Sunday, January 08, 2006

Google's Grand Plan to Take Over TV Advertising

This is a "must read."

In the same way that the sales receipt at the grocery issues you coupons for competitors of products that you just purchased, IP-TV -- when it comes -- will be able to show you and me the same program but different advertisements. If you like cars and I like landscaping, you might see a car commercial as I watch a sales pitch fot a lawn mower.

Magazines have been doing stuff like this for years, though in a more primitive way. National newspapers can sell regional ads to different parts of the country. Television might soon have an even more impressive capability.

...To understand what Google really means, however, I keep coming back to the core values of the company -- search and advertising. What does each new product or service do for search or advertising? Because until they come up with a third revenue source as big as those two, Google will always be looking for its livelihood in those two directions.
...VIRTUALLY EVERY TV AD IS WASTED ON PEOPLE WHO AREN'T REAL PROSPECTS. The entire programming chain is profitable DESPITE the fact that practically the entire audience is freeloading.How often do you see an ad on TV for something you're currently in the market for? I'm guessing almost never. But imagine if everyone watching "American Idol" only saw ads for things they might really buy? Or, better yet, only saw ads for things they had already expressed an interest in? The value of those same 30-second commercial slots would increase by orders of magnitude.Google imagines a world where only single people see ads, and people who can't drive see ads from taxi companies where others see Toyota campaigns. Where fraternities see ads for strip clubs, beer, Cancun weekends and LSAT prep courses, and only seniors (and their adult children) see ads for Alzheimer's drugs. What would be the value of that increased efficiency, capitalized into present dollars? Ten billion? Fifty billion? I say the value is $100 billion -- 25 percent of the total U.S. advertising market and 15 times Google's current size.Google is going to let the telco and cable companies burn their capital building out IP-TV, knowing that Google will still be the only game in town for the crux of the whole thing: the ability to show every viewer the specific ads that companies will pay the most to show him at that specific moment. What Google wants to do with these trailers is SERVE EVERY TV COMMERCIAL ON THE PLANET because only they will be able to do it efficiently. Only they will have the database that converts those IP addresses into sales leads, only they will have the servers and disk space close enough to the viewers to feed the ads. Only Google will have the chops to run a constant, real-time auction for the next ad every consumer is about to see, and then serve that ad at the moment the program goes to commercial.Suddenly, everybody can (and, really, must) advertise on TV, because it'll be so specific...and so dynamic.

Pretty exciting stuff.
Go read.

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