EchoStar Brand to Run Ads in Auctioned Spots, Provide Viewing Data
By KEVIN J. DELANEY
April 3, 2007; Page B4
Google Inc. is furthering its ambitions to move beyond online
advertising with a multiyear contract to sell television commercials
that will appear through satellite-TV provider EchoStar Communications
Corp.
Under an arrangement to be announced today, Google will sell TV ad
spots through an online auction system, with advertisers bidding the
amount they are willing to pay per thousand households that view each
commercial. Google will send the commercials of the winning bidders to
EchoStar, which will then insert them in an unspecified number of
daily blocks in the TV programming it delivers to the roughly 13
million households that subscribe to its Dish service.
The deal expands Google's push into the $54 billion U.S. market for TV
advertising, amid similar efforts by the Internet company to move into
radio and newspaper advertising. The EchoStar agreement builds on an
existing Google test of serving up TV ads to Concord, Calif.,
subscribers of cable provider Astound Broadband, a unit of
WaveDivision Holdings LLC.
The EchoStar partnership provides national distribution for TV
commercials brokered by Google, and the Mountain View, Calif.,
Internet company says it intends to sign similar deals with cable
providers, TV channels and local broadcast stations to sell ads for
them.
TV networks and some advertisers and media buyers have in the past
proved reluctant to join Internet-based efforts to change how TV ads
are sold, at least partly out of concern that their business would
become commoditized. But advertising executives briefed by Google on
its plans welcomed the announcement, saying it could improve the
market for cable and satellite-TV ads and nonpremium ad purchases.
Some added, however, that Google's auction system wouldn't replace the
way the premium spots, such as those for prime-time broadcast
television, are sold.
"I don't think anybody is thinking this is going to change large
national broadcast," says David Kenny, chief executive of Publicis
Groupe's Digitas digital unit. "This is something that brings a lot of
value to the more fragmented end of television."
Google and EchoStar declined to discuss financial details of their
arrangement, which they are testing and expect to have fully launched
within the next few months. But Google typically provides a minimum
revenue guarantee to partners, lessening the partners' financial risk,
and keeps a commission on ad sales.
Mike Kelly, EchoStar's executive vice president of advertising, said
Google would account for only a small percentage of the ads EchoStar
has to sell.
Advertisers who use Google's Web-based system for buying commercial
spots have the option of selecting specific TV networks, times of day
and regions where the ads will be viewed. Eventually Google intends to
allow advertisers to target specific groups of viewers, based on
information about the viewer demographics for each channel.
Google plans to tell advertisers how many TV set-top boxes were tuned
in to each commercial they ran, and charge based only on the number of
set-top boxes where the commercial played. It additionally will
provide advertisers data about whether users changed the channel
during the commercial.
Google is relying on information collected from set-top boxes by
operators such as EchoStar, which it says does not permit it to
identify any specific subscribers. At least initially, Google is not
matching commercials with the content of TV programs or showing ads to
specific users based on previous viewing habits or other personal
information. The Internet company says concern for user privacy will
be a factor in any future efforts to target TV advertising more
specifically.
For EchoStar, of Englewood, Colo., the deal could potentially boost ad
revenue if Google's auction system generates more demand for
commercial spots. EchoStar satellite TV subscribers won't see anything
different under the arrangement, as the commercials brokered by Google
will fill normal ad spots.
Similar efforts are under way elsewhere. Online auctioneer eBay Inc.,
with a group of large advertisers, is setting up an Internet-based
system for buying and selling TV ads. Closely held Spot Runner Inc.
has built an online system for advertisers to buy TV spots, and caters
to small- and medium-size advertisers who might not have bought TV
commercials before.
"It's way too early to tell whether Google will ultimately be able to
find the same success in traditional media it has enjoyed online,"
says industry analyst Greg Sterling of Sterling Market Intelligence.
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