When Google set out to sell TV ads using auctions and algorithms in 2007, few in the industry gave them much of a chance. But Google stuck with it for five years, even after shutting down similar attempts to sell other old media such as radio and print.
That all ended Thursday with a blog post from Google VP Shirshir Mehrotra, who wrote that the company is throwing in the towel on traditional TV advertising and refocusing its resources on digital video.
While TV networks had feared what Google would do to ad pricing, its effort also promised to bring potentially thousands of smaller non-TV advertisers into TV buying. Mr. Mehrotra said in his blog post that "lots of our clients bought traditional TV advertising for the first time."
But it was hard for Google to find enough inventory to make an automated system viable. TV is ridiculed in digital circles for its inefficiency, but it's an inefficient market that works pretty well for TV advertisers and the biggest networks. Google struck its biggest deal for content early on, with an agreement to sell some cable inventory from NBC Universal networks like Oxygen and MSNBC in 2008, but that was discontinued in 2010. Google also struck deals with DirecTV and Verizon FiOS, but it was unclear how much inventory was involved.
That Google stuck with it as long as it did demonstrates again that Google is trying to play a long game. Trends come and go, but when Google sets out to disrupt a market, it usually sticks with it. Take ad tech, mobile and social, for a few examples. And while online video's $3.12 billion market is a far cry from TV's $70 billion market, Google may still be able to skate where the puck is going as TV goes digital and spreads to net-connected devices. In the meantime, there's no shortage of YouTube inventory to sell.
"We'll be doubling down on video solutions for our clients (like YouTube, AdWords for Video, and ad serving tools for web video publishers)," Mr. Mehrotra wrote. "We also see opportunities to help users access web content on their TV screens, through products like Google TV."