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January 17, 2006
Google is acquiring a radio advertising company, broadening the reach of its ad business.
Google will pay $102 million in cash for DMarc Broadcasting, a Newport Beach, Calif., company that works with radio advertisers.
My quick review of their web site indicates that DMarc can identify demographic/spot market combinations to meet advertiser goals, has some sort of distribution/delivery mechanism, inventory management, and reporting.
The deal calls for Google to make additional cash payments based on product integration, net revenue and advertising inventory targets. Those payments could total $1.13 billion over the next three years, Google said.
Google plans to integrate DMarc technology into its AdWords platform, creating a new radio ad distribution channel for Google advertisers. This may be how they think about television, too.
Kevin Newcomb had some interesting comments about the acquisition. Here are some excerpts that interest me:
While the move may be surprising at first, a deeper look shows Google's platform can potentially be applied to many kinds of media, bringing the same benefits of an auction-based, pay-for-performance model to other channels. It's likely Google believes it can do a few things in the radio business, including making radio advertising more accessible to the "long tail" of advertisers, and making radio advertising more targeted and measurable, Jeff Lanctot, VP of media at Avenue A | Razorfish, said.
"If you consider those benefits, they really aren't search- or Web-specific. Over the next several quarters and years, I think Google will try to take this same approach with newspapers, magazines and TV; they would like to be the marketplace where all media is bought and sold," Lanctot said.
Radio makes sense as a starting point, both for its similarity to search in its historic direct response focus, as well as for its potential ties to Google's local efforts. "Local businesses could turn to Google for a package that includes search listings, radio spots...and eventually TV spots and newspaper ads," Lanctot said.
... "Offline advertisers will ... come to expect detailed reports and accountability. They'll want to know how effective the radio ad was and whether it resulted in new business," Beal said. "The same level of accountability that search marketers have been held to will now apply to traditional advertising..."
Google will need to address the question of who will manage the creative process... A likely scenario is one that gives advertisers a self-service option to choose elements of a radio ad script and then use a partner to record them. A similar approach is taken by SpotRunner, which last week launched a tool that offered a similar service for local spot cable ads.
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