• by Shankar Gupta , January 18, 2006

Continuing its expansion into traditional advertising, Google Tuesday announced that it will acquire dMarc Broadcasting, a provider of automated ad delivery platforms for radio stations. Google is paying $102 million up front for dMarc, out of a total cost of as much as $1.14 billion payable over three years.

Google's Tim Armstrong, vice president of advertising sales, said in a statement that the company "is committed to exploring new ways to extend targeted, measurable advertising to other forms of media."

Industry watchers are interpreting this statement to mean that Google will likely use a pay-for-performance mold for radio advertising, bringing a new model to old media. "They intend to help make radio more measurable," said Fredrick Marckini, CEO of search engine marketing firm iProspect. "And that suggests that they have designs on selling radio on a pay-per-performance basis," he added.

The search giant has already moved into another form of traditional advertising--print. This month, Google began selling print ads in the Chicago Sun-Times newspaper; late last year, Google also started selling inventory in several magazines.

Kelsey Group Analyst Greg Sterling said Google's moves into traditional advertising should help marketers better integrate the online components of their campaigns with offline media. "In the not-too-distant future, we'll see more integrated marketing campaigns," he said. "Online media has been sort of a silo. In the future, more and more sophistication will come in terms of how to use online and traditional media to complement and more effectively run campaigns."

Sterling noted that radio was especially synergetic to Google's Internet product. "This is very complementary to what they're doing, because you can't reach people during drive time on the Internet," he said. "It potentially gives them access to a multibillion-dollar revenue stream."

Some also view Google's move into radio as telegraphing an intent to move into other traditional media spaces--especially television. "Now it's a question of when--not if--they're getting into television," Marckini said.

Other search marketing professionals, however, cautioned against the assumption that the search giant would head into television advertising. "It may go that route, but TV is a much bigger hurdle. Radio ads are a much more local medium--a longer tail, with many more advertisers buying," said 360i President Bryan Wiener. "TV is still a tremendous branding vehicle. I sense that will be the last landscape that Google goes after."

He added that Google isn't likely to shake up the foundations of traditional media buying so quickly. "It's going to take longer to change the dynamics of the offline media market than it is the way the dynamics are changing online," he said. "These are entrenched industries that are not going to change overnight."