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February 12, 2007

Radio Advertising World Awaits Impact of Google-DMarc Rift

According to Media Post Publications, dMarc founders Chad and Ryan Steelberg have left Google over a number of substantial disagreements about how to best achieve revenue targets. Due to receive up to $1.13 Billion if certain growth goals are achieved, it is now being reported that the founders will be fortunate to receive more than $200 million.

The rift highlights some of the problems Google is facing with Google Audio. One is obtaining inventory on enough stations to provide the scale necessary to achieve revenue targets. Media Post reports Google/dMarc has relationships with 700 stations. By contrast, we work with over 2200 radio stations.

But the bigger issue appears to be one of fundamental philosophy. dMarc founders believe some human touch is required to support the sales efforts, while Google's philosophy is based on automation that eliminates human touch.

A separate article appearing in today's New York Times reveals more details about the problems Google Audio is having securing quality radio inventory.

"At a high level, dMarc and Google are both trying to move mountains and reshape traditional media," said Jordan Rohan, an Internet analyst with RBC Capital Markets. "That's not easy to do. If Google Audio were to be successful, it needs to have prime-time and drive-time inventory in major markets."

As the article points out, Google's valuation is based on achieving success in offline media. We doubt they'll be giving up anytime soon.

Posted by Jeff Small & Brett Astor at 11:01 AM | Permalink