Google expanding into radio and print ad sales
By stephendavis on Nov 09, 2006
In the past few days, Google has announced that it is planning to set-up advertising sales units for regional newspapers and local radio stations in the United States. If this goes ahead (and separately it has been reported that Google has already started hiring experienced radio airtime sales people) it marks a departure from the company's focus on online media.
Display advertising sales are very different from it current classified lineage model. At present, advertisers pay Google traffic referral fees based on a cost-per-click basis. The AdSense model enables advertisers to bid competitively for certain textual names (sponsored links) relating to a product category, e.g. car insurance or even product name. In the past year, there has been several law suits taken out by tradename owners attempting to restrict online users being 'diverted' on the Google results page away from their own Internet sites by the positioning of the sponsored links.
It is not clear whether Google intends to act like a true 'market broker' in the sense that it will bulk purchase airtime or newspaper pages in advance and then re-sell them among their customer base, e.g. taking the risk of not fully filling the inventory. Advertising time and space is a perishable commodity. Alternatively, it may act as a sales house, 'repping' regional newspapers and local radio stations to its existing online advertising buyers.
The first option exposes Google to new risks in that in most cases it will not have established relationships with the print and radio agency media buyers. which are bought using audience research data rather than direct response models. From a media owners perspective, editors potentially lose control over the make-up of their publications. Certain categories of advertising are thought to be more empathetic to the editorial than others. Looking at most consumer web sites, this certainly doesn't seem to be a factor taken into account.
Importantly, what we are probably witnessing is Google's move into mainstream advertising and the ultimate prize of network television. The purchase a few weeks ago of YouTube provides Google with a platform and audience from which to deliver video programming. However, the online advertising model is predicated on being content sensitive which neither local radio or regional newspapers are. Both media simply 'broadcast' the same content (and advertising) to an audience geographically defined. I suspect we'll see further announcements from the GooglePlex in the coming weeks.