After closing down Print Ads, Google exits Audio Ads programme
It's rare that Google encounters failure, but its three-year old foray into radio advertising has now come to an end. Yesterday it announced plans to shut its radio-advertising business Google Audio Ads and cut as many as 40 jobs, saying the investment didn't provide enough of a payoff.
The company, which expanded into the market with the 2006 purchase of DMarc Broadcasting Inc., is seeking a buyer for software that arranges ads on radio programs. Google will stop selling radio ads by 31 May and focus instead on online streaming audio, according to a blog posting yesterday.
It was the second time in two months that Google had killed a programme meant to expand its advertising business offline, suggesting that the appeal of Google's automated model for selling ads may be far more limited than the company once hoped.
The move illustrates Google's failure to parlay its dominance in internet-search ads into offline media. The company said last month that it would close a business that sold ad space in newspapers. Google spent $102 million in cash for DMarc and agreed to pay as much as $1.14 billion in later installments depending on performance. (See: Google cancels print ad programme)
The company had planned to revolutionise the way radio ads were bought and sold. In 2006, CEO Eric Schmidt said he foresaw a day when Google would have more than 1,000 employees serving a thriving radio advertising business.
"We have decided to exit the broadcast radio business and focus our efforts in online streaming audio," said vice president of product management Susan Wojcicki. "We haven't had the impact we hoped for" from the radio service.
Wojcicki said Google would apply some of its radio advertising technologies to selling ads on online audio programs. She also said that Google would try to find jobs for most of the people involved in the radio ads programme.
Google's radio advertising service enables users to punch criteria including specific geographic markets and demographics into a website, and set bid prices they're willing to pay to have their advertisements placed. Users are then able to track the ultimate placement and prices paid to for their radio advertisements using the site.
Google has traditionally prided itself on allowing employees to spawn a wide range of new products and services, sometimes seemingly well removed from the company's core search advertising business, which still pulls in an overwhelming majority of its revenue.
However, as the economy has soured and Google has sought to cut costs, it has been forced to more carefully pick and choose where to spend its resources.
"We have always accepted that if you take risks not all of them will pay off," Wojcicki wrote. In addition to print and radio, Google has also focused on providing a Web-based service for buying and selling TV advertising.
Wojcicki noted that Google "will continue to invest in our growing TV advertising business, where we can measure audience response and help advertisers understand how effective their ads are."