Google Radio: Will Audio Ads make money?
I have been "counting-down" Google's impending launch of its radio advertising product with exculsive, in-depth information and insider interviews, since I heard Google CEO Eric Schmidt talk of his vision for location-based delivery of highly targeted and personalized advertising via in-car radios last June, as I put forth in “Google targets GPS-based in-car personalized advertising.”
In “Google multi-billion dollar bets in 2007” last month I noted:
Google’s acquisition of dMarc Broadcasting in January was less costly, and less “sexy,” than the high-profile, high-powered takeover of YouTube. Radio does not have the marketplace cachet of online video. Nevertheless, Google has a lot more riding on its dMarc investment, than the YouTube deal.
Why? Google CEO Eric Schmidt routinely underscores Google’s multi-platform, multi-media worldwide advertising ambitions:
The long-term fantasy is we walk up to you and you give us, say, $10 million and we'll completely allocate it for you across different media and ad types.
In “Google’s ‘1 percent’” I discuss how Schmidt’s multi-million dollar diversified sales reveries are indeed fantasies, to date; Google’s $150 billion market cap is entirely dependent upon online search and associated advertising services (AdWords, AdSense).
Google CEO Eric Schmidt, November 8, 2006, Form 10-Q: Revenues realized through the Google Publications Ads Program, our radio advertising efforts, Google Video and Google Checkout were not material in any of the periods presented.
Why not? Google is golden to date in online search, but will it ever be able to make money doing anything else?
Google Publications Ads
Google has a newspaper ad sales test underway, it is its fourth try at print publications over the past few years. The old saying “three strikes you’re out” apparently does not apply to the 29th most highly valued public company (see “Should Google act as self-promoter?”).
Accolades for Google abound; It has been crowned the best place to work in the U.S. (see “Google: Do you want to work there?”). The Google mystique and its omnipresence on the Web (see “Is Google a public service?” and “Is Google ‘The Internet’?”), however, blind many to Google’s dismal record in its diversification efforts.
In “Google: $48 billion newspaper friend or foe?” I underscore the lackluster results of its fourth time at the print publications bat:
Savvy newspapers are determined to keep their proprietary high-quality advertising accounts far from Google’s grasp. While Google promises to help newspapers sell-out their lower quality inventory to smaller advertisers, it has not yet mastered the SME market for its own (AdWords) account.
In “Google: $31 billion local dilemma” I dissect Google’s lack of traction with small businesses and put forth the uphill battle Google faces with local merchants.
Google Checkout
In “Google Checkout: Free in 2007, still flawed.” I discuss how Google is giving away its much ballyhooed payments tool to merchants and subsidizing consumer use of the service.
I note: “Google is inspired by a mathematical formula; Has Google nevertheless lost its math groundings?”
Google’s Checkout is, in fact, well grounded in Google’s financial raison d’etre: AdWords. From the moment it was announced in June 2006, I have been underscoring Google’s Checkout end-game: “It’s official: Google launches ‘Checkout’ with predatory pricing model aiming to ‘increase advertising spending’”
In “Google Checkout: $20 million AdWords pitch” last month I put forth:
Is Google spending $20 million this quarter to spread holiday cheer to merchants and consumers? NO. Google is investing big-time in the hopes of “locking-in” merchants long-term, as AdWords customers.
Google Video
Google’s $1.65 billion acquisition of YouTube is Google’s hope in video.
In “YouTube vs. MySpace: Is friendly bankable?” and “Why Google wants YouTube independent” I underscore how YouTube finds itself in the same position as MySpace, wildly popular with non-paying users but not conducive to high-quality, high-paying brand marketing:
With “Sexxy Sangria” at MySpace and “hot lesbian kissers” at YouTube, News Corp. and Google will need to make the case for why marketing in “unprotected areas” of social networking properties is advantageous, if they hope to command more than “junk" CPMs based on their hundreds of millions of friends and video sharers.
Google on the Radio: Audio Ads
In announcing Google's acquisition of dMarc, Tim Armstrong, vice president of Advertising Sales, said:
Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media. We anticipate that this acquisition will bring new ad dollars and accountability to radio by combining Google’s expansive network of advertisers with dMarc’s talented team and innovative radio advertising technology. We look forward to working together to continue to grow and improve the ecosystem of the radio industry.
Despite Google’s claims of bringing AdWords style “targeted, measurable advertising” to radio, the Google-dMarc Audio Ads system will bare little relation to its AdWords money making machine.
Google-dMarc operates in a “legacy” advertising business, on the industry’s terms, not Google’s. Google and dMarc in announcing the acqusition:
GOOGLE: dMarc connects advertisers directly to radio stations through its automated advertising platform. The platform simplifies the sales process, scheduling, delivery and reporting of radio advertising, enabling advertisers to more efficiently purchase and track their campaigns. For broadcasters, dMarc's technology automatically schedules and places advertising, helping to increase revenue and decrease the costs associated with processing advertisements.
Google plans to integrate dMarc technology into the Google AdWords platform, creating a new radio ad distribution channel for Google advertisers.
DMARC: We are bringing together complementary visions of simplicity, efficiency, and accountability to the radio advertising process.
The Google dMarc announcement does not talk of Google revolutionizing the radio advertising industry, and neither does the Google dMarc radio advertising sales pitch underway in the field.
Below is an EXCLUSIVE picture of how Google dMarc positions Audio Ads to the radio industry. Google is not selling a Google radio revolution to radio professionals; It can’t, if it wants to maintain its credibility.
