Google Buys Company To Expand Into Radio
Wednesday, January 18, 2006
Google Inc. agreed yesterday to buy a radio advertising company in a further effort to extend its targeted-advertising technology beyond the Internet.
The Internet search giant, which has already tested its advertising expertise in print media, bought dMarc Broadcasting Inc., a Newport Beach, Calif., company, for $102 million in cash. Under the deal, Google is obligated to make additional payments of up to $1.14 billion over the next three years if certain business targets are met.
DMarc provides an automated system that allows companies to advertise on radio; its process helps companies schedule, deliver and track their ads.
"Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media," Tim Armstrong, vice president of Google's advertising sales, said in a statement.
Mark Fratrik, vice president of BIA Financial Network Inc. in Chantilly, said he believed the collaboration between Google and dMarc will benefit both Google and the radio advertising business. Companies wanting to advertise on radio will be able to plan wider campaigns that include targeted exposure on the Internet, he said.
"It's a way for Google to more effectively get into the media-planning stage of advertisers, and it may make it easier for advertisers to think about the Internet," Fratrik said.
The arrangement combines two niche advertising media -- the Internet and radio -- with Google's ability to laser-focus on the tastes of consumers. Fratrik said that advertisers looking to connect with men in the 18-34 age bracket, for instance, could buy time on the appropriate radio stations and complement the exposure by buying space on Web sites that cater to the same age group.
"It is a merger of a new medium with a legacy medium," Fratrik said. "Radio's been around for 80 years, and it's been a strong advertising medium. This is a signal that it's still around and viable -- and with this tool, it will continue to be very viable."
Radio advertising is expected to grow 2.4 percent in 2006, according to Merrill Lynch & Co., and could get a boost from the Google deal. Google already appeals to a large base of small and medium-size local advertisers -- the same group that fills the airwaves of local radio broadcasters. "We believe this type of platform could be quite appealing to the small and medium-sized advertisers . . . and could actually increase demand for radio," Lauren Rich Fine, an analyst at Merrill Lynch, said yesterday in a report.
She added that she was intrigued that Google was spending so heavily on traditional media when the growth potential online remains strong.
"Google has been test selling other forms of offline advertising, including magazines and newspapers, so this will add yet another offline medium, perhaps in an effort to be a one-stop platform for placing and managing advertisers' campaigns," she said.