After months of speculation, Google has officially jumped into the television business.
The Web giant announced on Monday that it is partnering with EchoStar Communications to sell commercials over the Dish satellite broadcaster's 125 national programming networks, an early indicator of how the Internet giant plans to use its $10.6 billion online-ad business to conquer television.
Under the EchoStar deal, advertisers will use Google's AdWords automated auction interface to bid on ad spots. Advertisers can upload their TV commercials and select the desired time of day and channel, as well as choose regional or national area coverage. They can also target the ad based on a show's demographics, such as males 18 to 34 years old, said Keval Desai, director of product management for Google TV Ads.
"We are not targeting households or individuals," he added. "We want to be cautious about user privacy," Desai added, referring to user concerns about Google's highly targeted online advertising.
In a related move, Google also confirmed that it has been testing a similar advertising effort with Astound Broadband, a small cable TV operator east of San Francisco that serves about 23,000 subscribers.
Astound has been testing TV ad sales with Google since the fall, the companies said. Cable set-top boxes track which programs a household watches so that targeting systems eventually could match the kinds of shows the household prefers with ads for products and services that would suit their interests, Astound President Craig Heiting said.
The Astound project is admittedly small, but it may indicate that Google is intent on doing more than the deal with EchoStar's Dish (short for Digital Sky Highway).
Several advertisers, including E*Trade Financial and 1-800-Flowers.com, plan to buy ads to run on Dish. They say knowledge of where and when a spot ran, and how many people likely saw it, is what attracted them to buying their TV spots though Google.
Several industry experts, however, said real interactivity and targeting will come when Google announces a deal with a major cable operator. Cable companies are known for being able to target and segment audiences--sometimes to even the neighborhood level--to a much narrower degree than satellite operators.
"To me, (the Dish deal) is less interesting than a cable deal would be," said David Bank, an analyst at RBC Capital Markets. "At the end of the day, they are going to have to store targeted ads--calling up the ones that are relevant--at the set-top box, as opposed to direct interaction (which they could get with cable).
senior VP, Denuo
I don't think it's a game changer for TV advertising," Bank said, "but I think it's got some interesting implications, and we'll all be watching it pretty closely."
"The obvious first place to try this out is in cable, which has a much greater aptitude for targeting than satellite can do at this point," said Tim Hanlon, a senior vice president at Denuo, a consulting arm of the advertising agency Publicis Groupe.
"Satellite is quasilocal, and it's always been a difficult sell for satellite operators because it's not quite local and not purely national, either. So it would stand to reason that this would be a natural for Dish to experiment in selling in a more efficient manner," Hanlon said.
Google is in discussions with several cable providers, Google's Desai said, but he declined to elaborate. "This model and product works for anybody who has TV ad inventory; networks, satellite operators and cable operators."
The search giant has reportedly talked to Comcast, but so far to no avail. Even eBay Media Marketplace, a cable TV ad marketplace created by eBay and backed by Microsoft, Hewlett-Packard and others, isbecause of a lack of participation by cable networks.
Networks and ad agencies fear that they will lose control over ad scheduling and pricing under the system. Google's plans, however, might fare better, as its AdWords platform has already proved successful as an ad-selling model.
With EchoStar, Google has electronically tied its online platform to the "head end" of the satellite TV operator, so the ad is inserted into the programming by the operator's server, according to Desai. Advertisers pay based only on the number of impressions, or potential views, of the ad.
As with any television commercial, the advertiser can never be sure that the viewer has not left the room during the commercial.