Google Audio Nabs Prime Ad Space at Clear Channel

Portal Will Sell Radio Ads at 675 Stations

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NEW YORK (AdAge.com) -- After a year of negotiations, Google Audio finally closed its sought-after deal with Clear Channel, giving the search behemoth access to ad inventory at the radio giant's 675 stations, inventory that is, both companies stress, not remnant.
John Hogan, CEO of Clear Channel Radio
John Hogan, CEO of Clear Channel Radio

"We've included highly attractive beachfront property radio stations," said John Hogan, CEO of Clear Channel Radio, "and all days and all dayparts. Advertisers that will be accessing our radio stations via Google will have, what we think, is a very attractive group of stations and markets to choose from."

Five percent of inventory
Google will get just less than 5% of Clear Channel Radio's inventory to sell -- although it's worth noting Google will not get 5% at every station, a percentage that varies by station and daypart; at top-performing stations Google will receive less than 5% of the available ad inventory, while at under-performers it will recieve more than 5%. Most importantly for Google, the ad inventory isn't remnant, which is inventory that remains unsold until the last minute.

"It's a smaller percentage of the high-demand stations and a slightly larger percentage of the stations with more normal demand," a Clear Channel spokeswoman said. "At a station like Z100 [in New York] a lot of inventory is already spoken for. But it's important that they did find pieces of those high-demand properties to put into this inventory."

When Google first approached Clear Channel a few months after its January 2006 acquisition of dMarc, a radio systems company to try to snag some of the radio giant's advertising inventory, Clear Channel was unimpressed. But after a year of monthly, and sometimes daily, discussions between the companies, a deal evolved that worked for both.

For Clear Channel execs, the deal is seen as a way for it to hire one of the better sales reps. Mr. Hogan is sending a letter to existing advertising clients today to explain the deal to them. He said he will tell them the same thing he's telling employees: "This deal is all about us making radio accessible to more new advertisers. ... We'll put the power of our AM/FM radio stations to work for what has been, heretofore, a difficult class of advertiser to engage. And doing it with what is arguably the hottest sales representation organization in the world."

Guaranteed premium inventory
The deal adds another 675 stations to the 900 Google Audio has already signed up. "It takes our station count about 1,600 stations with guaranteed premium inventory," said Drew Hilles, director of sales at Google Audio.

Advertisers will be able to target by market, format and demo but will not be able to target by station. The deal is for 30-second spots only, something Clear Channel's been pushing in favor of 60-second ads, especially on a national basis.

So far, reactions from radio buyers were mixed, with some not sure how it will affect their business relationship with Clear Channel and a few expressing disappointment that the radio company inked the deal. (There is some worry, on behalf of buyers, about commoditizing the medium.) All, including Clear Channel, agree that the deal will service smaller, new-to-radio advertisers and won't likely have an impact on the way national brand advertisers buy the medium, because they need to buy certain percentages during prime dayparts or stations, which are not guaranteed to be always available through Google Audio.

"We're expecting to see alliances between different companies," said Natalie Swed Stone, U.S. director-national radio at media agency OMD. Kathy Crawford, president of local broadcast at MindShare, said she was "disappointed in Clear Channel."

Not using dMarc
Clear Channel is not using dMarc's automation systems, having already invested in its own inventory and yield-management system, called Viero, which Google's front end will connect to, Mr. Hogan said. Clear Channel is marketing Viero to other broadcasters and the company envisions its ability to efficiently plug into Google's sales system will be a selling point.

(An automation system is the software and hardware that run radio's on- and off-air operations. Originally, stations were required to use dMarc's automation systems to plug into Google's Audio sales platform, but Google has since dropped that requirement.)

Clear Channel will also offer up its Creative Services group to help new advertisers craft their audio creative. Google already has a review process for creative and a marketplace that connects marketers and production companies.

One of Google Audio's biggest benefits for radio could come down the road, should high-definition radio take off as the industry hopes. In an interview two months ago, executives at dMarc talked about the system's potential once HD creates three times the amount of channels in a media sector that isn't growing as a whole. According to figures from Universal McCann's Bob Coen, the almost $20 billion radio industry is only expected to grow 1.6% in 2007.
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