Jack Taddeo, a radio industry veteran, expressed concerns to me about Google’s entry into radio advertising, particularly the Google dMarc impact on independent radio stations.
Taddeo operates a radio station in the mid-west and leads Jack Taddeo Communications, a consultancy to the radio industry.
I spoke at length with Taddeo about how Google dMarc is approaching the radio advertising market and asked him for his direct from the field views of a Google dMarc radio future.
Below is my EXCLUSIVE Digital Micro-Markets "The Real Deal" interview of Taddeo.
Q) The dynamics of buying and selling advertising in the radio industry are evolving with the entry of automated systems into the marketplace that are designed to make the media placement process more efficient for both advertisers and radio stations.
Are there inefficiencies in the way radio spots have traditionally been bought and sold that should be corrected?
Certainly less efficient is the way most national and regional ad buys are placed. That model is based on "media buyers" at the ad agency level placing buys based on ratings (in the case of radio, mostly Arbitron-rated markets) either through a station's national rep or directly with a sales manager or rep at the station level. In effect all ratings are history by the time they are published, even those delivered electronically. So a buyer must assume the ratings they are seeing are both timely and accurate. The issue has been debated by radio station owners for years to no great satisfaction.
As it relates to the question of inefficiencies in the existing media world, the above sets the table for discussion as to why some national advertisers may agree that there are problems with the traditional ad buying system.
Google's client base matches the existing radio ad base on a national and, maybe, regional level. So it is fishing in friendly waters, so to speak.
Q) Google acquired dMarc Broadcasting last January to bring "targeted, measurable advertising" to advertisers seeking to buy radio spots.
Is such a goal realistic?
Only if they can get it into enough radio markets and, really, into all radio stations in a given market. So if I am P&G and I want to buy ads for Crest toothpaste to impact Cincinnatti, Ohio, I need to have access to the stations that give the best audience impact for the target. I may not want kids 12-17 and I may not want men 65+. If I don't have access to the stations that deliver the target demo it doesn't matter how many cheap ads I buy on the Google stations. It is wasted money.
And if I owned the top rated stations in that market I would not want to give P&G access to my stations for pennies on the dollar. I would show P&G and their ad agency how it makes better sense to spend the money on the RIGHT stations for the product's target.
Radio is an ad supported media. That's how we pay our bills. We can't give it away and stay in business. And we can't allow a sales agent to lower the value of our inventory in front of the ad world.
Q) Google's dMarc pitch to radio stations sounds too good to be true: "dMarc's RevenueSuite solution fills any inventory opportunities with paid advertising, automatically!"
Is the Google dMarc service a win-win for both radio stations and advertisers?
Not for stations. That is unless you are trying to reduce your ad inventory to pennies on the dollar. I call it the "station going out of business rate".
The argument goes: if you have an open slot then why not get some money instead of no money? Plus you will be "sold out" which can help increase unit rate based on supply/demand pricing.
The problem is that you are doing two things you would never allow your own staff to do. 1) lower the rate by about 95%. 2) fill up the station with cheap commercials, decreasing the listening environement for what amounts to a few dollars.
Sometimes, some revenue is not better than no revenue. For advertsisers, if they don't care about targeting, maybe the "catch bin" of commercial inventory is usable.
Q) You are a radio industry veteran. What impact do you believe Google's entry into radio advertising will have on the industry long-term?
There are two areas of impact. One is in small markets where a station may be tempted to take 1.00 instead of no dollars for a slot that sells for 10.00 on average.
The other is the major and large markets where the owners will balk at selling inventory (even unsold inventory) for such a low rate. Mainly because there is an image issue. If Toyota can buy WGN in Chicago for 50 bucks when the normal rate is 300 then why would they ever place ads on WGN directly?
At some point this will be a targeted approach. Google is all about targeting. Right now they are simply trying to get in to as many stations as possible, to build the platform.
But it doesn't really make dollars and sense until it can be synergized with existing Google sales. They seem to be building a sales staff to do that.
So, if I am a station owner like CBS or Clear Channel and I have several hundred thousand listeners to one station in one market (not to mention the millions of listeners I have every day to my entire platform) I am probably not going to see the benefit to having Google's sales staff out there selling their ad words for a higher rate than they are paying me for my millions of listeners.
Q) Will you be trying out the Google d Marc "solution?" in the radio station you operate?
I have not done so at my station, based on the incremental revenue we would get in return for the ad space.
Google is nearing its one year anniversary of the dMarc Broadcasting acqusition, purchased to further Google's mission to bring "targeted, measurable advertising" to the entire world, including radio. Google is also nearing its promised launch date for Google Audio Ads "beta." Prior Google radio advertising launch dates have come and gone, however. Is this time the charm?
READ MORE OF MY EXCLUSIVE COUNTOWN TO GOOGLE AUDIO ADS LAUNCH!
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