Google on Tuesday underscored its ambition to expand beyond its core Internet-search business and into traditional media when it announced a deal to acquire a radio-advertising group for up to US$1.2 billion.
The agreement follows a deal struck last year when Google bought up space in technology magazines to resell to its online advertising clients.
With about US$6 billion in cash on its books, Google is rapidly expanding into new areas of business and new geographies. The company allows its engineers one day a week to work on their own projects to provide a pipeline of potential money-spinning ideas.
Deal includes targets
The firm said it is buying the privately held dMarc Broadcasting for an initial US$102 million in cash.
If certain performance targets are hit over the next three years, Google could pay an additional US$1.14 billion, the company said.
"Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media," said Tim Armstrong, vice president of advertising sales at the search engine.
DMarc uses an automated advertising platform designed to simplify the sales, scheduling, delivery and tracking of radio advertising.
Broadcasters are able to use the technology to manage the scheduling and placing of advertising to minimize radio station costs as well.
The company, based in Newport Beach, California, is run by brothers Chad and Ryan Steelberg.
Google aims to integrate the business with its AdWords platform. AdWords places relevant advertising on Google search results pages as well as on partner sites, such as the New York Times online and Earthlink. The company said the addition of dMarc would provide AdWords advertisers with an additional outlet to promote their goods or services.
Testing the waters
Google confirmed in September that it had dipped its toes into print advertising sales. The company bought space in specialist titles such as PC Magazine and Maximum PC to resell to its existing advertising base.
The company said at the time that the scheme was a test and declined to elaborate further on the details. But it is clearly not satisfied with sitting on the rapidly growing market for search-related advertising.
In November it provided advertisers with another service, trialing "click-to-call" sales, where Web users can phone an advertiser using a voice-over-IP connection.
Shares in Google keep marching higher -- they are now five times the US$85 offer price when the company joined the market 18 months ago.
The brokerage firm Bear Stearns earlier this month lifted its price target for the next year from US$360 to US$550. Piper Jaffray expects the shares to hit US$600 this year.
One analyst at the brokerage Caris & Company speculated that the shares could reach as much as US$2,000 apiece.
The market currently values the business at more than US$130 billion.