Google Pushes Its Ad Network Further into Print and Radio
Important Details: Google made two announcements last week, both solidifying the notion that it aims to be a central and omnipresent advertising presence. On Monday, the company announced agreements with 50 U.S. daily newspapers, including the New York Times, the Washington Post, and Tribune and Hearst properties. The deal will allow Google to sell ads into their print editions. Two days later, Google announced it was ramping up its radio advertising programs, beginning with Emmis Communications and Greater Media. The radio initiative is powered by Google’s purchase of radio advertising automator dMarc, which it acquired in February for $102 million. The initiatives follow on a so-far-tepid 2005 initiative that partnered with 26 magazine titles to sell Google-powered ads.
The initiatives match up Old Media’s essentially excess (remnant) inventory and Google’s burgeoning supply of advertisers, the estimated 400,000 largely smaller businesses who use its auction technologies to reach target customers through its Ad Words search word and contextual ad-matching programs. As usual, disclosure of the terms of the agreements is meager. On the print side, Google won’t charge any commission during the "three-month test."
Publishers and radio chain owners commented similarly that they were going into the programs with their eyes open, acknowledging that they were reticent to accept "brokered" ads while noting their great need for new revenue.
In Outsell’s Opinion: The announcements are a logical progression, both for Google and traditional media. They are a frank acknowledgment of the advertising revolution that Outsell continually tracks (see our Ad Spending Study) and analyzes (see our vertical search and click fraud studies). That advertising revolution isn’t just about ads delivered online. It’s the revolution of the new analytics, in which merchants and their agencies can begin to determine how well their ads are really working, gauge cost-effectiveness, and make rapid or real-time changes in their campaigns.
The announcements are also an acknowledgment that Old Media is stuck, finding it hard to find new customers and top-line growth. Finally, they are an acknowledgment, as we’ve noted, that Google is in many ways a fast-growth syndication company, brokering content, ads and matching the two.
Newspaper publishers now very tentatively hold a $50 billion ad base, less than a fifth of the $279 billion U.S. market, while radio ads total about $20 billion.
In Outsell’s view, there’s an inevitability to these kinds of agreements. As a Google vice president noted, the company brings transactional capabilities, targeting and accountability to the program. These are modern day must-haves, and ones that the traditional media have been too slow to build or buy into. Now they must share — something not deep in their DNA. The hope is that they can tap into the one part of the ad pie that is growing — auctioned, metrics-based, performance-oriented advertising. Of course, they know they’ll be paying commissions for it, but it’s one hope of bringing some new advertisers to their declining pages.
Publishers would like to retain as many direct relationships with advertisers as they can, but without the ownership of these metrics-based systems, they don’t have what merchants need going forward to maintain exclusive sales relationships. The new world of advertising partnering is dawning for newspaper and magazine publishers and radio and TV owners, and we’re seeing the first light. For Old Media, it is time to test and, as the Googlers are doing, watch the metrics.