The New York Times reports today that Google is having trouble selling ads on the radio, at least not with the same success it has had on the Internet and in newspapers. One has to wonder why Google is taking Google Audio on such a seemingly separate strategy from the one it used to grow online.
Most newspaper.com’s use Google ads to fill remnant inventory. And small sites, such as blogs, use the ads as revenue to support a hobby. Google combined what had been seen as individually unvalued into a viable advertising market.
At least the way The Times reports it, Google is taking a different path with radio. Here’s how the trouble gaining traction is reported:
Industry insiders cite everything from culture clashes to resistance in the radio industry, which relies heavily on sales representatives, to automate its advertising systems. But the hurdle mentioned most often is Google’s apparent inability to secure enough air time, or inventory, to make its system attractive to advertisers.“If Google Audio were to be successful, it needs to have prime-time and drive-time inventory in major markets,” said Jordan Rohan, an Internet analyst with RBC Capital Markets.
Ignore the “industry insiders.” Rohan’s wrong. Google’s advertising model is disruptive. And disruptive technology is often born in the low-end market, only to slowly work its way up the food chain. That’s what we’ve seen online.
Larger advertisers are starting to buy space with Google online, and only recently have Google ad rates started to climb from dirt cheap to moderately cheap for popular keywords.
Google’s next steps online should be to start selling banner ads in all of the standard IAB sizes. Let the rates grow and the returns grow for newspaper.com’s who use Google’s system instead of their own. Google is growing into a position where it can take over almost all online ad sales.
Same goes for Priceline.com and selling hotel rooms. If it wanted to, Priceline could partner with a hotel chain to sell all of its rooms, instead of the cheap "remnant" rooms that it does now.
