Google Spurns Radio Ads; Will Develop AdSense For Streaming Audio Instead

Last month Google gave up on serving newspaper ads; now the search giant is calling the radio business quits. In a post on Google’s blog, the company will exit the broadcast radio business and instead focus on streaming audio. The Google Audio Ads and AdSense for Audio products will be phased out; Google also plans to sell the Google Radio Automation business, the software that automates broadcast radio programming. Advertisers will still to be able to use Google Audio Ads until May 31. Google didn’t offer a specific reason for its decision to abandon radio ads. But even the search giant has been affected by the economic downturn and radio, like newspapers, have been struggling mightily. As UBS Equities analyst Matthieu Coppet stated in his revised media ad spend report yesterday, radio ad spend is expected to fall 8 percent this year.

Google got into the radio business in January 2006, when it bought dMarc Broadcasting, a digital solutions provider for radio. The deal was for $102 million cash consideration with earn-out targets that, at the time, were valued at up to $1.136 billion. The company’s founders, Chad and Ryan Steelberg, left Google a year after the purchase offer was made.

At least one radio ad sales company is welcoming Google’s entry into the streaming audio space. In an e-mail exchange, Doug Perlson, CEO of CBS-backed streaming media ad firm TargetSpot, told us, “Having Google introduce their million-plus advertisers to ... the highly targeted streaming audio ad market further validates its value. Google will have a positive impact to the entire internet radio community. We welcome their entry into the space.”

Updated: Rafat adds: At least 40 people will lose their jobs as a result of this closure, reports NYT, and others may get different jobs at Google (NSDQ: GOOG). Also, no word on whether the founders got any earnout from Google, though we doubt considering they left a year after. Google has mentioned regularly in its filings that it has yet to realize any significant revenues from the dMarc acquisition, though that “significant” amount has never been disclosed.

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