IHT : Google Goes YourTube

Wednesday, April 4, 2007

…..Google was set to announce Tuesday that it will begin selling television ads on the 125 national satellite channels distributed in the United States by EchoStar Communications’ DISH Network.  The agreement is Google’s latest foray into off-line media, and it underscores the company’s ambition to bring its wildly successful online advertising technology and auction-based pricing to new markets to continue fueling the company’s rapid growth.  Google’s online advertising technology has appealed to advertisers in large part because it allows them to aim ads effectively at specific audiences and users, and to measure the performance of those ads quickly.  The company hopes it can bring those forces to off-line media…..Last year, Google began tests to sell radio spots and newspaper ads…..”For Google to maintain its current momentum, it needs to become the king of something else beyond search, or play a meaningful role in a market that is much larger than the $16 billion online advertising market,” said Jordan Rohan, an analyst with RBC Capital Markets.  For Google, the $70 billion U.S. television advertising market offers a potentially lucrative payoff…..The agreement with EchoStar, which has about 13 million subscribers, will allow Google to test its system across the United States…..”The EchoStar partnership allows us to take this to a national TV audience in all of their networks,” said Keval Desai, Google’s director of product management for TV.

Desai said the television ad system would work much like Google’s existing online and offline advertising systems.  EchoStar would make some unspecified amount of air time available to Google’s advertisers.  Advertisers or agencies would upload video spots to the system along with their desired target audience or network and would specify the price they are willing to bid for the air time.  Google’s ad system would then select the winning ads and play them on the air. Using information collected by EchoStar’s set-top satellite boxes, it will be able to give advertisers a report showing how many people viewed any ad and whether users tuned it out in the first few seconds.  Google will also use information collected by EchoStar to deliver the ads to their target audiences more precisely, the companies said.  Advertisers will not be able to designate specific households, but will be able to choose individual networks like ESPN or MTV and a time of day.  Alternatively, they could choose a demographic group or geographic region, and Google’s system would schedule the ads across a variety of networks.  Advertisers and agencies testing the system with Google said they were hopeful that it would prove compelling…..One of Google’s biggest challenges in selling radio advertising has been its inability to obtain sufficient amounts of air time during prime-time hours and from top radio networks.  Desai said that the EchoStar partnership included air time during all hours of the day and that Google was actively seeking other partners, including cable operators, satellite providers, television networks and local stations…..Delivering more relevant ads may also allay fears among advertisers that viewers will increasingly use digital video recorders to skip ads, Kelly said.  Neither Google nor EchoStar would discuss how revenue from ads would be split between them.  When Google sells ads on other companies’ Web sites, it gives the majority of the advertising revenue to those companies and keeps only a small portion.

Reference : http://www.iht.com/articles/2007/04/03/business/google.php

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