Google is best known for its ability to monetize intangible services, mainly for connecting people with information on the Internet. But when Google leapt into offline media, it entered a world of sometimes clunky legacy systems that bear little resemblance to Google’s streamlined digital platforms.
The inefficiency of the systems associated with placing newspaper ads may have been a reason the firm ditched its print newspaper ad program last week. But Google appears dedicated to its radio ad business, despite the old media hurdles involved. For one, convincing radio stations to adopt its programming platform seems to be a challenge.
Google bought dMarc Broadcasting in 2006 to move into terrestrial radio advertising. Through the acquisition, it obtained technologies for radio programming and advertising that are provided as hardware, sold by resellers, and shipped just like computer hard drives or processors.
The newspaper industry’s gloomy outlook likely contributed to Google’s decision to shut down the print program. Yet, the radio business isn’t exactly healthy, either. The Radio Advertising Bureau reported year-over-year drops in radio revenue of around 20 percent in November, and continued declines are expected in 2009.
“The radio industry is bordering on a little bit of desperation at the moment,” said Brad Saul, president of radio network and syndication firm Matrix Media, and a radio industry consultant. Saul and others question the viability of Google’s Audio Ads program for a number of reasons. One is the ability to provide sufficient inventory to advertisers.
“Part of the challenge is if you give up control of your inventory…that’s kind of a scary thing,” said Saul.
In the early days, Google experienced problems obtaining enough radio inventory. In spring 2007, the company formed relationships with Clear Channel Radio and Emmis Communications, both of which provide ad inventory for the young program. But by then, dMarc’s founders had left the firm, fomenting concern about the future success of the audio ads program.
There are 1,600 radio stations in Google’s network, according to the company. However, the inventory tends to be the stuff radio firms cannot sell themselves, mainly remnant, late-night ad slots.
In addition to the deals with Clear Channel and Emmis, Google appears to be banking on distribution of the automation platform, which it recently updated, to bring more inventory. And the company has used some creative ways to promote the system. “They offered us the latest software for free,” said the chief engineer for several radio stations, who spoke on condition of anonymity.
Although he has not installed the newest version of the technology, three years ago his company installed an updated version of the dMarc system they were already using, mainly because Google offered them a great deal. Essentially, Google gave them the upgrade in exchange for a certain number of ad slots per day for a three-year period, providing guaranteed inventory for the fledgling audio network. “I think they were trying to get their name out there at the time,” he said. Today, the radio firm has fulfilled its barter agreement, but still provides Google with around 500 spots per day on four stations.
The recession could help Google score more inventory, said Jennifer Lane, publisher of Audio4cast, a site covering the digital audio business. “In this climate, Google is not going to have a problem getting a supply of ad inventory,” she said, because it may be more difficult to sell at rate card prices. “The question is whether or not they’ll be able to sell it.”
Though Google will not reveal the number of advertisers using its offline programs, the ability to attract advertisers may be a challenge. “I don’t know anybody who’s bought it,” said Saul.
Anthony Hamawy, president of Cruise.com, a former Google Print Ads advertiser who also uses the firm’s television ad service, has tested the ads, but wasn’t pleased with the results. “Radio is extremely difficult for us to track,” he said. His firm relies on unique 1-800 numbers to track print ad results. Google Audio Ads does offer call tracking as a means of measurement; the company allows advertisers to determine cost per call by tracking call volume and duration according to geographic location, for instance.
The promise Google has made to its print, radio, and TV partners is to bring new advertisers — mainly the ones already using Google’s Web ad offerings — to old media. But each medium has its own unique properties, and advertisers don’t necessarily find the same value in radio, TV, or print that they do online. For example, Hamawy especially appreciated Google’s ability to place ads in small, local papers efficiently. However, unlike the Web or local newspapers that might reach only residents of a particular zip code or small town, radio stations have a relatively broader reach.
“It’s impossible for radio ads to have the ability to do what is the key feature of AdWords,” said Kurt Hanson, publisher of Radio and Internet Newsletter and CEO of AccuRadio.
Still, in comparison to average radio CPM rates, advertisers may be getting a good bang for their buck. While an average CPM rate may be $30, the same spot might sell for as little as $3.50 through Google’s auction system.
“If we don’t use the Google stuff, normally we put national [Public Service Announcements] in there,” said the radio engineer. “It’s advantageous for us [to run Google ads].”
Google lists several audio ad “success stories” on its site for firms including Gifts.com, GolfNow, and Motor Trend Auto Shows. Yet, Google still does a lot of promotion and education to get advertisers interested. In October 2007, the firm offered advertisers $2,000 toward future radio ads when they spent a minimum of $1,000 on an individual campaign. And early next month the firm is holding “AudioCast 2009” in its New York offices, an event for “advertisers, agencies, broadcasters, and forward-looking innovators who are committed to creating a sustainable radio business.”