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January 17, 2006

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» How do I click an ad on the radio? from mathewingram.com/work
Google hasnt made many billion-dollar bets, except for the recent one on AOL (which was more of a hedge than a bet) so the deal announced today for dMarc Broadcasting is notable if only for the potential price tag. Up front costs are only $100... [Read More]

» Google is no Microsoft from The Stalwart
For some reason last night (don't ask!) I ambled over to Henry Blodget's blog Internet Outsider where he was chiming in on the news that Google had about dMarc Media, a radio advertising company:So let's extrapolate: If there aren't already, [Read More]

» Advertising is the business, search is one vehicle from Don Dodge on The Next Big Thing
Google announced that it will acquire dMarc Broadcasting, a radio advertisement service. In an earlier post Search is a commodity - Ad serving is the business I postulated that delivering advertisements in a targeted and efficient way is the real busin... [Read More]

Comments

Bruce Hamm

Makes sense that they would operate what is essentially an ad exchange for this discreet market - radio. But what Google lacks in that market is organic inventory, which is what you need to make the profits add up. Not that they shouldn't begin to proceed down this path - as radio is one where the economics are well suited towards a similar level of spend as Google's broad base each has - individually and where direct reponse markets that rely on frequency are good candidates for cross-media buys, but do you see them extending to buy organic inventory, which would imply acquisitions of station groups?

Henry Blodget

I would be surprised if they bought any stations (or other offline properties) in the near-term. I think the play is to extend the Google Network offline, without buying any actual content or licenses. The radio stations (and TV networks, and newspapers, etc.) should want to participate, as it will just represent another channel for ad sales--one that might be more efficient than existing channels.

Simon Andrews

"If there aren't already, there will soon be companies like dMarc for all media: Television, newspapers, magazines, telemarketing, outdoor advertising, etc."
There are already and they're called media agencies - owned by WPP, IPG etc. Right now advertisers go to Mindshare (WPP) or Universal McCann (IPG) and ask them to plan and buy the best campaign to meet their objectives. The agency uses their experience and get paid 1% or 2% of the spend.
Google will have more scale and therefore more learning and will therefore be more effective - so attracting more advertisers.
Google is reinventing the ad agency with a better business model.
We covered this when the NYT ran an interview with Eric Schmidt - including this;
"In any case, there is little doubt that Mr. Schmidt believes that science will replace much of the art of marketing. "I have this fantasy that goes like this," he said at one point. "You are the C.E.O. of a large company, and I come to you and say, 'Give me $1 million and give me your Web site, and we will guarantee you will get $100 million in sales.' Which C.E.O. would turn that down?"
http://simonandrews.typepad.com/big_picture/2005/10/google_wants_to.html

John

Google's plans make a ton of sense, but they still need to show that their inclusion in these different mediums nets out to an economic positive for the media owners and advertisers.

If it turns out they are a net positive then a lot of people are going to be looking for a job, if not...well, who cares?

Timothy

Well here comes another search engine (www.evaal.com) that looks like it will share the wealth with the web community not take over everything

Steve D

Why is Yahoo's revenue diversification often set as a example that Google should follow. Yahoo's marketing-services business - which is made up of branded and sponsored-search advertising - accounted for 88% of Yahoo's gross sales by end of 2005. Yahoo derives the remaining portion of revenue from its fee business, consisting mostly of revenue from its Internet-access partnerships with SBC Communications Inc., Verizon Communications Inc., BT Group PLC and BellSouth.

88% of Yahoo's revenues is derived from advertising, while 99% of Google's revenues is derived from advertising. That's not a big difference. Moreover, Yahoo has 'heavy' branded advertising which is lower margin business due to sales force and ad creation team expenses, while Google does not. Yahoo could auction-sell graphic ads on let's say Y!Finance or even its front page (after quality approval of an ad) with paid-for-impression pricing instead of setting arbitrary pricing and keeping human sales force. But they don't. They are not tech focused in a way Google is. In my opinion, that's not something Google should imitate. Instead, Google is going to introduce its ad auction system to TV and radio advertising and spread its paradigm-changing innovations to those areas with a laser focus. Yahoo has become a second fiddle and losing in everything to best of breed providers due to their dispersed focus: to Google in search, to Ebay in shopping, to Skype in communication, to PayPal in payments, to mySpace in social networking, to Expedia in travel, to Apple in music. That's not something for Google to imitate and it seems very unlikely Google will want to become what Yahoo is now.

Stuart MacDonald

As somebody who used to spend a few hundred million on marketing, I can tell you that this is a Really Big Deal. If there ever was any doubt, this is a clear indication of GOOG's intention to just "be" the hyper-aware plumbing of the global advertising business. Now the big question is, what are they *really* going to do to get out in front of the next wave of branding ad dollars moving online? Because surely that's the next big move to solidify their core online leadership position.

-- Stuart

P-

Henry... you might have missed and important point...

'Google is buying dMarc Media Networks, which provides an electronic dashboard that allows advertisers to research, buy, and manage radio campaigns on a market by market basis.'

and a post from the comments section...

"If there aren't already, there will soon be companies like dMarc for all media: Television, newspapers, magazines, telemarketing, outdoor advertising, etc."
There are already and they're called media agencies - owned by WPP, IPG etc. Right now advertisers go to Mindshare (WPP) or Universal McCann (IPG) and ask them to plan and buy the best campaign to meet their objectives. The agency uses their experience and get paid 1% or 2% of the spend.

-Simon Andrews

... Google maybe is valuing the radio slice in terms of reward more than television or print in terms of what it could do with it. Could it be too that they're seeing that the sellers aren't seeing the inherent value
of their own space more so that it doesn't translate into a higher asking price, hence Google is picking it up??...

Could be a little of both!

P-

George

There have been numerous attempts to create advertising exchanges and none of them succeeded. Google is Google, but only one man walks on water.

George

"Moreover, Yahoo has 'heavy' branded advertising which is lower margin business due to sales force and ad creation team expenses, while Google does not."

It will be interesting to see which model holds better when mortgage companies and homebuilders reduce the spending on keywords.

Peter Childs

My feeling is that it's part of a strategy to strengthen Google Local, provide more commercial destinations (ad placements) for Google maps in anticipation of more prevasive mobile internet. And of course for the reasons mentioned above.

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