CBS/Google Radio Ad Deal Is Imminent
In a report issued by Merrill Lynch, lead broadcast analyst Jessica Reif Cohen said a CBS/Google deal would likely be "wide-ranging" and would include both advertising and content elements.
"Although no deal was announced, we believe that the companies continue to negotiate terms of an agreement," wrote Cohen, referring to CBS chief Leslie Moonves keynote Tuesday at the Consumer Electronics Show in Las Vegas.
The sticking points could revolve around control of advertising sales and the size of a revenue guarantee that Google would pay to CBS for being able to monetize its television content through YouTube and other Google sites.
With respect to the advertising sales arrangement, Merrill Lynch speculated that it would primarily be focused on CBS' radio inventory and would not likely include any network or local TV station time.
As I've covered earlier, Google has recently stepped up efforts to expand its presence in offline media, especially radio and print media.
It's estimated that a Google deal to sell 10% of CBS Radio's advertising inventory would generate approximately $200 million in revenues and that the upside for CBS would be two-fold:
First, attracting new small business advertisers to its platforms alla Google's experience with search, and second, creating a more efficient sales model that reduces the friction/cost of selling advertising.
Naturally, Madison Avenue is protesting the development stating that a potential Google deal is initiating the commoditization of advertising time and related pricing pressure.
Does Madison Avenue have a case? Leave your thoughts below.
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