In an expected but by no means insignificant move, Google will begin selling 30-second ads to run on hundreds of radio stations operated by Clear Channel Radio.
The deal is part of the search engine giant’s determined expansion beyond the Internet, and it’s one that should bring much-needed revenue to the struggling Clear Channel. The multiyear agreement calls for Google to sell a guaranteed portion of Clear Channel’s advertising inventory across more than 675 radio stations.
Neither company is revealing the agreement’s financial specifics.
National but Targeted
Google has been seeking an outlet for its Google Audio Ads. With this deal, advertisers will get national distribution of ads targeted at specific audiences. In announcing the pact, Google and Clear Channel noted the arrangement will bring radio advertising capability to companies that currently use Google only for online ads.
Google’s desire to sell radio ads was made clear about a year ago when it acquired dMarc Broadcasting, a company that created an automated ad-purchasing system for radio stations. The system served as the basis for Google’s Audio Ads platform.
“Google is obviously branching far beyond search,” Piper Jaffray Senior Analyst Gene Munster told the E-Commerce Times. Nevertheless, and despite its wealth, Google has struggled to find a big radio partner.
No More Small Potatoes
Google’s previous radio deals have been “rinky-dink,” said Munster, a description that clearly does not apply to the Clear Channel pact. “As far as the clear channel deal … this is a real gorilla,” he said. “It takes Google’s radio (initiative) from talk to actual substance.”
In announcing the deal, Clear Channel CEO John Hogan said it was a “win-win” for the companies because it offers Clear Channel a whole new universe of potential advertisers while bringing to Google “another option for its existing customers.”
The deal will not mean pink slips for Clear Channel’s national and local sales teams — at least not yet. Clear Channel’s sales representatives will “continue to focus on the company’s most lucrative advertiser relationships, and on the many advertisers who seek specialized advertising packages and concepts,” the company stated.
Meanwhile, Google’s intention is to convince its huge inventory of online advertisers to take a shot at radio ads.
“I think there is a lot of easy value that Google can add to the empty inventory within Clear Channel” by using its auction model to sell radio spots, said Munster. “Clear Channel will take a portion of its inventory and turn it over to Google, which will manage an auction for the inventory. Advertisers don’t have a choice. If they want certain ad spots, they’re going to be forced to bid for them. And from an advertiser’s perspective, they feel they get the fair market value.”
“I think [the deal] is going to work,” Munster predicted. “I think it’s going to be a model that radio people are going to use in the future.” However, even if Google succeeds in moving into radio, TV and other traditional media venues, “80 percent of its business is still going to be over the Internet,” said the analyst.
Clear Channel considers the agreement to be part of its larger effort to “differentiate” its radio ad alternatives. Clear Channels sales personnel are currently using the Viero System to dynamically price ads. Viero Systems is now fully compatible with Google AdSense for Audio, both Google and Clear Channel stated.