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Google is exiting radio ad business

February 13, 2009|Alana Semuels

Continuing its retreat from traditional media, Google Inc. is bowing out of the radio advertising business. It plans to keep trying to sell ads for streaming audio on the Web.

The cutback reflects a general belt-tightening at the Internet giant, which is trying to curb its big spending by shutting down businesses that aren't working.

"While we've devoted substantial resources to developing these products and learned a lot along the way, we haven't had the impact we hoped for," Susan Wojcicki, vice president of product management, wrote in a post on the company's blog. About 40 employees will lose their jobs.

Google launched its radio efforts when it bought DMarc Broadcasting Inc., a Newport Beach company with radio advertising technology. The 2006 deal was initially valued at as much as $1.1 billion but ended up costing less because DMarc failed to hit performance goals.

The Google Audio Ads and Radio Automation programs sought to create new revenue streams for broadcast radio and to streamline the process of buying and selling radio advertising.

"It's just not making them enough money for the cost," said Greg Sterling, an analyst at Sterling Market Intelligence. "It speaks to the weakness of the medium itself."

What's more, he said, the recent cutbacks suggest Google's efforts to become a multiplatform media company are dormant. In January, it killed its Print Ads program for newspapers, ended uploads to Google Video and closed its mobile social-networking service Dodgeball.

But Sterling said Google's media "will probably resurface in a less ambitious form when the economy revives."

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alana.semuels@latimes.com

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