Measuring Radio - What Google Needs
There's much speculation going on right now that Google will buy a sizable amount of radio inventory (perhaps from Clear Channel) that they will then offer to advertisers via AdWords. Clearly, Google is trying to take the great radio ad deployment system they acquired in DMarc and encourage advertisers to start using AdWords/DMarc as their web-based online & radio deployment system.
The first problem with DMarc (and SpotRunner for that matter) is that today the only thing an advertiser can easily measure is radio/TV impressions. Whereas AdWords measures billions of search & content impressions to within +/- 0.01% accuracy, radio measurement is currently more like +/- 5% accuracy. To those in the high-end ppc management space, you'll recognize that +/-5% is not nearly good enough to optimize against. To be clear, the impression measurement problem is an industry problem, not just Google/DMarc's. While it may be easy with DMarc to measure both the number of times a radio ad aired and the markets it aired in, measuring the number of people who actually heard the ad is currently impossible.
[For those interested in the topic of accurate radio impression measurement, I wrote about Project Apollo and the Arbitron Portable People Meter back in March. Likewise, I wrote last month about the growth of Quick Response codes in Japan; to quote the article I read on the topic, QR codes "codes are a similar to bar codes except they are square, look a bit like an ink blot and contain much more information."]
More problematic still is the fact that there's no reliable, accurate way to measure radio ROI. Sure you can use a distinct 800 number, but that doesn't give you the equivalent of keyword-level ROI data ("speaker-level data" anyone?) that advertisers need in order to actively participate in the radio ad auction that Google would love to power.
No speaker-level data = no granular ROI measurement
No granular ROI measurement = no active auction participation
No active auction participation = no radio advertising efficiency
No radio advertising efficiency = no benefits for radio stations
While Google's involvement in radio will bring new, more analytical advertisers to the medium, the ROI feedback loop that has powered the growth of search advertising will continue to be noticeably absent until someone gets ubiquitous distribution and consumer use of a free PPM-like device out there.
For those of you in the VC/startup community, that, my friends, is huge market opportunity begging for a creative solution.