Continuing its drive to expand its reach beyond the Web, Google reached a deal to partner with satellite TV provider EchoStar to deliver television spots for its advertising clients.
Together, the companies will create what they called the first automated system for buying, selling, distributing and measuring the effectiveness of video ads delivered over EchoStar’s Dish Network.
Google has also been testing a similar approach with cable provider Astound, which operates in parts of California.
Financial details of the EchoStar deal were not disclosed. The terms give Google access to a portion of the advertising inventory on Dish Network, covering all parts of the day and all commercial channels on the 125-channel network.
A First Step
Google CEO Eric Schmidt made it clear the search giant considers the partnership the first step in a larger strategy to become a key distributor of TV ads.
“Our partnership with EchoStar is important for us as we begin to offer a TV advertising platform broadly,” he stated. “We think we can add value to this important medium by delivering more relevant ads to viewers, providing better accountability for advertisers and better monetize inventory for TV operators and programmers.”
During the initial phase of the service, only advertisers who are invited will be able to take part.
“We are confident we will be able to bring increased efficiencies to Dish Network’s advertising sales and more accurate, up-to-date viewer measurement with easily accessible online reporting to advertisers,” said EchoStar CEO Charlie Ergen.
Further Expansion
Google investors hailed the news, driving up the company’s stock by more than US$12, or 3 percent, to $471.11 in morning trading Tuesday.
For Google, TV is something of a final frontier, a logical next step for a company that has already taken its strong Internet advertising base and extended it to other forms of traditional and new media.
Google has unveiled partnerships to deliver print ads to newspapers across the country and has pushed into radio sales, as well.
One-Stop Shop?
It also hopes to be a major player in the delivery of advertising to mobile devices and has invested in a firm that delivers marketing messages into interactive video games.
With TV ads in the fold, Google may offer advertisers a one-stop shop for a variety of advertising approaches, potentially creating vast new opportunities for delivering and reinforcing branding messages across all of those platforms.
EchoStar’s Dish Network has about 13.1 million customers in the United States. Many of its subscribers also buy Dish’s digital video recording and interactive TV programming, offering the two companies additional opportunities for feedback on ad effectiveness.
Google will receive anonymous, aggregated data from EchoStar customers and will use that information to give feedback to advertisers about their campaigns.
Taking the Web to the Tube
That measurement and improvement element is what Google hopes to take from the Web to the TV medium, creating an AdWords-like system for auctioning advertising time the way keywords or placements are now sold — potentially driving up the revenue received per ad — and giving advertisers real-time feedback to help them better target their messages.
With online advertising worth just under $17 billion last year and TV ads worth as much as $70 billion, the reasons for doing the deal from Google’s perspective are even more clear, Sterling Market Intelligence analyst Greg Sterling told the E-Commerce Times.
“The motivation here is obvious,” he noted. Google is advancing the inevitable in some ways by extending the same level of measurability and accountability common with Web-based advertising methods to other forms of media, Sterling stated.
Resistance Is Likely
Google is hoping to become a “kind of dashboard for media buying across platforms,” he added, and will likely face resistance from those who fear the company is becoming too powerful in that role.
“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,” Sterling concluded.
Success will be determined by how willing other media players are to partner with Google, with more such deals needed to reach the critical mass necessary to make it a viable alternative for placing TV ads, Bank of America analyst Brian Pitz said.
“Google is clearly moving towards becoming a one-stop shop for purchasing advertising on multiple platforms,” he said in a research note.
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It is obvious that Google does not have much experience in the television advertising space. Google is trying to fit a square peg into a round hole. Over 20 media auction sites failed in the late 1990s. The real solution for TV advertising is the dynamic insertion of text links at the bottom of the TV screen. So say for instance you want to download the season of Sopranos when you see the text link that says ‘download Sopranos" you will click it with your remote and instantly it will move to your Internet ‘iTunes’ account. When purchased it will link back to the exact commercial link placement thus giving you 100% ROI and accountability. This can be used for everything — imagine the value for Procter & Gamble when a $.50 pack of gum can get deposited in the online shopping cart for Wal-Mart? Then the consumer either buys the gum using their home PC or goes to the store …all accountable. This is the way the industry will go. This is what is currently being built in the industry by a no-name company that may emerge as the next big competitor to Google. Google just brings attention to the market but in the end Google will be the Hot-Bot of TV.