Not long after pulling out of the newspaper business (1/21/09 RBR #13), Google announced yesterday it will stop selling ads for radio, and plans to sell its Radio Automation business it bought in 2006 from dMarc Broadcasting. Google estimates up to 40 people may be laid off. Google TV, meanwhile will continue. It recently signed a deal with NBCU, in fact.
"We will phase out the existing Google Audio Ads and AdSense for Audio products and plan to sell the Google Radio Automation business, the software that automates broadcast radio programming. Advertisers will continue to be able to use Google Audio Ads until May 31 and broadcasters will be able to publish inventory to Google until that date as well," Google’s VP/product management, Susan Wojcicki, wrote on the company’s blog on Thursday.
Google will focus its efforts on placing ads on streaming audio over the Internet, she said.
See Agency response in Advertising Business Report.
RBR/TVBR observation: Google had three problems: 1) The box and service was too expensive for stations. 2) They couldn’t get beyond remnant inventory to offer advertisers and 3) Radio ad sales are down dramatically and have been for quite some time. So the deal that Google had with many stations was probably at a higher rate than what stations are selling the inventory for today. Stations were and are probably undercutting the Google inventory on rates (unless there was some caveat in the contract forbidding that).
Radio didn’t adopt, when it should have, a direct response model as a viable part of its business, a la the way TV did. DR is 25%-40% cheaper than the going rates on TV. Instead of adopting that model they sold to Google.
Google, not in the radio business, didn’t know enough about it to get a handle on the effect the economy had on radio advertising. The advertisers were very wary of Google to begin with, and from what we heard some saw them as a “frenemy.” Some clients went to media agencies asking about Google and many of them said “No—wait and see.” Also, many broadcasters saw Google as an enemy and would not give up their inventory for Google to market.