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"Postmodernism is a change-or-be-changed world. The word is out: Reinvent
yourself for the 21st century or die! Some would rather die than change."
Leonard Sweet, cultural historian.

08/02/2006 Entry: "Google, the Wal-Mart of advertising"

There's a buzz today about the Google announcement of a deal with XM Satellite Radio that bears comment. Under the deal, which will be handled through dMarc -- the radio advertising rep firm Google acquired in January -- Google's AdWords clients will have access to ad inventory on XM's non-news channels. Here's a key graph from Joe Mandese's MediaDailyNews article:

Why Google is making its play in radio when Madison Avenue appears most focused on making the process of TV buying more efficient isn't clear, but dMarc is believed to have plans to extend its electronic trading systems into television.
Another MDN article looks at other players getting involved in this space, including SoftWave, a company that just went public Monday.
Meanwhile, SoftWave is just one player in an increasingly aggressive online media-trading marketplace, which goes beyond eBay's initiative and Google's ventures. For example, Strata Marketing has publicized its recent partnership with Spot Buy Spot, which allows online media transactions for broadcast and cable TV and radio, including buying, revisions, makegoods, rejections and cancellations. About 800 media-buying agencies nationwide have adopted Strata's software.
So clearly we have some smart people with deep pockets trying to blend internet technologies with offline advertising placements, and that may sound -- at least on the surface -- like good news for broadcasting. Believe me, folks, it isn't. And Mark Zagorski, Chief Marketing Officer of MediaSpan Group, nails it in an insightful commentary, also in today's MDN:
When the easy money knocks on the door, broadcasters should be cautious as to whom they let in--or risk commoditizing their business beyond the point of saving.
This is exactly what the Googles and eBays of the world want to do, and a commoditized broadcasting marketplace would benefit only them. Some will argue that planet Google levels the playing field for any business wishing to advertise, thereby opening the door for the small guy. But Zagorski rightly argues that this is bad for the industry, because many advertisers don't wish to be associated with downscale upstarts.
Google's mantra to create efficient markets by cutting out the middle-man and driving prices down may have a long-term negative effect on radio (broadcasting): creating a more downscale environment that eschews brand value in favor of commodity and chases away premium advertisers. In other words, the cure for the short- term pain may end up dooming the long-term business.
Broadcasters need to keep a close eye on this, because while Google's efforts heretofore to bring its technologies to the offline world have failed, they are a tenacious and formidable competitor with deep, deep pockets. We need to view them as the Wal-Mart of the advertising world and ourselves as the neighborhood grocer. As Zagorski points out, every revolution comes at a price, and Google is now fighting an industry with "deep personal legacies, relationships on both sides of the aisle (salesmen and agencies), and an ingrained infrastructure of people that need to keep paying their kids' tuition bills." It will not go down without a fight.

This is, again, why media companies need to turn the tables and start disrupting Google's (and other internet pure play companies) model by attacking it from the bottom (local) up. Local media is still the best marketing machine ever created, and we have the ability to drive web businesses at the local level, something Google can't (yet) do. This is where the battle must be fought, and I can only hope that the right people are listening.

Will we fight or will we opt for the easy money? Hmm.


"The future is not something we enter. The future is something we create."
Leonard Sweet