Google was mum on its dMarc Broadcasting acquisition at its Q3 conference call last month (see "Is Google hiding the radio star? Google silent on dMarc Broadcasting").
Google spokesperson Michael Mayzel told me that Google is:
Planning on releasing a beta version of Google Audio Ads by the end of the year.
Industry insiders are not convinced that Google’s dominance in online search advertising is easily duplicated in the radio advertising market.
Over the past few weeks, I have had several discussions with the management team of a new force in the radio advertising market, SoftWave Media Exchange Inc. (SWMX).
The SWMX team, Josh Wexler, CEO, and Bill Figenshu, Chief Operating Officer, is ambitious and impassioned and, perhaps more importantly, is not intimidated by Google dMarc forays.
SWMX says it “provides an efficient, dynamic and transparent open marketplace for the purchase, sale, management and distribution of advertising media time”:
SWMX applications enable advertisers and broadcasters to execute sophisticated media transactions on one platform, in one process, in real time - from any computer with an internet connection. The SWMX Marketplace currently includes SWMX Radio and SWMX Television. SWMX Radio serves a broad range of advertisers, agencies and leading radio stations across the U.S. representing 13 of the top 15 broadcast groups, 50 of the top 50 U.S. markets, 39 of the top 50 stations and a daily national audience of over 9 million listeners, or 40% of the total U.S. broadcast radio market, according to Arbitron. Launched in June 2006, SWMX Television currently serves the local spot cable market, delivering access to a national daily cable audience of millions representing all major networks.I asked Bill Figenshu about SWMX’s vision and the impact Google dMarc may have on the radio advertising market.
Below are my questions and Figenshu’s responses (in italics).1) SWMX's Q3 earnings results last week were prefaced by the statement: "SWMX began operations on August 23, 2005, with the intent to transform the way advertisers and broadcasters buy and sell ad time by providing an online platform that improves the efficiency and transparency of media transactions."
Such a mission statement is similar to what Google has said it aims to do via dMarc Broadcasting which it acquired in the beginning of the year.
You are a newly formed company, how will you successfully compete against resource intensive Google-dMarc?
Well, we sure can't outspend them, so we'll just have to out-think them. By the way, although we officially launched the company in August 2005, there was much beta testing before that. As early as 2003 there was testing on the Citadel radio stations on the West Coast. I was then the President of the region and I gave them (at the time it was called Remnant Radio) glamorous markets like Boise Idaho & Spokane Washington. We were at it years before the SWMX launch.
We are successfully competing with them, in fact, we are substantially ahead of them in stations, sales, and innovation. Having enough money to buy a small country is not enough. (ok, maybe they have enough to buy a big country, whatever).
We clearly understand the broadcast business. It's in our DNA. We speak to the station managers and the owners. We spend the time with ad agencies and direct advertisers. We constantly innovate the platform. We make mistakes, we fix them right away.
Stavros Aloizos, our Chief Technology Officer is a very good listener. He learned the business with his ears, then applied the technology. That's why we are not just about the remnant side of radio. Remnant is last minute. nice business, but the big money is in full rate, and full schedules.
In addition to full rate radio, we launched Cable TV last summer, and plan to launch Broadcast TV in a few weeks. Oh, have I mentioned passion? You can't buy passion. We have a ton of broadcasting passion.
2) SWMX recently marked its first anniversary.
What are the two most significant milestones reached in the first year of operations?
1. Making it through the first year would always be a milestone for any new enterprise.
2. Passing over 1,000 radio stations ahead of plan would be up there too!
What are the two primary objectives for year two?
3) What is SWMX's greatest competitive advantage?
After STAYING IN BUSINESS? OK,
1. Continue to grow our acceptance within the advertising community would be the first. We have doubled the number of ad agencies using us each quarter. We expect that to continue and accelerate.
2. Fully launch and integrate our TV, Radio & Cable platform into a true exchange.
There are a few.
1. Our staff. From CEO Josh Wexler on down, we understand our mission every day. SWMX is about media, advertising, and the quickest most efficient way to get from the advertiser to the eyes & ears of the intended target. Full time. The people who work for SWMX understand media, work within it, and embrace change. Then we apply evolutionary designs in order to relate to our customers.
2. We move fast, very fast. We compete at every level to provide value for the advertiser and the broadcaster. And we do it "right now."
3. This is a full time job for us. We don't do "search", hold auctions, or dabble in other businesses.
4) RBC Capital Markets channel checks suggest Google is adding up to 100 high-profile radio sales people to its dMarc operations for a roll-out in the major markets.
How will that change the dynamics of the industry? Will SWMX be impacted?
Putting 100 high profile (and VERY HIGH PAID) sales people in itself will not have much impact if they don't have stations to advertise on. Sales people need something to sell. It's all about distribution. At SWMX, we do in radio, (40% of all US listening in less than 10 months.) and expect to in TV and Cable very soon.
Assuming they (Google) have the distribution, I believe Google will be good for radio if they bring new advertisers to the platform. 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.
95% of SWMX advertisers are NEW to radio. We see this as a good thing. We make it easier for more new advertisers to buy TV, Radio & Cable. That is the dynamic that will change the industry. Trying to buy media for the untrained is difficult. If we make it easier, faster, and provide value, for both advertisers and broadcasters, it will make an impact
5) RBC Capital Markets indicates Google dMarc doesn't have sufficient valuable radio ad inventory to support its sales force investment and projects Google will team up with another player, perhaps Clear Channel.
How would such a scenario change the radio market dynamics?
It's hard to answer as I don't know at what level they would play at. If they BUY or take an equity stake in CCU, it would be hard for them to attract other broadcasters to go along with their radio platform. Unlike SWMX with is an on line "opt-in" platform. Google requires a "box" in the station to deliver commercials. If you were a station manager, would you allow Clear Channel/Google to place equipment into your station? We think not.
Although Clear Channel has many great stations, they still don't have as many as we have nationwide. By the way, I don't believe GOOG/CCU will turn down money from us. We currently do business with many Clear Channel stations. If Google buys them outright, they may still want money. Just a guess.
If Google buys millions in advertising time on Clear Channel stations, it will be a bit messy. - Other broadcasters would react. Can they buy every broadcaster's inventory? (gosh, don't answer that!) - Will CCU exclude current accounts? Will Google sales people call on the SAME agencies as CCU? - Would they sell the inventory for less than CCU is selling it for? - What about their national rep firm Katz? Radio network Premiere? or the Profit System. (all owned by CCU)
6) Josh Wexler, CEO, said, in announcing Q3 earnings, that SWMX plans to supplement organic growth via strategic alliances and acquisitions.
What types and sizes of deals is SWMX targeting?
We don't comment on potential acquisitions or deals other than to say, if it's media related, and good for our company and stockholders, we'll look at it. Is Google for sale? If they can be in radio, we were thinking of getting into search.
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