GOOGLE COULD INFLUENCE HD RADIO

DMarc Ad-Sales Efforts Marry Well With Expanded Choices

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NEW YORK (AdAge.com) -- The emergence of HD digital radio could bring Google-owned dMarc Broadcasting into the radio fold in a much bigger way, predicted Bob Struble, CEO of iBiquity Digital Corp., the company behind HD radio technology. He made his bet yesterday during a panel examining the future of the medium.
Bob Struble

Mr. Struble is the force behind HD digital radio, which vastly expands the number of format choices available in each market because stations can digitally “multicast” a second signal.

“Google got into radio because they believe with this technology they can bring their business model into the radio space,” Mr. Struble said. “You’ve got a whole new set of stations coming on with these multicast channels, and the radio guys are probably not initially going to double or triple the size of their sales forces to sell the new inventory. ... So you get a system like [dMarc’s] where a national advertiser can buy any market, any place, any format they want in one place, automatically and with unbelievable accountability because it’s all tracked and reported [electronically], and that has the potential to really move the needle quite significantly.”

Some disagreement
The panel, sponsored by the International Radio and Television Society, was a mix of satellite and terrestrial sales executives -- and one media buyer -- talking about the change the industry faces. Several disagreed with the claim that the Google-dMarc model would take the radio industry by storm.

“The dMarc model is interesting ... and it definitely has the potential to become a viable medium to buy last-minute inventory,” said Matt Feinberg, senior VP-radio at Zenith Media, “but from a logistics standpoint we’re planning three months to a year in advance, crafting a media plan.”

DMarc technology lets advertisers buy and insert radio advertising directly. It doesn’t own any stations but has composed a 500-station media network. A common criticism of the company is much of the ad inventory stations make available for purchase through dMarc is remnant space -- which means it’s not guaranteed to be available.

“That model might not be right for the kind of clients who are out at major agencies,” said Rich Lobel, exec VP, CBS Radio Integrated Solutions.

Struble a booster
“I’ll take the bet,” said Mr. Struble, though he said dMarc might not make inroads in its current model. “AM and FM always gets hammered on accountability. Did the ads actually run? You could think of dMarc as a way to automate the back office in a way we haven’t had in this industry to a level clients would appreciate. I think their model will evolve to accommodate to your clients. I wouldn’t look at them today -- how they’re doing business (now) -- as necessarily the long pull.”

While ad-supported HD radio is an estimated two to three years away, the panel also focused on the near term: Satellite subscribers are nearing the 10 million mark. And more than 700 terrestrial radio stations have converted to digital signals, allowing them to multicast.

HD radio has a long way to go to get more radios with HD receivers on the market and to drive consumer awareness about the technology. Mr. Struble noted all the major radio broadcasters had committed to spending $100 million worth of media time promoting it over the next year, making it the most advertised product on radio.

Satellite, meanwhile, has moved beyond early adopter status both in consumer and advertiser terms. Sam Benrubi, senior VP-ad sales for Sirius and his counterpart at XM, D. Scott Karnedy, pegged the ad market for satellite at $100 million.

Second wave for satellite
Mr. Feinberg said he has about 10 clients who move in and out of the satellite radio space, but he’s now seeing it as a regular part of the media plan. “We’ve seen the first wave get in, we’ve experimented, we’ve spent $10,000, and now we’re starting to spend a little more and have seen a second wave getting in. Now satellite radio does have a number ... and the satellite radio companies have to start getting on board with a measurement system that’s in line with terrestrial radio.”

“Two years ago, our average order size was $4,670,” said Mr. Karnedy, senior VP-sales for XM. “Now we’re seeing zeros added to that figure, and every time a zero gets added you become more accountable. This is a year we’re at a crossroads. ... Clients, marketers, they need to see some sort of quantifiable justification to make that investment.”

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Ad Age reporter Abbey Klaassen was moderator of the panel.

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