Google Launches National TV-Ad-Sales Test on Echostar

E-Trade, Intel, Others to Participate in Program That Will Also Offer Second-by-second Ad Ratings

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NEW YORK ( -- Google is making its entree into TV with a bang, announcing it has teamed with Echostar to offer a national, auction-based ad-sales system for inventory running on 120-plus cable TV networks, and offering second-by-second commercial ratings for the buys made through the system.
Mike Steib, Google's director of TV, said 'market dynamics will drive pricing.' He said the program will also be the first to offer second-by-second commercial measurement.
Mike Steib, Google's director of TV, said 'market dynamics will drive pricing.' He said the program will also be the first to offer second-by-second commercial measurement.

120-plus cable channels
In a few short months, the service will be up and running as a closed trial. Already advertisers such as Intel, E-Trade and 1800Flowers have decided to participate.

The launch marketers and agencies will be able to go into their existing AdWords account and access a TV-advertising account. They can elect to have their ads run on any of Echostar's 120-plus cable channels available and buy by daypart. Or marketers could ask a recommendation engine to generate a plan based on the demos a marketer is trying to reach.

Then the advertiser will bid for inventory on that particular daypart and channel in a blind auction, which means advertisers won't see other bids and will only know what the winning bid price was if they indeed won the auction. All bidding will be based on household cost-per-thousand viewers, or CPMs. Google didn't disclose whether Echostar would be able to set a minimum price for its inventory but, said Michael Steib, Google's director of TV, "market dynamics will drive pricing."

The killer app
But it may turn out to be the measurement aspects that provide the killer app for marketers. Twenty-four hours after bidding closes, Google will report back on the bids that won, the ads that ran and the audience for those specific ads. That means that unlike the TV-reporting situation -- in which a marketer is given the overall rating for the program in which his or her ads ran -- Google will report a rating for that specific ad. If a program generated 1 million viewers, but 50,000 tuned out before the commercial break commenced, Google would only report an audience of 950,000 for the ad.

Google will also use Echostar's set-top box data to provide the second-by-second rating for each ad so a marketer can see how well the ad held the audience through its 30 or 60 seconds -- and how many tuned out.

Mr. Steib said advertisers that run the same ad across 10 channels will be able to find out the next day how each channel held the audience. For example, one channel may retain 95% of the audience through a break while another may have only kept 70%. The advertiser can then use that data to make better decisions the next time it bids on which channels it should target at what CPMs. He said Google's system will provide the "first widely available second-by-second measurement of each commercial," reported back in real time and help marketers "target audiences in more informed way and more efficiently."

Commercial-ratings issues
Of course, this system bypasses the issues under debate in the TV ad industry about commercial ratings -- and when questioned how networks will react to the system, Mr. Steib recognizes it could be controversial, at least initially. After all, TV networks have long been able to charge advertisers based on how many people watched the program -- not the ad breaks. TV-audience measurement hasn't provide the level of transparency and granularity the Google system proposes and, in fact, the industry hasn't even been able to agree upon if, when and how to implement commercial ratings. Some agencies, such as Starcom, for example, are taking measurement initiatives themselves, in December signing a deal to access viewing activity across 350 TV stations in 300,000 homes served by cable operator Charter Communications in the Los Angeles market.

"We acknowledge we're entering existing markets and talking about new ways to do things," Mr. Steib said. "But we believe when you take away uncertainty of measurement you make that inventory more valuable." And, he said, for every advertiser that decides a particular program doesn't get an audience that stays engaged, there'll be someone who comes in to replace them for that inventory.

Unlike Google's foray into print advertising, in which it touted a theme of bringing new advertisers to the medium, the TV test is full of names that spend hundreds of millions on traditional TV advertising. While that brings instant credibility to the test, it may also create pause among TV networks and cable operators thinking about whether to partner with the search giant on ad sales as existing media-sales organizations tend to fear any entity that replaces their relationships with advertisers.

'Test-and-learn approach'
Nick Utton, chief marketing officer at E-Trade, said in an e-mail his company is participating in hopes of "gaining real-time analysis of our TV advertising investment. Our marketing model is based on a test-and-learn approach, which provides us with innovative ways to reach our target, value-driven customer. We believe in early adoption of new digital-marketing technologies to ensure we learn as quickly as we can to achieve the highest efficiency with our marketing spend."

"We're entering our closed trial with an array of advertisers, some of whom are the largest in big name advertisers in TV today," Mr. Steib said. "We're working with a bunch of the biggest agencies. We're also looking at advertisers who are newer to TV or who don't spend as heavily on TV as the bigger guys."

Coinciding with the launch, Google is launching a creative marketplace for TV advertising in which smaller marketers will be able to connect with producers who can craft the spots. Google has a similar service for its small radio advertisers.

While Mr. Steib wouldn't speculate on the types of targeting the product could offer in the future, he said that with Google's search infrastructure one could certainly see ways in which the system could help advertisers better understand the branding impact of their campaigns. He also said he intends for video search to eventually be applied to the planning process. An advertiser could, for example, search for any cooking show that has the word "avocado" in the program description and target its ad in that particular program, rather than choosing to be on the Food Network at 4 p.m.

Increasing relevance
"Our goal is at end of day to bring better ads to user," he said. "We want somebody to sit down in front of TV set and see more relevant ads. If we do that, inventory becomes more valuable and advertisers will see more return on investment. ... We'll only be successful in this space if we prove to people who own TV inventory that we can make that more valuable."

Mike Kelly, exec VP, Echostar, said he's excited that the deal will help his company leverage set-top-box technology that Echostar has been building into its boxes for many years.

"In an age when there's lots of concern about what our DVR technology does to advertisers, we're not standing still but trying to deliver more relevant ads to viewers and help advertisers get more efficient," he said.

Long Tail networks
The amount of inventory Echostar has committed is, said Mr. Kelly "less than half [its total available inventory] but [is] a sizable, relevant amount on 125 networks, equally distributed across all tiers and dayparts." He also cites the importance of the measurement data, particularly against small so-called Long Tail networks that don't generate a sizable enough audience to show up on Nielsen's reporting.

In the initial trial, Google will only be reporting live impressions, but DVR playback is something it is working with its partners on.
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