Update: Google buys radio ad provider

Google has reached an agreement to acquire dMarc Broadcasting, whose technology links radio stations and advertisers and automates various aspects of the radio ad selling process.

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Google will pay $102 million in cash for all outstanding equity interests in dMarc, and has agreed to make up to $1.136 billion in additional payments when and if certain performance goals are met, Google announced on Tuesday.

"Their business and how they work with customers is very complementary to ours. Those visions are introducing simplicity, efficiency, accountability and scale to advertising. What they do for the radio process in advertising is very similar to what we do in online and digital [advertising]," said Patrick Keane, Google's head of sales strategy, in an interview.

"By making available our radio advertising inventory to Google's extensive base of advertisers we complement each other very nicely," said Ryan Steelberg, dMarc's president.

Technology from dMarc will be integrated into Google's AdWords advertising platform to open a new radio ad distribution channel for Google advertisers, Google said.

However, work on that integration will not begin in full until after the deal closes, so existing AdWords customers should not expect to see any merged services for "some time," Keane said.

Existing dMarc customers will not suffer any service interruption as a result of the acquisition, which is expected to close this quarter, after customary closing conditions are met. More information about dMarc, which is based in Newport Beach, California, can be found at dmarc.net.

Google's planned foray into the world of radio advertising is yet another attempt by the company to broaden its online advertising mix and ad distribution channels beyond the paid search model, from which Google derives most of its revenue.

For example, Google is experimenting with buying ad space in print publications and reselling it to its advertisers. The company's recent renewal of a broad advertising and technology partnership with America Online (AOL) calls in part for AOL to help expand the amount of graphical ads in Google's ad network.

"It’s a fascinating development that confirms the speculation about Google branching out to traditional media," said Greg Sterling, an analyst at The Kelsey Group.

Clearly, Google is interested in diversifying its revenue streams, and this deal might point to a broader initiative to explore opportunities in traditional media, such as television, Sterling said.

For example, if Google can get a foothold in radio advertising, it will reach users at times when they are not exposed to Google's online ads, such as the times when they are driving to and from work, Sterling said.

The deal could also be significant if Google successfully introduces to broadcast advertising its methods of tracking the effectiveness of online ad campaigns, Sterling said. This would be a novel development in traditional media, where evaluating the performance of ad campaigns generally isn't done as accurately and scientifically as it is in paid search advertising, Sterling said.

Because most radio stations are vehicles for local advertisers, this deal also has the potential to boost Google's efforts in local search and its related advertising, Sterling said.

DMarc, founded in 2002, has about 100 employees, Steelberg said. The company's staff and executive management team are expected to remain after the acquisition closes.