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May 17, 2007

CEO Schmidt on Radio Advertising With GoogleAudio: A Closer Look

If newspaper articles told the whole story, there'd be nothing to blog about.

As promised, we're continuing our discussion of Google CEO Schmidt's interview in USA Today on May 16th.

Q: Why do you think your network of advertisers, who specialize in online text ads, are ready to move to audio advertising?

Schmidt: We have enough inventory. We got into radio when we bought (radio company) dMarc Broadcasting, but they had remnants (unsold ads offered at last-minute discounts), which is stuff people didn't want. That's a good business, but not a great business. What we needed was prime-time slots, and that's what Clear Channel offers us.

Our comments:
It's mostly true that pure 'remnant' inventory is the stuff nobody wants. That's why we've said before that a sole focus on getting low CPM's is mistaken. Now, if you have the requisite ability and knowledge to assess remnant inventory, there is a place for remnant inventory in a radio advertising campaign. But a campaign built solely on remnant inventory is not sustainable, never mind scalable because by definition that renmant inventory isn't always available.

You can get low CPM's, but can you get low CPM's on higher quality radio media placements? That's the key when it comes to direct response radio advertising.

The question for businesses who want to begin advertising on radio via GoogleAudio is whether Google's Clear Channel inventory - the "prime time slots" - are priced right. Because it's easy to for anyone - yes, anyone - to get "prime time slots" (often thought of as "drive time" or "morning drive" or "afternoon drive"). All you have to do is pay. A lot.

Key Point: Success in radio advertising isn't about what you pay. It's about what you get for what you pay. It's a fraction, not an integer. You can't overpay, and you can't 'under-get'. If you understand this, you can avoid being misled by a lot of what is said about radio advertising.

Posted by Jeff Small & Brett Astor at 09:46 AM | Permalink