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Wednesday, November 08, 2006

Google Takes To The Airwaves (GOOG)(CCU)

Following Google's announcement that it would make a misguided move into newspaper ad space buying, late news comes that the search giant may buy $1 billion in radio inventory.

The clear winner in this would be radio giant Clear Channel. If Google buys such a large block of time from the radio chain, Clear Channel's flagging fortunes is an ailing industry could be reversed, at least temporarily. Four years ago, Clear Channel's stock traded at $53. It now changes hands around $35, having made a move up from $28 on but-out rumors.

Still, it is by no means certain that Google's second foray into tradition media this week will work. The system Google is offering will allow its advertising customers to use its Adsense system to sign up for radio advertising by picking radio advertising the way it would AdWords. Google argues that this is an efficient means for buying time on stations.

But, is it? Radio is targeted by region first, and then by demographic segment and programming type. Buying radio is not rocket science. It is actually a simple and effective means for targerting people especially during "drive time" from 6 AM to 10 AM and then again in the late afternoon.

Radio can only be as efficient as the size of its audience. Satellite radio and in-car iPod have cut into this audience and that is likely to continue.

Like newspapers, buying advertising in a medium with a falling audience may not be attractive, whether the ad are bought through Google or directly from the source.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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