Unlikely bedfellows? Not necessarily, according to RBC Capital Markets analyst David Bank, who says there are several reasons to suggest Google might be interested in acquiring more non-remnant radio inventory.
Automated sale of remnant ads
Right now, through Google's year-ago acquisition of dMarc, a radio systems company, it has been able to create an automated way to sell what is mostly remnant radio inventory, which remains unsold until the last minute. But, noted Mr. Bank, Google Audio is making several high-profile hires in the radio sales field in major radio markets. Now why, if Google Audio's selling of remnant ad time is so automated, would there need to be so many high-priced radio ad sales folks?
"We believe there's a reasonable chance Google Audio is establishing critical mass in anticipation of a major acquisition of prime inventory. ... Given [Clear Channel's] current exploration of strategic alternatives, we could see this playing out potentially through Google making a modest investment in CCU [the radio giant's stock symbol] to help secure access to inventory," he writes.
Clear Channel a week ago announced its intention to explore strategic alternatives, in the face of a weak stock price. Mr. Bank also noted that Clear Channel has been the most innovative in terms of its sales strategy and technology. For example, Clear Channel spearheaded the industry's move to cut commercial time through its Less is More initiative.
Preparing for local search?
It also makes sense that Google might want to beef up its local sales staff in anticipation of capitalizing on one of the biggest untapped opportunities in online advertising: local search. Indeed, Google is also experimenting with automating advertising in local papers. One scenario: The private equity groups that are busily snapping up local media -- newspapers and radio -- perhaps sniff this trend and could, after gaining critical mass, turn around and sell that local audience to Google.
Only time will tell. But as Mr. Bank said, a Google deal with Clear Channel "would have the potential to be very good for CCU and very bad for everyone else in the near term."