Serious buzz about multichannel video advertising

Wednesday, April, 17 2013

Is Google Fiber a TV advertising play?

By: Stewart Schley Wednesday, April, 17 2013

Internet titan Google is pursuing a bigger role in broadband infrastructure in part because it has its eye on the world’s greatest advertising prize: the $60 billion spent annually on TV advertising in the U.S., says investment analyst Richard Greenfield of BTIG Research.

Greenfield’s analysis of Google’s plans to expand high-speed fiber network projects beyond Kansas City suggests the company wants to move beyond its present dominance in Internet search advertising – a $17 billion market in 2012, according to the IAB – and into television.

If that’s the case, it won’t be Google’s first attempt. The company launched, and then last summer, a TV advertising platform that was designed to match ad buyers with available inventory from local cable companies, among others. Our view then (and now) was that Google encountered a rough reality of the local TV ad business: avails aren’t so much purchased as they are sold. In other words, with lots of competing local media available to car dealers, restaurants, furniture retailers and others, it’s often the most effective local account executive who gets the buy.

That’s not going to change because Google or anybody else enters the very costly business of building super-fast fiber optic networks in selected communities (with Austin, Texas and Provo, Utah the latest, according to ). But controlling its own broadband infrastructure, tied to a traditional, cable-like multichannel video service, could present Google with new possibilities for marrying Internet-style ad targeting with the prized advertising inventory that’s tied to premium television content.

Also, as Greenfield notes, control of a high-speed broadband network that also offers a traditional pay-TV service could help make Google’s YouTube feel like a more mainstream TV viewing experience. Says Greenfield: “To capture even more YouTube viewership, co-mingling the over-the-top experience and television experience will be neccessary; Google needs YouTube to be accessible/viewed in the same way you watch traditional television content, rather than requiring switching HDMI ports or utilizing a separate device.”

One other interesting wrinkle is the possibility that Google could work with incumbent cable ad industry partners to help build its local TV ad business. Google is listed, interestingly, as a partner company of Viamedia, the independent cable advertising rep firm that also does business with Verizon’s FiOS TV and others.

When we last asked Viamedia’s founder, Jeff Carter, about Google, he wouldn’t comment on any specific business relationship in Kansas City. But he did offer in an email message that “competitive video provider representation is an area of Viamedia’s expertise and we would be very interested in helping Google succeed in the execution of their local advertising effort there and elsewhere.” Now, “elsewhere” looks like it may be starting to happen.

Related:

Google, fiber and the local TV advertising threat (Aug. 20, 2012)



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