Google’s attempt to grab a piece of the $50 million television advertising market secured another toehold last week, increasing the odds that the initiative can alter how TV spots are bought and sold.
Under a deal with NBC Universal, Google in the fourth quarter will begin to sell some last-minute scatter time on some of NBCU’s cable networks. The two companies also will work together on research projects, in collaboration with some agencies and advertisers.
Google’s TV Ads project, which auctions unsold commercial time and provides data, could be a game-changer if it creates new ways of measuring TV viewing, said Peggy Green, vice chairman of Zenith Media USA.
“We’ve always done things and guaranteed on age and sex,” she said. “But if you can prove that a certain creative works better in a certain environment, the metric by which you evaluate what a buy does could potentially be different.”
Ms. Green credited NBC for looking at new ways to do business.
“I’m not saying it will definitely be a success, because I think the jury is out on that, but I think you embrace change, and I think that’s what they’re doing,” she said.
Google, the most-used Web search engine, has been looking to move beyond the Internet search arena, eyeing traditional media such as TV and radio.
The deal with NBC Universal should open the door to partnerships with other programmers, said Mike Steib, director of TV ads at Google and a former NBC executive.
“Every meaningful development in our industry can be tracked back to pioneers who adopted it early, and I think this is one of those cases,” he said. “I am hopeful we will look back and say this was the first cable group to use the product. A deal like this can trigger lots of activity.”
Before joining Google, Mr. Steib was a VP at NBC. While he said he knew the “numbers” of people to call at NBC, he emphasized the deal did not stem from his connections at the media company. “The product and the technology had to stand on its own merits. I don’t think it’s because I used to have a 664 extension,” he said, referring to the first three digits of most NBC phone numbers in New York.
The agreement with NBCU comes after a quiet year for Google TV Ads. The search giant inked its first deal for Google TV Ads in 2007 with satellite TV distributor EchoStar. Since then industry skeptics had wondered if Google TV Ads was much ado about nothing.
Mr. Steib said Google has been focused on product development in the last year, as well as finalizing deals. Google engineers have built new features into the system, he explained.
“Our team built a feature that lets an advertiser come into the system and, rather than say, ‘I want to be on this channel,’ they say, ‘I want to target shows that have particular keywords in the show description,’” he said.
The deal also marks NBC’s latest attempt to look at ad sales in a new way. The media giant earlier this year made big changes to its upfront schedule announcement to encourage integrated and multiplatform purchases.
Mike Pilot, president of sales and marketing at NBC Universal, said the deal provides “the access to a new and different kind of metric that can help color the effectiveness pie in a different way.”
Through research with Google, NBC expects to learn more about the way television advertising can work better with online advertising.
“I think there’s some real juice there,” Mr. Pilot said.
Google also will be building an automated system that will allow some marketers—including some Google clients currently not advertising on TV—to buy ads without dealing with salespeople or agencies.
An automated sales process has people in the ad industry worried that they could be replaced by a machine.
Mr. Pilot said integration and customization have increased the workload for his sales staff, and that automation can free them from some simple tasks.
Another worry about automated transactions is that they turn TV spots into a commodity, making it more difficult for networks to prevent bargain hunters from driving down prices.
Last year, the industry rejected an auction-based ad-buying system built by eBay that was being bankrolled by a dozen big-spending clients. It processed a few deals before eBay shut the project down.
NBC’s deal with Google includes several provisions that protect the network, according to people familiar with the particulars.
For one, the network sets a floor price for its ads. If Google can’t find a buyer at that price, it can’t sell the ad. Google gets to split with NBC the revenue generated above the floor price.
NBC also is able to review and reject ads bought through Google to make sure they meet standards and practices and technical guidelines.
The network can substitute inventory when it needs to protect relationships with clients and agencies.