Google, dMarc and Radio Advertising
Last year Google bought dMarc for ~$100 million in cash and a earn-out option for another billion. Last week the two dMarc founders left Google and there's speculation that things are not going as planned with Google's into move into the $22 billion radio advertising industry. There are rumors of cultural clashes between the radio people and the Google folks, clashes between Google's fundamental belief in an automated sales process and the radio industry's historical use of sales reps.
Google's automated sales process for AdWords works so well because their cost per click model (CPC), tied to their auction system for pricing and selling ads, leaves emotion entirely out of the ad purchase decision cycle. The purchase decision ends up being a strictly intellectual process of looking at the cost of the ad buy, looking at the conversion rate of clicks to purchases, and setting an auction bid that gives you an acceptable return on investment for the ad.
Traditional radio advertising is a whole different ballgame. Radio ads cannot be CPC advertising; they are based on cost per thousand (CPM) impressions. The primary value of CPM advertising (especially in a one-way medium like radio) is increasing brand awareness. It is very difficult to make a hard correlation between radio ad buys and incremental revenue. The ROI on radio ads are much fuzzier and harder to quantify. Therefore the decision to do brand advertising, and more specifically how much to spend on brand advertising, is a more emotional sales process. An emotional sales process goes much more smoothly when a sales representative is there to ease the buyer along.
It's an interesting problem to tackle. The move toward mobile is creating a hybrid market. Which sales model do you follow? We're developing the clickable audio ad, which you can do with a feedback-enabled audio system like the cell phone. You can combine the emotional pull of audio ads with the demonstrable ROI of CPC ads. The goal of audio ads in a mobile medium starts to be less about brand building (though it still is), and more about invoking a direct call to action, AdWords-style. Hear an ad, press the "5" key, and be connected to the advertiser. You're listing to a movie review; you "click," the call is transferred to MovieFone, and you buy your tickets. Or you initiate any of the other options possible with a live connection -- like requesting follow-up emails with more information; or calling open API web services and, for example, clicking on a preview for a TV show and programming your TiVo. We're continually inventing new implementations for the clickable audio ad.
It's a new world out there.