In its latest cross-platform ad play, Google on Tuesday announced it has agreed to acquire dMarc Broadcasting, an automated radio advertising media buying technology.
The deal calls for Google to make a $102 million cash payment, as well as contingency payments worth a bit more than $1 billion dollars over the next three years, if product integration, net revenue and advertising inventory targets are met. The acquisition is expected to close in the first quarter.
Google said it plans to integrate dMarc technology into Google AdWords to create a radio ad distribution channel for Google advertisers.
Google is committed to exploring new ways to extend measurable advertising to other forms of media, such as radio," said Tim Armstrong, VP-advertising sales, Google. "With this acquisition, Google will get a talented team and innovative technology in the radio advertising market."
Greg Sterling, an analyst at the Kelsey Group, said in his blog that Google’s latest purchase “points the way to a kind of new integration of online and offline media buying.
Fredrick Marckini, CEO at search engine marketing agency iProspect, agreed. “This speaks strongly about [Google’s] direction and their interest in extending their business model into other forms of media,” Marckini said, adding: “I don’t think you spend $1 billion dollars on something that you don’t have plans to recoup and monetize.”
Google has already had a busy January, starting with its announcement of Google Video, which lets users pay for and download video on demand.
Sterling said TV is another avenue he expected Google to explore this year. “TV is definitely on the radar for Google,” he said in his blog. Last year Google made waves in the print media world by announcing its plan to sell print advertising.
However, in December, BusinessWeek Online reported the results of its own analysis of Google’s pilot program to sell ad space in PC Magazine and Budget Living “indicates that advertisers haven’t warmed up to the program so far.” Eight of 10 of the advertisers that participated told BusinessWeek Online they were “unhappy enough with the results that they say they’re unlikely to do further print advertising with Google.” Only one of the 10 said the ad performed well enough to recoup the initial investment.
Google's announcement is not perceived as a threat, one radio ad executive said. “We see this as another service out there but doing something quite different from what national radio reps are able to offer advertisers,” said Michelle Skettino, VP-corporate marketing for Interep, a major independent advertising and marketing sales rep for radio.
Skettino said she sees the Google play as more of a remnant inventory sales tool. “It’s for advertisers who want the lowest cost possible and buy radio on a commodity-type basis,” she explained. “Our advertisers are trying to use radio in all its capabilities, which entails getting very detailed about your buys and often incorporating promotions with it; and this kind of system just can’t do that. We really don’t see it as any kind of major competition,” she said.
Lauren Rich Fine, research analyst at Merrill Lynch, noted in a research report on Tuesday that “as certain mediums, such as radio, are somewhat beleaguered, the reaction [from the media industry] is likely to be mixed.”
However, Fine said the local aspect of the radio ad platform could be very appealing to Google’s advertiser base. “As a medium that caters largely to local advertisers, we believe this type of platform could be quite appealing to the small- and medium-sized advertisers, a base of advertisers that Google already has amassed.” Fine speculated that Google’s entry could thereby “actually increase demand for radio.”
“At the same time, it could wrestle some control from the stations themselves, which could be met with resistance,” Fine wrote.
Resistance or not, Google continues to forge into new media channels to sell advertising, and some industry watchers say it can do so with what could be considered its biggest asset.
“Their advertiser base creates a market,” Marckini said. “No one ever talks about the 150,000 advertisers that make certain kids of deals possible. The question is only how far will these advertisers follow Google. So far, this ad base has been willing to part with hundreds of millions of dollars for search ads.”