Google Encounters Hurdles in Selling Radio Advertising

SAN FRANCISCO, Feb. 9 — When Google acquired dMarc Broadcasting, a company whose software allows marketers to place ads on radio stations, for up to $1.24 billion early last year, it was seen as a clear sign of Google’s ambitions to extend its dominance over Internet advertising to other media.

Now, there are indications that Google Audio, as the company’s foray into radio advertising is known, has hit some snags. The two brothers who founded dMarc in 2002 have left Google amid growing speculation by analysts and radio and advertising executives that the Internet giant is finding it harder than expected to muscle its way into the radio business.

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.

“At a high level, dMarc and Google are both trying to move mountains and reshape traditional media,” said Jordan Rohan, an Internet analyst with RBC Capital Markets. “That’s not easy to do. If Google Audio were to be successful, it needs to have prime-time and drive-time inventory in major markets.”

Google, which began testing radio ads late last year, confirmed the departure of Chad and Ryan Steelberg, the dMarc founders, which was first reported on Thursday by paidContent.org, an industry blog. In a statement, the company said it was happy with the progress of the tests to date and remained committed to the audio business.

And during a conference call with analysts last week, Jonathan Rosenberg, senior vice president for product management at Google, said the radio test was “pretty robust in terms of scope.”

“I believe we had over 700 radio stations in more than 200 metros in the network,” Mr. Rosenberg said, according to a transcript of the call published by Thomson Financial.

But radio analysts said that they were not impressed by the numbers themselves, stressing that Google’s access to air time may be limited, by and large, to what the industry calls “remnant inventory” — ad time sold at the last minute and at low prices.

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