Google Radio: Will Audio Ads make money?

Google Radio: Will Audio Ads make money?

Summary: Can Google win in radio?

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TOPICS: Google
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January 17 will mark the one-year anniversary of Google’s acquisition of dMarc Broadcasting.

I have been "counting-down" Google's impending launch of its radio advertising product with exculsive, in-depth information and insider interviews, since I heard Google CEO Eric Schmidt talk of his vision for  location-based delivery of highly targeted and personalized advertising via in-car radios last June, as I put forth in “Google targets GPS-based in-car personalized advertising.”

In “Google multi-billion dollar bets in 2007” last month I noted:

Google’s acquisition of dMarc Broadcasting in January was less costly, and less “sexy,” than the high-profile, high-powered takeover of YouTube. Radio does not have the marketplace cachet of online video. Nevertheless, Google has a lot more riding on its dMarc investment, than the YouTube deal.

Why? Google CEO Eric Schmidt routinely underscores Google’s multi-platform, multi-media worldwide advertising ambitions:

The long-term fantasy is we walk up to you and you give us, say, $10 million and we'll completely allocate it for you across different media and ad types.

In “Google’s ‘1 percent’” I discuss how Schmidt’s multi-million dollar diversified sales reveries are indeed fantasies, to date; Google’s $150 billion market cap is entirely dependent upon online search and associated advertising services (AdWords, AdSense).

Google CEO Eric Schmidt, November 8, 2006, Form 10-Q: Revenues realized through the Google Publications Ads Program, our radio advertising efforts, Google Video and Google Checkout were not material in any of the periods presented.

Why not? Google is golden to date in online search, but will it ever be able to make money doing anything else?

Google Publications Ads

Google has a newspaper ad sales test underway, it is its fourth try at print publications over the past few years. The old saying “three strikes you’re out” apparently does not apply to the 29th most highly valued public company (see “Should Google act as self-promoter?”).

Accolades for Google abound; It has been crowned the best place to work in the U.S. (see “Google: Do you want to work there?”). The Google mystique and its omnipresence on the Web (see “Is Google a public service?” and “Is Google ‘The Internet’?”), however, blind many to Google’s dismal record in its diversification efforts.

In “Google: $48 billion newspaper friend or foe?” I underscore the lackluster results of its fourth time at the print publications bat:

Savvy newspapers are determined to keep their proprietary high-quality advertising accounts far from Google’s grasp. While Google promises to help newspapers sell-out their lower quality inventory to smaller advertisers, it has not yet mastered the SME market for its own (AdWords) account.

In “Google: $31 billion local dilemma” I dissect Google’s lack of traction with small businesses and put forth the uphill battle Google faces with local merchants.

Google Checkout

In “Google Checkout: Free in 2007, still flawed.” I discuss how Google is giving away its much ballyhooed payments tool to merchants and subsidizing consumer use of the service.

I note: “Google is inspired by a mathematical formula; Has Google nevertheless lost its math groundings?”

Google’s Checkout is, in fact, well grounded in Google’s financial raison d’etre: AdWords. From the moment it was announced in June 2006, I have been underscoring Google’s Checkout end-game: “It’s official: Google launches ‘Checkout’ with predatory pricing model aiming to ‘increase advertising spending’

In “Google Checkout: $20 million AdWords pitch” last month I put forth:

Is Google spending $20 million this quarter to spread holiday cheer to merchants and consumers? NO. Google is investing big-time in the hopes of “locking-in” merchants long-term, as AdWords customers.

Google Video

Google’s $1.65 billion acquisition of YouTube is Google’s hope in video.

In “YouTube vs. MySpace: Is friendly bankable?” and “Why Google wants YouTube independent” I underscore how YouTube finds itself in the same position as MySpace, wildly popular with non-paying users but not conducive to high-quality, high-paying brand marketing:

With “Sexxy Sangria” at MySpace and “hot lesbian kissers” at YouTube, News Corp. and Google will need to make the case for why marketing in “unprotected areas” of social networking properties is advantageous, if they hope to command more than “junk" CPMs based on their hundreds of millions of friends and video sharers.

Google on the Radio: Audio Ads

In announcing Google's acquisition of dMarc, Tim Armstrong, vice president of Advertising Sales, said:

Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media. We anticipate that this acquisition will bring new ad dollars and accountability to radio by combining Google’s expansive network of advertisers with dMarc’s talented team and innovative radio advertising technology. We look forward to working together to continue to grow and improve the ecosystem of the radio industry.

Despite Google’s claims of bringing AdWords style “targeted, measurable advertising” to radio, the Google-dMarc Audio Ads system will bare little relation to its AdWords money making machine.

Google-dMarc operates in a “legacy” advertising business, on the industry’s terms, not Google’s. Google and dMarc in announcing the acqusition:

GOOGLE: dMarc connects advertisers directly to radio stations through its automated advertising platform. The platform simplifies the sales process, scheduling, delivery and reporting of radio advertising, enabling advertisers to more efficiently purchase and track their campaigns. For broadcasters, dMarc's technology automatically schedules and places advertising, helping to increase revenue and decrease the costs associated with processing advertisements.

