Google, Clear Channel in Broad U.S. Radio Advertising Deal

Web search leader Google has broken into radio with a multi-year advertising sales agreement with the largest U.S. broadcaster, Clear Channel Radio, the companies said on Sunday.

The deal, long anticipated by the radio industry, marks the progress Google

is making as it expands into offline media, not just in radio, but also television and newspapers -- even in the face of resistance from some traditional media players.

Last week, it revealed a parallel deal to supply satellite TV broadcaster EchoStar and its 13 million viewers.

Clear Channel said it has agreed for Google to sell a guaranteed
portion of the 30-second spots available on its 675 radio stations in top U.S. markets, in a bid to expand the universe of local radio advertisers to Google's online buyers.

Financial terms were not disclosed. A Clear Channel executive said Google has access to less than 5% of the radio broadcaster's overall inventory of advertising air time. The U.S. radio industry generates $20 billion in annual sales.

Through Clear Channel, Google Audio Ads promises to offer advertisers national distribution across all top 100 U.S. radio markets, enabling them to reach specific audiences, throughout the day, including prized "morning drive-time" slots, in targeted local markets.

Clear Channel attracts up to 20% of U.S. radio sales and draws 110 million listeners. Formats range from rock to all-talk to easy-listening, 24-hour news, Christian and jazz.

In a joint statement, Clear Channel Radio said its national and local sales forces will continue to focus on the company's most lucrative advertiser relationships, and on advertisers who seek specialized ad packages. Google will focus on advertisers who run ads online but who do not yet run ads on radio.

"By making radio more efficient and measurable for online marketers, this is a way to further activate their marketing efforts," said Charlie Rahilly, Clear Channel's executive vice president of operations and negotiator of the Google ad deal.

A year ago, Google telegraphed its ambitions in radio when it agreed to pay more than $1 billion for dMarc Broadcasting, which links advertisers to radio stations through an automated ad buying system. DMarc is the foundation of Google Audio Ads.

Google counts hundreds of thousands of Web-search advertising customers, many of which have never used radio for marketing, according to Drew Hilles, the former head of advertising sales at dMarc, who now runs Google radio sales.

Mountain View, California-based Google is also talking to other radio broadcasters, but Hilles declined to comment on whether they included CBS , another big U.S. radio player, or satellite radio broadcasters. "Clear Channel is the benchmark relationship in radio," he said before adding that: "We are in conversations with lots of other companies."

For Clear Channel, of San Antonio, Texas, the deal opens up an additional sales channel online for its 5,200-strong sales force and potentially new revenue by reaching advertisers who previously have not marketed on radio. By expanding its base of advertisers, Clear Channel said its sees Google Audio Ads boosting the average amount advertisers pay for spots, as measured in CPM, or costs-per-thousand ad impressions.

The deal comes ahead of a hotly contested vote this Thursday by Clear Channel stockholders on a plan by management to sell the company for $19 billion to a private equity group made up of Thomas H. Lee Partners and Bain Capital.

At the time the proposed private equity buyout was announced in November, the company said it planned to sell 448 of its 1,150 radio stations -- mostly in small markets -- as well as Clear Channel's 42-station television group.

The Google deal covers the remaining 675 or so stations that represent the lion's share of the U.S. radio market.

The partners said the internal ad-buying system used by Clear Channel's sales force now fully works with Google's radio-ad-buying service. This complements an online ad partnership where Google already provides a way for Clear Channel advertisers to place text ads on station Web sites.