• Bloomberg News/MediaDailyNews, Friday, February 13, 2009 11:45 AM

Google will shut down its radio ad business and lay off as many as 40 workers, saying that the three-year investment simply didn't pay off. The search giant expanded into the radio ad business in 2006 following the $102 million purchase of dMarc Broadcasting. Google is now seeking a buyer for the software that arranges ads on radio programs. According to a company blog post, Google will stop selling terrestrial radio ads by May 31 and focus instead on streaming radio. Last month, the Web giant closed its business that sold ad space on newspapers.

Google faced an obstacle, according to MediaDailyNews, dMarc mostly trafficked in remaindered ad inventory--the unsold air time left over at the end of the business day, which is considered less desirable by advertisers. Besides that, radio ads have now gone three years without any growth. After climbing 0.4% in 2006, radio advertising fell 2.3% in 2007, 8.5% in 2008, and according to Mark Fratrik, an analyst with BIA Financial Network, it will drop 10% this year. "The radio industry is getting hit from both sides," Fratrik said, adding that audiences are shrinking, and advertisers are increasingly finding other ways to reach customers.

As Susan Wojcicki, vice president of product management, said today on Google's blog, "We haven't had the impact we hoped for." Indeed, in light of the recession, Google is taking a harder line on investments that aren't paying off. The company slashed capital expenditures by 46% last quarter and added only 100 new employees, compared to 500 in the third quarter.

Read the whole story at Bloomberg News/MediaDailyNews »