Google begins limited test of radio ads

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SAN FRANCISCO - Google Inc. said on Thursday it has completed the development of its widely anticipated radio advertising system and begun a limited test allowing customers to buy ads via its online ad-buying system.

In a statement on the Web search leader's site, the company said it had begun testing a system it acquired by purchasing dMarc Broadcasting in early 2006 for $102 million and which it subsequently built into its existing AdWords online ad system.

Google Audio Ads is working with more than 700 radio stations covering more than 200 metropolitan U.S. markets, Google spokesman Mike Mayzel said.

"We're happy to announce that the integration is now complete and we've recently begun a U.S. beta test of Google Audio Ads with a small group of AdWords advertisers," Google said in a statement on its official advertising blog.

RBC Capital Markets radio industry analyst David Bank said the test was a first step in a major undertaking by Google.

"What everybody's expecting is that Google will get involved with a big radio player on a wider scale," Bank said, adding that is talking with a number of major radio operators.

Analysts expect Google Audio Ads to shake up the $20 billion annual U.S. radio advertising industry by offering a simplified Web-based purchasing process for radio ads to its existing base of hundreds of thousands of text advertisers.

One executive at a big radio company said last month the industry was moving cautiously in its dealings with Google.

Bank concurred, saying: "There's a real mixed emotion among radio operators."

On the one hand, Google's entry may turn radio advertising into more of a commodity.

"A disaster could occur if people who were buying spots offline started buying online at a lower pricing level," Bank said.

But by helping turn its vast audience of Web search advertising buyers into radio ad buyers, Google may eventually prove to be a boon for the industry, he noted.

"What Google gets is a dual revenue stream on top of search. They're not in the radio advertising business. They may also use it to sell search to local radio customers," he said.

Google may offer radio operators a large upfront financial guarantee to sell air time inventory to mitigate their risks.

"Audio Ads offers detailed reporting, targeting by demographic, location and station type, and provides easy access to the huge market reached by radio programming," Google said in discussing the project on its AdWords sales site.

The AdWords purchasing system allows customers to track how much is spent on each radio ad, when and where the ad airs.

Google is inviting a small set of selected advertisers to join the current test program. The company said it had not set a date for when its radio advertising service will become more widely available to advertisers.

Google is seeking to expand beyond the pay-per-click Web search advertising market it dominates to offer advertising across a range of traditional and new media formats ranging from newspapers to online video.
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