GOOG Alphabet Inc

By Jack Nicas 

Google's smart home speakers on Thursday played an unprompted promotion for Walt Disney Co.'s new "Beauty and the Beast" movie, the first sign of how the world's largest advertising company could shoehorn ads into its growing number of voice interactions with users.

Users of Google's voice-controlled speaker, called Google Home, heard a 17-second promotion for the movie, after asking the devices about the their schedule. "By the way, Disney's live-action Beauty and the Beast opens today," the device said, according to user videos. After mentioning a detail about the movie, it said, "For some more movie fun, ask me to tell you something about Belle," a main character in the film.

The promotion, which appeared to be Google's first attempt to test advertising on Google Home, reflects a new balancing act between monetizing new search formats and users' tolerance for more ads. The promotion was also read aloud on some smartphones that run Google Assistant, the company's digital-assistant technology that also underpins its speakers.

Joseph Vorbeck, a 32-year-old web developer in New York City, said he wasn't pleased to hear the Disney promotion after his Google Home told him the weather and his schedule for the day. "It was kind of jarring," he said. Advertising on the device "would really ruin the experience for me."

Google, a unit of Alphabet Inc., said the promotion was a partnership with Disney, not an ad. Riffing on lyrics from Disney's 1991 animated version, Google said, "This isn't an ad; the beauty in the Assistant is that it invites our partners to be our guest and share their tales."

Disney didn't pay Google for the promotion, a person with knowledge of the deal confirmed, though it was done with the Hollywood studio's approval.

Google could use the "Beauty and the Beast" promotion as a proof-of-concept to try to sell companies on using Home as an advertising platform in the future.

Google built its massive advertising business by displaying ads alongside its search results. Those search ads have been successful in part because they are relevant to users' interests and discreet -- users can scroll past them if not interested.

But voice interactions don't allow for such subtle advertising. Promotions can be slipped into conversations quietly, such as product placements, without being labeled as ads, but Google has long been careful about labeling advertising.

Since Google unveiled Google Home and Google Assistant last year, industry analysts have wondered how Google plans to monetize the products, which can also run on smartphones. Both products serve similar functions as Google's search engine -- finding users information and answers -- and could cannibalize its main moneymaker, unless Google finds a way to sell ads on them.

The company's approach has long been to make products useful and popular before profitable. "If they find them useful and they use it at scale then we'll figure out a way" to monetize the products, Google's search chief John Giannandrea said shortly after the products were announced.

John Mason-Smith, a 29-year-old business-software salesman in Virginia Beach, said he loves his Google Home, but ads on it would feel intrusive. "When your only interaction with the device is via voice, when you put an ad in the middle of that, it's like someone interrupted your conversation to do an unprompted sales pitch," he said. "It's a protected space they're violating."

The company later Thursday updated its statement, saying that the promotion was part of a feature that calls out "timely content," such as a holiday, after telling users about the day ahead. "We're continuing to experiment with new ways to surface unique content for users and we could have done better in this case," Google said. By Thursday afternoon, it had removed the promotion.

--Ben Fritz contributed to this article.

Write to Jack Nicas at jack.nicas@wsj.com

(END) Dow Jones Newswires

March 16, 2017 20:38 ET (00:38 GMT)

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