Google, Echostar Partner for TV Advertising

Apr 2, 2007  •  Post A Comment

Google plans to see if the auction-based ad buying system that has made it billions on the Web can work the same magic for TV.

The world’s biggest search engine today unveiled of its first foray into TV advertising via a partnership to broker ads for satellite provider Echostar that will effectively bring online measurability and accountability to TV ads for the first time.

In doing so, Google makes good on a promise CEO Eric Schmidt alluded to at the company’s annual press day last May when he said the company was experimenting with a TV ad product.

Google declined to specify when the trial would start, but the Internet giant will “soon” test an ad-buying system in conjunction with Echostar, 1800flowers.com, Intel, eTrade and other advertisers as well as media agencies OMD and Publicis, said Michael Steib, director of Google TV ads. He joined Google earlier this year from NBC, where he most recently shepherded the rollout of NBC’s online video syndication business. “We passionately believe we can bring more relevant ads to viewers by providing more relevant metrics to advertising agencies,” Mr. Steib said.

Whether Google’s entrance into TV advertising becomes a watershed moment for advertising in the way the introduction of TiVo a decade ago was remains to be seen. However, Google appears to be a shoe-in to address some of the oft-repeated concerns of TV advertisers — better measurement and more accountability.

“When the Internet started to offer more accountability and efficiency in terms of media buying it was inevitable that would bleed over into traditional media and Google has accelerated that,” said Greg Sterling, principal with Sterling Market Intelligence.

But Google’s system won’t replace traditional ad buying, and will instead co-exist along side the work of media buyers and marketing campaign strategists, he said. “This is part of a large trend towards more efficiency,” Mr. Sterling said

Advertisers are eager for faster, more accurate results. “We are always looking for maximum efficiencies and understanding ROI and this system allows us to do it,” said Steve Jarmon, VP of brand communications and partnership marketing for 1800flowers.com.

The system will operate under the same principles as Google’s AdWords, the system by which Internet advertisers buy search terms for sponsored links on Google searches.

Under Google TV Ads the advertiser pays Google and Google shares the revenue with the operator. The advertiser will only pay for impressions delivered.

The advertiser signs up online, then places bids on dayparts and networks available from Echostar. Advertisers can choose from about 125 cable networks that Echostar owns inventory in. With Google TV Ads, the advertiser bids on CPM.

At the end of the auction, the highest bidder wins the spots and pays one penny more than the second highest bidder. “The point is to encourage advertising to create the most efficient process,” Mr. Steib said. “That yields the highest return on investment.”

Then, 24 hours later, Google reports on how that commercial fared on a second-by-second basis, with data on how many households tuned into the commercial and for how long. Nielsen, by contrast, reports on ratings for the TV shows in which advertisers buy commercials.

Echostar will be able to measure the effectiveness of the ads across the majority of it 13.1 million homes, said Mike Kelly, executive VP of advertising at Echostar.

If successful, Google will expand the test to other advertisers and video distributors and will also include demographic data. In addition, Google will build an online marketplace to match advertisers to creative shops who can help craft ads for TV.

(Editor: Romanelli)