Google is recognised as the dominant force in online advertising, particularly because of its clout in paid-for search marketing. But it is now looking to expand into offline advertising, with moves into the print and radio media buying arena. In the US, the company is running its second magazine space-buying experiment, and has recently acquired radio advertising buying network dMarc Broadcasting for $1.2bn (&£686m).
Google is bulk-buying ad space with a range of US titles, including Martha Stewart Living, and inviting advertisers to bid for ads. Meanwhile, dMarc, a media buyer with 500 US radio stations in its network, offers advertisers an online system for booking ads without having to talk to salespeople.
UK media buyers and planners claim to be unmoved by the developments. As Jim Marshall, chairman of Starcom UK and chairman of the media future group at the Institute of Practitioners in Advertising, points out, media broking – buying ad space in bulk and then selling it on – is not allowed in the UK. Any ads that are booked must be on behalf of named clients. Furthermore, you cannot be both a media or advertising agency and a media owner.
Marshall also questions the benefits to clients of broking. “You can’t plan a strategy properly,” he says. BLM Group chief strategic officer Charlie Makin agrees/ “Media broking works against any precision in media buying and planning. And clients are increasingly demanding precision.” But internationally, the situation is very different. Not all countries have rules banning media broking: it is allowed in the US and in some European countries, and was only outlawed in France ten years ago. The big international marketing services groups are certainly concerned about Google’s plans.
But as a senior agency figure stresses, the biggest problem in trying to work out Google’s strategy is that the company itself appears confused about what it is doing. In part, this is because, even though Google is now listed on the New York Stock Exchange, its corporate culture is still laid back and its intentions often opaque.
Google is enormously cash-generative and appears willing to throw money at exploring new areas of business. Staff can spend 20% of their time pursuing their own projects, which can make it difficult to differentiate between a strategic move and someone’s pet project. But then, Google originated as the pet project of university students Sergey Brin and Larry Page – and turned the information and media industries on their heads in barely ten years.
Google product management director Richard Holden says: “If we get good sales and positive interest from advertisers and agencies, we would look to extend. We are not involved in anything beyond print at the moment.”
But in addition to the print experiment and the dMarc purchase, Google last year paid Time Warner $1bn (&£576m) for a 5% stake in AOL – and AOL is hard at work developing television programming for distribution over the internet.
It is unclear whether Google wants to become a media buyer or broker, or whether it wants to create an automated exchange system that advertisers and their agents could use to find and buy media more easily. Such a system is unlikely to put big media agencies out of business, since they can add value to their services in a number of different ways. But it might appeal to smaller advertisers, who often do not have the money to use a media buyer or planner.