TELECOM Digest OnLine - Sorted: Re: Google's Next Frontier: Television


Re: Google's Next Frontier: Television


Neal McLain (nmclain@annsgarden.com)
Sun, 08 Apr 2007 15:58:23 -0500

I wrote:

> Google's Next Frontier: Television
> By Jon Brodkin, Network World, 03/27/07

But I didn't include the link to the rest of the article. Here it is:
http://tinyurl.com/2od78e

Two paragraphs in this article caught my attention:

> Google has already tested an auction-based system for
> selling commercial space for a small cable TV company in
> Northern California.

> The job ad for the Google software engineer position says
> candidates should have experience with emerging TV
> standards and set-top box operating systems. I would
> imagine [Google has] been working at the request of a
> [cable] service provider to figure out how, within their
> set-top box environments, they would deliver ... a
> targeted advertising experience, [media analyst Greg]
> Ireland says.

Well, maybe that's Google's plan. Or maybe Google has something
simpler in mind: to figure out how to deliver a "targeted advertising
experience" to small cable systems, rather than trying to customize
advertising for individual households. For many small cable systems,
*any* local TV advertising would be a new experience.

As I noted in a previous post on this subject, many small cable TV
systems don't use the advertising slots ("avails") in non-broadcast
advertising-supported programming networks. The cost of doing so
exceeds the potential revenue. http://tinyurl.com/2fwduo

The only forms of local advertising these systems offer are text and
static images: the crawl on The Weather Channel (during
"local-on-the-eights") and character-generator channels that cycle
through static screens.

If a cable system doesn't use the avails, the network's spots (typically
those instant-response "call-this-800-number-right-now" ads) pass
through by default. Whatever revenue these spots generate goes to the
network, not the local cable system.

Google can change this, and it looks to me like they might be gearing up
to do it.

Exactly how they're doing it is unknown, but I imagine it would use a
web-based interface. In its simplest implementation, Google would
maintain a database containing:

- The channel lineup of every participating cable system.
- The avail schedule of every ad-supported non-broadcast network.
- Some means of activating ad insertion at the cable company's headend.
(This might require new headend equipment, but I'm sure Google could
take care of that.)

With this implementation, the cable operator could schedule any ad
spot into any avail simply by logging in to a secure website.

Taking things one step further, the ad agencies -- or even advertisers
themselves -- could schedule ads without the cable company having to
do anything. If two or more advertisers want the same avail, an
automatic auction would ensue. The cable company might not even know
about it (although, of course, it could check the schedule on that
secure website). Google would collect the revenue and send the cable
company a monthly check.

In my view, the real significance of such a scheduling system lies in
the opportunities it creates in small communities -- places with
populations in the 5,000-10,000 range. Such communities are large
enough to have a local commercial infrastructure (car dealership;
furniture store; lumber yard; weekly newspaper; Wal-mart; possibly a
community college), but they dont have a local television
broadcast station. Independence, Kansas comes to mind: population
around 10,000, with about 4000 households.

Businesses in these communities are prime candidates for advertising
on cable. But if the local cable company doesn't offer ad insertion
into non-broadcast networks, their only options are those
text-and-static-image channels.

If Google's plan works as I think it will, insertion costs will fall
dramatically, making it possible for small cable companies to
participate.

Of course, the ads themselves would have to be created before they
could be inserted. I think this problem will take care of itself: if
insertion costs drop significantly, the advertisers themselves will
fund the production costs.

Local advertisers (the furniture store, the lumber yard) can contract
with a local production house. (And if a local production house
doesn't exist, somebody will certainly start one.)

National advertisers that support their local dealers through
cooperative advertising programs will be able to extend these programs
to local cable. To illustrate what I mean, here's a hypothetical
example -- a Chevrolet spot:

- When this spot runs on a broadcast station covering a large area, it
says "see it at your local Chevrolet dealer today."

- When this spot runs on Cable One in Independence, it says "see it at
Romans Motor Company, on West Main Street right here in Independence."

Maybe that's not the "targeted advertising experience" that Greg
Ireland imagines, but it's a lot simper and cheaper to implement.

Neal McLain

[TELECOM Digest Editor's Note: That is exactly how it is done here. It
is done that way for the Toyota dealer in town and the Chevvy dealer.
Except it does not include the phrase 'right here'; it says Romans
Motor Company, (street number) West Main, Independence, Phone
(number). PAT]

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