Google Ventures Into TV

By Peter Koeppel

Google's entry into the TV marketplace started with a test on a small cable system in California and now is expanding via a partnership with Dish Network. In its quest to offer one-stop shopping for all forms of media, Google is trying to develop a TV advertising platform that delivers targeted ads based on household demographics.

Google has stated it wants to deliver more relevant ads to viewers. To accomplish this goal, Google might use a database of the demographics in a neighborhood and analyze programming being watched by a household in that neighborhood and then insert ads that are relevant to that particular audience and programming. So, for example, a household in an upscale area might receive an ad for a Mercedes, while a household in a lower income area might be sent an ad for a less expensive automobile brand. Google and Dish will use an automated system for buying, selling, delivering and measuring television ads. And within 24 hours, advertisers will know not only what ads have been viewed, but also where in the ad viewers have tuned out. Google feels that advertisers will pay higher rates for these more targeted ads.

ADVANTAGES...AND CHALLENGES
At its core, the concept is really a direct response model. If you were to combine this model with traditional direct response metrics--such as consumer response to the advertising--this type of system could allow marketers to further improve the ROI from their DRTV campaigns.

However, there are many variables that ultimately could determine the success or failure of this type of program for advertisers, such as whether the media rates are too high to pay out and the type of media inventory that Google can access. For example, with Google's radio program, the inventory it is offering to advertisers tends to be on low-ranked stations in outlying areas of the DMAs. It may prove difficult to access more prime media, because the larger, established players in the radio and TV industry may be reluctant to hand over control of their inventory to Google.

Another possible advantage of this system is that Nielsen now uses only 10,000 monitors to track viewing habits, whereas the Google system with Dish will tap into data from 4 million set-top boxes. The ability to measure results in real-time with such a large sample size potentially could provide marketers with more precise data to analyze and adjust campaign performance.

The potential of Google's automated TV system to deliver more targeted ads is intriguing, but the program needs to be proven over time. So far, Google's venture into radio and its purchase of YouTube don't seem to be paying out. However, with more than $10 billion in revenue last year, Google has the resources to make these ventures profitable. Stay tuned.

Peter Koeppel is president of Koeppel Direct Inc., a full service media buying agency based in Dallas. He can be reached at (972) 732-6110, or via e-mail at pkoeppel@koeppelinc.com.