Google TV Ads: Google Brings Auction Model To TV Advertising

Rumored and written about for several weeks, Google is in fact launching a beta trial of TV ads with cable company Astound and satellite TV provider Echostar, which owns Dish Network. Astound operates in selected cities in Northern California. But Dish Network is national. Interestingly, Dish Network is highly interactive, with the ability to search for programming using keywords.

Depending on whose numbers you believe, TV advertising in the U.S. today is worth between $50 and $70 billion in annual spending. Compare that to the Internet’s $16.8 billion and paid search’s roughly $7 billion in U.S. ad revenues in 2006. Google as a company had global revenues of $10.6 billion last year.

Just looking at the pool of potential revenues, in one sense, the motivation here is obvious. But there’s something of a philosophical motivation for Google as well as it tries to bring more efficiency and “transparency” to other media. In many ways, Google is merely the agent of inevitable developments that the Internet is helping bring about: the demand for more “accountability” in traditional media.

In the context of Google’s simultaneous efforts in print newspaper and radio advertising this is a very interesting development as Google seeks to become a kind of dashboard for media buying across platforms. Somewhat ironic is the fact that as brand advertisers start to question traditional media and shift budget online, Google is pushing offline.

By all accounts, Google’s radio experiment has been decidedly mixed while its print newspaper program has done better according to third party reports. As far as TV goes, agencies and advertisers will undoubtedly be interested in trying out the system. But whether Google succeeds or fails here will depend on how much ad inventory Google can gain access to and whether it in fact brings greater buying efficiency and targeting than already exists.

One challenge Google may face as it cuts more TV-related deals is the fear of Google itself and its market position and power.

The Google TV ads program will offer an auction marketplace with a required minimum bid (not disclosed). There will also be a marketplace of vendors for advertisers that don’t have their own resources to create TV commercials. (Google also did this with radio.) But for the foreseeable future this program is clearly for agencies and larger advertisers that already have those capabilities.

I was told that targeting will be available by daypart, geography and by demographic audience segment. Apparently all these can also be layered. Advertisers won’t have the ability to bid for specific time slots during a program but they will be told within 24 hours whether their ads ran and, if so, how long they were viewed. In other words, did TV viewers sit through the entire commercial or tune out? An interesting use of this system might be A/B testing accordingly (or use online for A/B testing of video before sending the “winning” ads to TV).

Advertisers will only pay for actual impressions delivered. Asked about the nature of the available inventory, Google told me that there would be both “premium and niche networks” as part of the program.

One vision of the future that Google is impliedly proposing is of an integrated media buying platform that allows agencies, advertisers and media buyers to track ad campaigns across traditional and online media and compare performance and metrics side-by-side.

It’s highly premature to predict whether the Google TV ads program will succeed, but the move will surely reverberate online (for Google’s competitors) and throughout the TV ad industry. Reaction should be immediate and fairly polarized.

Postscript: See related discussion now at Techmeme. Google’s press release now here, saying this:

At Google, we are constantly looking for ways to improve the user experience and bring value to advertisers, publishers and partners. Users spend a lot of time watching TV so improving the relevance of advertising information on that medium is important. That’s why today we are excited to announce our trial to deliver Google TV ads. Working closely with our partners, EchoStar and Astound Cable, we are currently running a trial to deliver better ads to viewers and help advertisers, operators and programmers more efficiently buy, schedule, deliver and measure ads on television.

Deliver more relevant ads to viewers and provide better reporting for advertisers

Advances in set-top-box technologies make it possible to report aggregate statistics on how many times an ad was viewed and whether it was watched through to the end. As part of this trial, we will be working with partners to use aggregate, anonymized set-top-box metrics to deliver timely and accurate viewing reports. Advertisers can use this data to understand the effectiveness of their TV ad campaigns and use this information to provide more relevant ads to viewers.

Bring more advertisers to TV and help inventory owners

With our AdWords™ and AdSense™ advertising programs we have seen the benefits of the long tail and we think we can apply these principles to help grow the TV advertising industry. Our goal is to extend the reach and visual power of this medium to include more advertisers, large and small, and help monetize more TV programming with relevant ads.

Create efficiencies in the existing model

With Google TV ads, the entire process is automated – from planning the campaign to uploading and serving the ad to reporting on its effectiveness. Like our AdWords advertising program, Google TV ads are bought using an auction model and through a single online interface that is already familiar to agencies and advertisers. Advertisers can target by demographic, daypart and channel and pay only for actual impressions delivered. Pricing is on a CPM basis. Because the entire process is automated and online, advertisers can plan their TV ad campaigns efficiently all year long. The flexibility of this model also allows advertisers to make changes to their campaigns as often and as quickly as they like.

This is an early trial. We look forward to getting feedback and working closely with advertisers, agencies and partners to improve and expand our TV ads offering.