Google announced a partnership with Echostar to sell and measure TV ads on Dish Network. Google's technology can add transparency to an inefficient ad medium, leveraging 800,000 search advertisers into the more concentrated TV market, but could potentially face backlash from ad market participants as Google power grows beyond online.
Although Google has fairly quickly come to dominate online advertising, the online market is still dwarfed by the $140 billion annual global TV advertising market. As advertisers have become more accustomed to the measurability and ROI of online marketing, some have begun to question the effectiveness of TV advertising, with some (J&J is a notable example) even skipping the annual network ad buy event, the Up-fronts. Google is hoping to capitalize on this discontent by leveraging its technology and 800,000+ advertising customers (a network like NBC has at most 5,000 advertising relationships) to smoothen the TV ad-buying process by providing more advertisers to publishers, more measurability to advertisers, and more relevancy to viewers. This is a major undertaking by Google and, like the company's efforts in print and radio, will likely take several years to prove itself. However, these efforts could add another leg to Google's growth in 2009 and beyond.
With recent moves into Print, Radio, and TV advertising, combined with an online platform that is expanding beyond search to include image and video (on YouTube) advertising, Google hopes to become the One-Stop-Shop for advertisers and publishers, particularly those looking to address the "Long Tail." Although Google is not expected to step into the network ad buying marketplace soon, the company may begin to aggressively go after remnant inventory to prove the efficacy of its approach. Through market forces and better targeting, Google believes that they can improve relevancy of ads to advertisers and consumers alike.
Google's most significant hurdle could be to overcome the rising fears from media giants, agencies, and advertisers that Google is becoming too powerful. These fears may slow Google's growth in non-search ad markets. However, if the company can provide a significant improvement in ad buying/selling, measurability, and targeting, then longer term publishers, agencies, and advertisers will jump on board.
In the announced partnership with Echostar, Google will get a portion of Dish Network's ad inventory, which Google will put up for bid through an online auction-based purchasing system. Using available information on Dish Network's 13M subscribers, Google will enable advertisers to target their purchases based on daypart, geography and demographics. With the help of Dish Network's set-top boxes, Google will be able to track actual impressions for each ad as opposed to more traditional market share estimations from Nielsen, and will only charge advertisers for actual ad views, effectively porting the CPM pricing model to television. Google will likely either be acting as a commission-paid agent for Dish or as a reseller.
Although Google has fairly quickly come to dominate online advertising, the online market is still dwarfed by the $140 billion annual global TV advertising market. As advertisers have become more accustomed to the measurability and ROI of online marketing, some have begun to question the effectiveness of TV advertising, with some (J&J is a notable example) even skipping the annual network ad buy event, the Up-fronts. Google is hoping to capitalize on this discontent by leveraging its technology and 800,000+ advertising customers (a network like NBC has at most 5,000 advertising relationships) to smoothen the TV ad-buying process by providing more advertisers to publishers, more measurability to advertisers, and more relevancy to viewers. This is a major undertaking by Google and, like the company's efforts in print and radio, will likely take several years to prove itself. However, these efforts could add another leg to Google's growth in 2009 and beyond.
With recent moves into Print, Radio, and TV advertising, combined with an online platform that is expanding beyond search to include image and video (on YouTube) advertising, Google hopes to become the One-Stop-Shop for advertisers and publishers, particularly those looking to address the "Long Tail." Although Google is not expected to step into the network ad buying marketplace soon, the company may begin to aggressively go after remnant inventory to prove the efficacy of its approach. Through market forces and better targeting, Google believes that they can improve relevancy of ads to advertisers and consumers alike.
Google's most significant hurdle could be to overcome the rising fears from media giants, agencies, and advertisers that Google is becoming too powerful. These fears may slow Google's growth in non-search ad markets. However, if the company can provide a significant improvement in ad buying/selling, measurability, and targeting, then longer term publishers, agencies, and advertisers will jump on board.
In the announced partnership with Echostar, Google will get a portion of Dish Network's ad inventory, which Google will put up for bid through an online auction-based purchasing system. Using available information on Dish Network's 13M subscribers, Google will enable advertisers to target their purchases based on daypart, geography and demographics. With the help of Dish Network's set-top boxes, Google will be able to track actual impressions for each ad as opposed to more traditional market share estimations from Nielsen, and will only charge advertisers for actual ad views, effectively porting the CPM pricing model to television. Google will likely either be acting as a commission-paid agent for Dish or as a reseller.
Thanks Piper Jaffray Research, April, 2007
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