In Latest Deal, Google Steps Further Into World of Old Media

[SOURCE: Wall Street Journal, AUTHOR: Kevin Delaney kevin.delaney@wsj.com]
Google has brought in billions of dollars in revenue by brokering advertisements that appear on Web sites. Now it is taking its ad machine beyond the Internet in an ambitious quest to place ads in traditional media such as newspapers and radio. Google will pay $102 million in cash for dMarc Broadcasting. (The company will pay up to an additional more than $1.1 billion over three years if dMarc meets certain targets.) DMarc runs an online system for advertisers to buy radio airtime. It then automatically slots the advertisers' commercials into radio stations' computers for broadcast. The acquisition could open enormous new markets to the search company. But it could also test the limits of Google's automated ad-placement technology that brought it more than $3 billion in online ad revenue in 2004. Most people think of Google as a place to go to gather information. But in a business sense, Google operates as a huge clearinghouse for advertisers. At the heart of Google's advertising operation is an automated system that auctions off the right to place advertisements on its search-results pages when an Internet user types in certain key words. Most of its advertisers simply log into the system to place their ads and make their bids. They pay only when someone clicks on the ad. Google also brokers the sale of ads that appear on other Web sites -- sometimes tied into key words and sometimes not. The radio deal is the latest of a series of recent moves by Google in which it aims to bring its Internet advertising expertise to bear on old-media markets. Since last year, Google says it has been placing ads on behalf of advertisers in three magazines and the Chicago Sun-Times newspaper. And Chief Executive Eric Schmidt late last year acknowledged in an interview that the company is considering extending its ad system to TV advertising as well.
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