Tuesday, May 12, 2009

Even Google Drives Away from Radio

Headline in a trade pub this morning:

Google: Radio ROI still a mystery. Google CEO Eric Schmidt says its algorithm-driven system wasn’t able to crack radio's ROI code and present a definitive return-on-investment to advertisers. Google exits radio at the end of this month.

Hate to say, "I told you so..." but, well, I did. Google's take on how to make a trillion bucks on broadcast radio was an old idea: the remnant sale. Stations cut deals to make leftover spot time available to Google to go sell in big, anonymous blocks. Advertisers could get dang cheap commercials and stations could sell time that otherwise went by the wayside. Perfect!

Hardly. You rarely knew which station would run your commercials, who their audiences were. In most markets, you had few choices of stations. Few advertisers want tonnage anymore. Not even cheap tonnage. What they want is to be able to reach people who are likely buyers for whatever it is that they are selling. Maybe there is a little branding and name recognition in there, too, but even that needs to be targeted toward folks who really care. Beyond that, advertisers want (and are getting from many media) the ultimate ROI: only paying for customers who act. And they are willing to pay more for those who actually become customers.

That is so foreign to how most ad media are set up to operate that many in the media can't grasp it. So they keep peddling their 30- and 60-second commercials and their 1/4-page ads, priced on audience estimates or readership audits, while the real world moves on.

Google should probably distance itself from radio anyway. Their stock is, what, $500 a share? Several major radio companies are below a buck and trading now over-the-counter.

Run away, Google! Run away!

Don Keith N4KC

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