DMarc Broadcasting will allow Google Ad Words advertisers to bid for spots on XM's non-music stations, sending an early signal of how it might monetize the "long tail" of offline advertising -- the lower-rated, niche content for which traditional people-powered methods of buying and selling may not be as efficient. Because dMarc's system is completely automated, it makes aggregating and buying that content economically viable.
Ads automatically inserted
According to a joint release today, Google's technology "automatically schedules and inserts advertising across XM's non-music commercial channels, helping to increase revenue with a wealth of new advertisers, while decreasing the costs previously associated with processing advertisements."
Acquired by Google in January, dMarc's core proposition is one of simplicity. It has used its market share in automation systems -- the software and hardware that run radio's on- and off-air operations -- to create a 500-station media network that lets advertisers buy and insert radio advertising directly.
XM and dMarc have been testing the system with dMarc radio advertisers for two months.
Ad revenue for satellite radio
"I look forward to the time, hopefully in latter part of this year, where we can really start reaping the half million Ad Words advertisers they have," said D. Scott Karnedy, senior VP-sales and marketing at XM. "For XM, it's another ad revenue stream to tap into." XM and rival Sirius are bullish on increased ad revenue to augment subscription fees.
Google is betting on the increased fragmentation of audiences as being key for its auction-based contextual selling system. Satellite radio offers several hundred stations for advertisers to choose from.
In addition to Google's entree into the world of satellite radio, the emergence of high-definition radio may spell further opportunities for the web giant. At a panel last February Bob Struble, CEO of iBiquity Digital Corp., the company behind HD radio technology, predicted that HD digital radio will expand the number of radio stations in the country, because the technology allows stations to "multicast" -- or stream additional broadcasts.
"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," he said at the time. He explained that dMarc allows a national advertiser to buy any market, in any geographic location and in any format they want and do it automatically, "with unbelievable accountability because it's all tracked and reported [electronically], and that has the potential to really move the needle quite significantly."
Google has also discussed the possibility of entering the TV ad market, a sector witnessing a growth in the number of electronic auction system operators.