MOUNTAIN VIEW, Calif. Google officials say they are expanding the dMarc Broadcasting radio advertising distribution technology in hopes of creating a significant boost for the radio industry’s stagnant revenue stream.
At least one media watcher believes the deal signals a sea change in the way radio inventory is bought and sold if Google makes dMarc an auction-based advertising service.
Google plans to launch its AdSense for Radio product later this fall; the product integrates dMarc automated ad-insertion technology and management tools with the Google AdWords platform.
AdWords is an auction-based advertising program that allows advertisers to target potential customers at the exact time they are searching online for relevant products and services. Advertisers pay on a cost-per-click or cost-per-impression basis. eBay to Test e-Media Exchange Model As search giant Google moves forward with its Internet-based system for selling radio advertising, a task force comprising marketers and media agencies says it will test a pilot program in early 2007 with the goal of facilitating media advertising transactions via eBay’s online auction platform, with an initial focus on buying and selling TV ads.
The initiative has the support of the Association of National Advertisers and the American Association of Advertising Agencies. Task force members say the time is right to embrace advancements in technology and the benefits of the digital world.
According to their press release, “The e-Media Exchange test will assess the viability of the business system and determine the size and scale of benefits to the advertising industry. A variety of media are under consideration for the test.”
eBay will manage the framework and technology for the project. Advertisers can register their interest and become involved at www.admarketpilot.com. Wal-Mart, Toyota, Home Depot and Microsoft are already committed to the initiative.
– by Randy J. Stine
Google officials say the current dMarc Revenue Suite platform doesn’t cost radio stations a thing to run and uses computer software that simply inserts national advertiser commercials into open avails after the traffic department has closed the station log. The automated system streamlines the ad-buying process and allows better verification of when an ad actually airs, according to Google. The dMarc Revenue Suite platform works with most radio audio and traffic management systems.
Google has not announced if a bid-based or set price model will be used for radio advertising sales.
“The new radio service will connect advertisers directly to radio stations through our automated process. This technology seeks to simplify the sales process, scheduling, delivery and reporting of radio advertising in an effort to help advertisers more efficiently purchase and track their campaigns,” according to a Google press release. “We believe we can add new advertisers to the market.”
The Internet giant entered the radio ad business when it bought dMarc Broadcasting for $102 million in January.
Executives believe the search engine innovator can significantly reduce the costs to broadcasters associated with processing broadcast ads and announced several agreements they say further illustrate the needs of broadcasters to fill unsold inventory. Greater Media Inc. has launched dMarc’s inventory replacement system at one of its stations in Detroit, with plans to expand the Google ad-insertion platform if it proves successful there.
Meanwhile, XM Satellite Radio said dMarc would sell commercial inventory on its non-music channels.
“XM is excited about the opportunity to leverage Google’s extensive advertising base to open up a new revenue stream,” stated D. Scott Karnedy, senior vice president, sales and marketing solutions, for XM.
Other major broadcast groups are expected to watch the Greater Media deal closely to see what the potential profits might be, according to analysts, who say that previously, mostly small-market radio groups and stations used the dMarc Revenue Suite and its remnant inventory abilities.
Rick Feinblatt, Greater Media’s vice president for radio, acknowledged there are several available inventory-filling companies, including inventory auction site Bid4Spots and direct response companies like Marketing Architects, but he said he believes Google/dMarc has the most promise with its level of automation.
“We have tried on our own to sell leftover inventory with a modicum of success,” said Feinblatt. “Not a lot of clients we typically deal with can buy that way. Most clients want spots to run at a specific time on a specific day. They do not want just leftover avails.”
Google has the potential to “connect with advertisers we normally wouldn’t” reach and tap new revenue streams, said Feinblatt, adding that the “untapped potential” of remnant inventory becomes more intriguing when you add Google to the mix.
“Their pitch is that a lot of companies that use Google right now would have an interest in using radio. And honestly, they wouldn’t have to bring a lot of their existing clients to the table for that to be a significant number,” Feinblatt said.
Greater Media launched dMarc’s Revenue Suite on WRIF(FM) in Detroit in early summer and expects to expand the platform across its 19 radio stations if it proves successful, he said. “This will strictly be a supplemental income feature for us. I do not believe this will revolutionize radio or the way we sell, by any means. We just have to be smart and look at our options.”
‘Too soon to tell’
“This will be another way for our clients to utilize our stations,” said Feinblatt.
It is “too soon to tell” if the dMarc/Google ad-insertion platform will work well enough, he added. “The results haven’t been terrific yet … very modest success so far.”
Greater Media receives a percentage for each commercial that airs from dMarc, Feinblatt said.
dMarc officials declined to comment on the Greater Media project.
A potential influx of new advertisers to radio could mark a shift in how clients view radio and the way the ad community purchases time, according to one media analyst.
“I think the bigger deal is that this marks the beginning of a turn in the way traditional media is bought and sold,” said Shar Vanboskirk, a Forrester Research analyst who specializes in the interactive area. “It’s a significant change to sell remnant radio inventory on an automated process, possibly on a bid basis, although dMarc has said it will use some inventory for upfront sales. Radio (ads) could eventually be put up for auction and targeted based on customer behaviors.”
Vanboskirk’s hypothesis is that large advertisers will not immediately flock to Google/dMarc’s way of doing things. However, smaller advertisers will try the model as a cost-savings approach.
“Small advertisers will likely try first and then larger advertisers will gradually experiment,” Vanboskirk added. “And they may never spend their primary radio budget on Google/dMarc, but rather determine how much they should spend to reach the level of audience dMarc can deliver.”
Google employs nearly 5,000 full time workers worldwide.