Lessons Learned From Demise Of Google Audio

Guest Contributor, Steven Keith Platt, Platt Retail Institute

In 2006, Google announced that it was revolutionizing the radio advertising business. In furtherance of its goal, it introduced a real-time, bid-based, automated method to sell ad inventory, as well as the promise of accountability through measurement and reporting.

Google Audio never lived up to the promise, and on 31 May Google is pulling the plug. This follows Google’s recent exit from the newspaper ad business. Yet Google’s failure offers some interesting lessons for those of us in the digital signage space.

Google sells about one-third of all Internet advertising in the U.S., a USD 23.4 billion industry. With Audio Ads, Google desired to expand beyond the Internet to create a brand marketer’s dashboard. It would track measurement and spend across various media platforms, including print, radio, and TV, as well as the Internet.

If successful, the benefits that could have inured to Google might have included, among other things, leverage over both the brands and the media by controlling the pipes that enable the system, as well as a way to make money by selling ads in a much-enlarged market (i.e., the U.S. radio ad business is estimated at $20.0 billion).

In the end, the fate of Google’s radio business is attributable to a variety of factors. Most significant is perhaps that both the real estate owners – the radio stations – and the real estate buyers – the ad agencies – resisted. This episode offers three interesting take-aways for the digital signage industry. These include the following: –

  1. The stations and agencies may have won the battle, but not the war. For now, Google is retreating to the safety of what it knows: the Internet. Google now will focus its efforts in online streaming audio. What the radio stations forgot is that their medium, like most mass media, is fragmented and old. Satellite radio is part of the fragmentation process. As well, consider that most of us spend more time in front of a computer than listening to the radio in our cars. What the radio stations may have lost is the opportunity to be part of an integrated ad buy to address problems in their shrinking market, as well as the opportunity to syndicate their content to a growing media. This is illustrative of the power of emerging digital media to capture share from older media outlets. Clearly, CBS knows this, lest it would not have acquired SignStorey.
  2. Most marketing folks do not yet appear ready to bid for their ad real estate. But as digital media becomes more prevalent, human intervention will not be possible, much less required. As metrics improve and go real-time, available space will go up for bid, tagged with this information. An agency or its client will have defined its preferred media and demographics, as well as the price it is willing to pay. This will be instantly matched against the space, with the relevant content in-tow. Digital signage will be at the forefront of this movement due to advanced technologies linked to web distribution.
  3. According to Eric Schmidt, Google’s Chief Executive, the radio venture failed because Google never came up with a good way to measure listener response. This is true, as it was mistakenly attempting to get consumers to call in or log in in response to a radio ad. We humans will rarely go out of our way sans a direct benefit. Google was also fighting the history of an old-line, established medium. We often hear the complaint about how digital signage is held to a higher standard versus such prehistoric media. Yet it is precisely the ability to measure the consumer impact of digital signage that will make it a successful industry; comparable to what the Internet achieved with click measurement, albeit much more exacting. Our firm has tested digital signage extensively in stores and in banks. Higher education and mass transit are next. And as these superior measurement models continue to be developed, so industry adoption will increase.

Editors Note: Steven Keith Platt is Director and Research Fellow at the Platt Retail Institute

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