The next frontier: Google eyeing a move into TV's territory

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If you thought it was scary when Google dipped a toe into the magazine ad sales business, just wait until the search giant goes after TV.

In an interview following its mind-blowing earnings call on Oct. 20, Tim Armstrong, Google's VP-advertising sales and operations, said that while no tests of TV ad brokering are under way, there is interest in the medium.

"The walls between offline and online budgets are starting to come down quickly," he said. "TV would certainly be helpful to advertisers [and] agencies."

"Print is the test we are doing right now," Mr. Armstrong added. "We are always considering ways to extend ad programming."

Search agency executives and analysts said a TV play makes sense for Google. "I wouldn't put anything out of the question," said Andrew Wetzler, president of search agency MoreVisibility.

"Any medium they can disrupt and intermediate, I think they will," said Joshua Stylman, co-founder of another search agency, Reprise Media. "Will Google get [to TV]? One hundred percent yes."

An online trade publication called already claims that Google placed a classified ad for a production manager to handle something called Google TV. That is thought to be an extension of Google Video, a service that enables Web surfers to use keywords to search the content of TV programs.

Google has already ventured offline by testing ads in magazines on behalf of its advertisers, and through a beta rollout of a classified ad service. In the print test, Google purchased ad space and resold it in smaller chunks to its clients.

The search giant has the money to expand. With third-quarter earnings beating even its own expectations, Google posted revenue of $1.58 billion-a 96% leap from 2004 third quarter and 14% over the second quarter. "Their spending on research and development grew by 58% between Q2 and Q3 of this year [to $151.7 million]," said David Hallerman, senior analyst, eMarketer. "That impressed me because that's looking ahead to the future."

Executives during the earnings call emphasized that many of Google's current tactics are geared toward the long term. They attributed revenue growth partly to the success of advertisers doing search branding online.

Big push

Mr. Armstrong said 25% of Google's top-tier advertisers have used Google's product Site Targeting, a service through which advertisers choose the sites or network of sites on which they wish to advertise, and place text or graphical ads there. Brands pay for these ads on a cost-per-thousand basis instead of Google's typical cost-per-click.

"Google has made a big push to reach brand advertisers," Mr. Stylman said. "They have a fiduciary duty to reach out to the GMs and Procter & Gambles of the world for their shareholders."

Mr. Stylman and others said that Google's corporate identity is much more than that of the world's biggest search engine. "Google wants to be the source of all the information that's in the world and be one easy source for people to look for it," said Jeremy Cornfeldt, VP-search and affiliate marketing, Carat Fusion. Whatever it takes to serve that goal, Google will presumably consider it.

The company listed $7.6 billion in cash and marketable securities in the third quarter. With that kind of pocket change, it could go on an acquisition spree to open new revenue streams. "Why not buy a company in another medium?" Mr. Hallerman speculated. "With $7.6 billion, they could afford a small cable station."

Imagine if Google had its own TV channel, said Mr. Cornfeldt. "You could search through Google's video library and watch a film on your TV. ... That would change the ad landscape."

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