Is Lack Of Radio Inventory Holding Back Google Audio Test?

Channel checks by RBC media analyst David Bank find that Google's pitch to major radio advertising buying agencies has whet buyers' interest, but there may be nothing to deliver right now.

"We believe a critical mass of advertisers is interested in testing the platform, but Google has yet to secure access to a sufficient amount of radio ad inventory to enable tests of flighted campaigns," Bank writes to investors in a Monday morning (Dec. 18) memo. "For the radio industry (and for Google), this means no significant impact until at least mid-2007."

Bank says he continues to "anticipate a major commitment of radio ad inventory in the coming months that would change dynamics meaningfully; we believe its impact on the market will likely lag its introduction by 1-2 quarters."

Google, says Bank, has changed course by courting buyers with a new message: it is emphasizing that coordinated radio and Internet campaigns increase the efficacy of both media. "Google is also claiming the capability to measure return on investment for radio along some parameters. If Google has cracked radio ROI measurement, the impact on the radio industry would be immense."

He notes that previous pitches by Google emphasized "mostly the increase in efficiency of radio ad buying, and, not surprisingly, never found sponsorship among major national radio buyers, whose role in the media economy would probably be negatively disrupted."

Bank reports that most of the buyers he and his staff contacted "appeared interested in testing the efficiency of the dMarc platform" but that "there is simply not enough radio inventory in the Google Audio system (yet) to enable buyers to run flighted campaigns. In addition, Google Audio hasn't demonstrated to major advertisers how it could prove the efficacy of the integrated platform."

In the end, and if the notion actually works, "broadcasters may gain from overcoming fear of commitment by advertisers," Bank theorizes. "The first broadcasters to commit inventory could see relative outperformance vs. industry peers, through above-market guarantees." Bank says his channel checks indicate that major market groups are currently exploring ways to work with Google on this and other ventures. "There is some potential for Google to drive incremental advertisers to buy radio ads by streamlining the ad buying process."