IP Democracy: Google to Sell EchoStar Ads -- Cable is a Long Shot

Google has lusted after the TV market for a long time and now the search giant has finally found a major way into the television ad business. The company announced a trial with 13 million-subscriber DBS operator EchoStar to deliver an unspecified amount of “Google TV” ads that will be served up nationwide on an automated, auctioned basis through Google’s already familiar online interface.

Data stored in the satellite providers’ set-tops will allow Google to “aggregate, anonymized set-top-box metrics to deliver timely and accurate viewing reports,” giving advertisers better data to plan their campaigns and assess their impact. This deal follows a similar trial by Google with a small independent cable operator, Astound Cable.

But, the real money, the biggest opportunity of all for the search leader, is with major cable operators such as Comcast, Time Warner Cable and Cox. Not only do these TV service providers dominate the U.S. market for multichannel video, they’re on the upswing with their dynamic packages of voice, video and data services, while one-way distributors such as EchoStar are facing extinction due to the technical limitations that bar them from expanding beyond uni-directional TV transmissions. (EchoStar, however, will soon unveil an online video distribution experiment.)

Moreover, the inherently local nature of cable systems support geo-targeting of advertising, which is also, along with contextual ad placements and ad auctions, a key strength of Google online. EchoStar just can’t get local the way cable can.

But, Google’s chance of striking a similar deal with the major cable players is probably astonishing small. For one thing, as the New York Times’ Miguel Helft points out, cable operators like to sell their own advertising.

But Google is likely to encounter some resistance from cable operators with established sales forces, and competition from technology start-ups that also hope to broker TV ads.

For another, cable companies are genetically resistant to handing over power of any key technology, any source of revenue, to a powerful entity. They like to control their suppliers and have a track record of picking the little guys over the big guys even when the big guys can do the better job.

Just ask Microsoft. Despite a lot of hullabaloo, Microsoft has yet to gain traction in the cable world with its interactive TV software. Granted, the software sucks in the eyes of cable engineers, but cable executives have long said privately and among themselves that Microsoft is the last company in the world they would allow to control their invaluable set-top platforms.

So, although the Google-EchoStar deal is mildly interesting, I would wager that this is as far as it goes for Google in the TV ad business for a long time to come.

Posted by Cynthia Brumfield on April 3, 2007 8:17 AM to IP Democracy