should note that I was one of those who (incorrectly) predicted Amazon.Com's demise. Amazon was (is?) carrying $2 billion in junk bond debt. I could not see how they could ever crawl out of that hole. Clearly I was wrong. Looking at Amazon now I see four things:
A direct retailer of books, electronics and other products.
A software company that sells its software and infrastructure to support other vendors retailing.
An internet infrastructure company that can sell time on its computer network "farms" and bandwidth pipes.
A huge "bricks and mortar" distribution chain for books and other products. This distribution chain can also be "rented" in part to support other vendors.
When you compare Amazon and Google, you can see how weak Google really is. While Amazon is very much a software company, Google is rapidly becoming nothing more than an advertising/media company. However, the problem that Google has is that their business model is easily subject to attack by competitors. While Amazon has a difficult to replicate business because of the cost of it's infrastructure (software, internet and bricks and mortar distribution) Google pretty much has one thing: it's search engine. The search engine is under attack by Amazon (with their A9 search engine) and Microsoft, among others. The only real defense Google has is slightly better results and force of habbit (I use Google because I'm used to using Google). Right now Google has a big pool of cash from the stock market. But they remain vulnerable to competitors and they have no other revinue stream to fall back on.
Google seems to be attempting to take their pool of cash and diversify deeper into media and advertising. Presumably the objective is to give them a revinue stream like Amazon's, that cannot be easily attacked. But this evolution takes Google farther from being the leading edge technology software company that many Googlistas still seem to think they are.
Having been very wrong about Amazon, I fear making any predictions about Google's future. But it is tempting to say that they are following an Internet model where everything happens faster. In their case the rise to bloated egos beleiving their own press ("we're all brilliant") to business decline as their revinue growth stagnates and their attempt at expansion gets mired in the difficulty of expanding into advertising and media.
Chicagoland radio is horrible, and getting worse. Thankfully, I only have to work in that area, I commute from a good distance away where there are a handful of decent, small, locally owned radio stations worth listening to. I can understand why you'd pull your advertising from the Chicagoland market... People like me would NEVER hear it.
Google is probably buying this corp for their contacts and expertise in advertising outside of the "virtual" arena. Makes a bit of sense, really. Why start from the ground and build up, when you can afford to buy someone/some company already established in the industry?
What will Google do with this new talent/resouce? Couldn't even begin to speculate. Maybe sell beagles on the black market, or something.
Also a good point to note, is that with the advent of Satellite radio with no commercials, who's going to put up with radio for that much longer.
,particularly if they're already paying Howard Stern millions upon millions. You don't think other radio personalities won't want a piece of the pie ?
Exactly how much longer do you think Satellite radio will be commercial free? Cable started out the same way and now the only channels that are any different than over-the-air channels are the pure premium channels.
Satellite radio will surely go to this model
Trust me, it's only a matter of time.
-- You see, there would be these conclusions that you could jump to
Maybe, just maybe they're hopping they can use the radio stations for very wi-fi.
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I am betting that Google plans to use some secret voice recognition technology and that, for example, if Howard Stern is talking about breasts, then a Hooters add may appear during the next commercial. If a gardening show is on, then lawn care products may appear. This is obvious different from advertising today where an ad is set months before. Google's servers would store the ads and decide when they are played. My feeling is that Google will test on radio first and then quickly roll this out on TV. Advertising will become more relevant. No more tampon commercials during 24!
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