Google plans to integrate dMarc technology into the Google AdWords platform, creating a new radio ad distribution channel for Google advertisers.

DMARC: We are bringing together complementary visions of simplicity, efficiency, and accountability to the radio advertising process.

The Google dMarc announcement does not talk of Google revolutionizing the radio advertising industry, and neither does the Google dMarc radio advertising sales pitch underway in the field.

Below is an EXCLUSIVE picture of how Google dMarc positions Audio Ads to the radio industry. Google is not selling a Google radio revolution to radio professionals; It can’t, if it wants to maintain its credibility.

The Google pitch to radio is surprisingly standard:

Google Audio’s value proposition addresses inefficiencies radio buyers face.

Google dMarc is not the only company addressing “inefficiencies radio buyers face.”

I have spoken at length with the management of two new forces in the radio advertising market that question the viability of the Google dMarc positioning, SoftWave Media Exchange Inc. and Bid4Spots:

Bid4Spots vs. Google Audio Ads? EXCLUSIVE ‘Real Deal’ CEO interview on radio battle

SWMX Radio vs. Google? SWMX COO talks ‘The Real Deal’ in exclusive interview

Bid4Spots: Advertisers want to know that their spots will run and unlike Google’s system and others, spots won by stations in our auctions are not able to be pre-empted… it remains to be seen whether AdWords advertisers who are used to the precision targeting of key word ad placement will tolerate the mass-appeal world of broadcast where listeners aren’t just interested in one particular product or service.

SWMX: If they are going to call on already established advertisers that are currently doing business with radio, it could be a problem. If they are selling AGAINST current local radio stations it could be a BIG problem…Unlike SWMX with is an on line "opt-in" platform. Google requires a "box" in the station to deliver commercials.

I have also spoken at length with radio station owner Jack Taddeo, who expressed concerns to me about the Google dMarc impact on independent radio stations, as I put forth in “Google Audio Ads EXCLUSIVE: Radio station owner ‘Real Deal’ interview”:

I asked Taddeo if Google dMarc is a “win” for radio stations:

TADDEO: 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 environment for what amounts to a few dollars.

I have also spoken at length with radio talent that will be critical to Google when it officially launches Audio Ads:

Google Ad Creation Marketplace auditioning radio talent: Exclusive First Look

Google Radio NOT AdWords easy: Audio Ads Exclusive

Google is not only currently testing its Google dMarc radio advertising platform for an impending national launch of Audio Ads, it is auditioning radio talent to create the ads.

Google is building a “Google Ad Creation Marketplace” to support development of Google Audio Ads creatives for AdWords customers.

The “Google Ad Creation Marketplace” is a first for Google. One of the hallmarks of the self-serve Google AdWords platform is the ease by which anyone can login to Google and create their own Google AdWord creative in literally a matter of minutes.

Google Audio Ads will be a different Google species, however.

Google will recommend that small business advertisers hire “ad creation talent” to develop audio ads that meet the specifications required for the Google dMarc systems, at a cost of from $100 to $1000.

Google Audio Ads will NOT be AdWords easy.

I asked Brian Haymond, veteran radio talent, how the Google Ad Creation Marketplace would impact the radio talent industry:

HAYMOND: I think the huge misconception on the part of a lot of talent seekers is the "value" of a voice talent.I have seen and heard things like: "pickup a quick $50 for an hours work" or "$100 a minute is more than a doctor makes" etc. Well, we have an enormous paradigm problem…exacerbated by folks who accept work for wages below what should be closer to scale.

I asked André Bergeron, veteran recording talent, for his thoughts on why Google Audio Ads will not be entirely self-serve, as Google AdWords is:

Writing a few keywords for an internet ad is very different than creating an effective radio ad.  If all an advertiser wants to do is write words on a page and then have it read by somebody and then placed on the air for cheap, that is easily done. In fact, the advertiser could voice it himself in his home and save the costs of paying the talent. So, can it be self serve?  Probably. Would it be good? Memorable? Do the job?, I'd say, no.

Dollar-A-Holler Radio ads have been around forever. The local Hi-Fi Store owner could always go into the local station and bark off a series of sale prices in shrill tones that would annoy anyone within earshot. This would be no different, really. There is so much more to effective messaging, to branding, to understanding how people listen to the radio than simply writing down "for all your underwear needs" and handing it off to Johnny promo voice to record.

Part of why people can't stand listening to the radio is the quality of the ads, they're, by most estimations, shouted, boring, and insultingly simplistic, and, if there are a lot of them, it just magnifies the mind-numbing nature of them.

My conversations with radio professionals underscore how Google is entering a well established radio market, via its acqusition of dMarc.

Google AdWords were revolutionary because Google created a new advertising market; Google introduced a new product, in a new industry, with a new value propostition. Google Audio Ads, however, are jockeying to fit-in and stick-out within a well established industry.

Google dMarc is not offering a “revolutionary” value proposition to radio, a decidely non-revolutionary industry.

ALSO: Google targets $7 billion outdoor ad market

Topic: Google

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