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Friday, June 12, 2009

Google on TV - is a starring role on the way?

Microsoft (MSFT) has rolled out Bing, their new search engine, to much fanfare and with a multimillion dollar advertising campaign. But are they fighting last year's battle?

Google (GOOG), as everyone knows, dominates search advertising with its AdWords offering. They are also strong in pay per click through AdSense. The company has struggled with print ads and radio ads and ultimately abandoned both efforts.

One area where Google has persisted is television. The company offers a service that works much like a combination of AdSense and AdWords except the ads are filmed TV commercials.

Like AdWords, an advertiser creates an ad, sets a daily budget and bids on placing the ad on shows or channels that are a good marketing fit. Much like AdSense, the TV networks offer ad inventory at relatively low cost with the expectation that the ads supplied by Google will be relevant to the viewers of the programming.

Google hasn't registered the kind of success they have seen in the search advertising arena but they seem to be committed to expanding the service.

Until recently, the Google TV advertising was limited to the 13 million households that get TV service through the Dish Network. Google has increased coverage this year by making deals with several national cable networks such as CNBC, Bravo, MTV, USA, and MSNBC. Google contends it has increased its reach now to 95 million households. The four major broadcast networks, however, are not yet accepting Google TV Ads.

Still, it is known that TV advertising works. Google TV ads now make targeted television advertising available to small companies for a mere few thousand dollars. Adding to the attraction for advertisers is Google's ability to supply data. Google is able to provide real-time data on viewers via Dish set-top boxes. They provide info on how many people watched an ad, how long an ad is watched before the channel is changed and whether it was watched on a DVR. Advertisers can easily determine where response is best and reduce advertising on those shows or channels where the results are not meeting expectations.

Being an Internet company, Google is well aware that users are increasingly watching TV shows online. Consequently, the company is setting up agreements to run their ads on online shows. So far, this initiative is in a beta stage and, significantly, the company has not yet partnered with Hulu, one of the most popular TV viewing sites. It can be assumed, though, that Google will not lag in the Internet channel for long.

Conclusion --

If Google can gain more traction among advertisers with their TV ads, it will be easier for them to increase their reach across more TV channels and networks. With marketing budgets under pressure during this recession, it seems like a good time for Google to press their case. Their current advertising systems seem to be a good fit for TV and this seems to represent a good way to extend their business in a new direction. With their market share in search advertising maxing out, Google could use a new venue to exercise their strengths.

In the meantime, Microsoft is nipping at Google's heels with Bing and has not yet even begun to think about TV. Google's ability to pioneer new advertising channels like this should continue to keep it ahead of its competitors.

Hat tip to InfoNgen.com and Inc.com for background used in this post

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