Google Inc. will sell and select some of the ads shown to EchoStar Communications Corp.’s 13.1 million satellite TV subscribers, marking the online search leader’s latest effort to extend its marketing muscle beyond the Internet.
Under the partnership announced Tuesday, Google hopes to prove the automated formula running its booming online advertising network can also become a moneymaker in long-established media such as TV.
“We think a lot of the principles of the Internet can be applied to the TV business,” said Keval Desai, Google’s director of product management for TV ads.
The Mountain View-based company quietly began testing its television advertising system with Astound Broadband in about 25,000 households in Concord — a suburb about 30 miles east of San Francisco. Google still hasn’t determined when it will begin distributing ads to EchoStar’s Dish network.
Google’s earlier expansion into radio and print advertising hasn’t made much of a financial dent so far. Internet ads accounted for virtually all of Google’s $10.6 billion in revenue last year.
But the alliance with EchoStar’s Dish network — the second-largest U.S. satellite service behind DirecTV Group Inc. — should provide Google with a better springboard into the roughly $60 billion market for broadcast and cable TV advertising.
“This has a much better chance of getting the market excited” than Google’s foray into radio and print, said Kevin Lee, executive chairman for Did-It Search Marketing, which helps manage online advertising campaigns.
To become a significant force in TV advertising, Google still needs to broaden its reach by working out similar distribution arrangements with other cable and satellite providers, said Chris Geraci, U.S. director of national TV at advertising agency OMD.
“This is a nice building block, but it’s not enough to change the landscape,” Geraci said.
Two of the nation’s largest cable providers, Comcast Corp. and Time Warner Inc., already rely on Google for some of their online advertising revenue. Neither company has indicated whether it’s willing to entrust their cable TV advertising with Google.
Coupled with its vast clout on the Internet, Google’s off-line ambitions already have raised fears that the nine-year-old company will trample traditional media as it accumulates even more power.
Those concerns have intensified in the television industry since Google bought online video pioneer YouTube Inc. for $1.76 billion late last year.
Google’s plans to sell television ads creates “a fundamental channel conflict” as it also tries to funnel more online video ads into YouTube’s Web site, said Nick Grouf, chief executive of Spot Runner Inc., which already sells targeted television advertising.
“It would be the equivalent of NBC coming out and saying it’s going to try to sell advertising for Fox and ABC,” Grouf said.
In a sign of the industry’s misgivings about YouTube, NBC Universal and News Corp. — owner of Fox TV network — a rival online video network that is supposed to debut this summer.
None of the ads that Google places on TV will appear on YouTube, Desai said.
Both Google and Englewood, Colo.-based EchoStar are betting their partnership will create new advertising opportunities by making it easier for small businesses to get commercials on TV.
The automated system for TV ads mirrors Google’s Internet advertising network with one key difference.
Google’s Internet ads are linked to specific terms entered into its search engine or the content displayed on a Web page. Google’s TV ads won’t get quite as personal because they will be targeted more broadly at specific demographic groups, regions and programs on one of the Dish Network’s 125 satellite channels.
Each day, Google will analyze anonymous data culled from the set-top boxes of the Dish network subscribers and only bill advertisers for the segment of the audience that watched a commercial a designated amount of time. Desai declined to specify the minimum amount of time that an ad must be watched to justify a charge.
Because of strict privacy laws governing cable and satellite TV, Google isn’t trying to divine the interests of individual viewers or households, although company officials have said they eventually hope to win permission to do something along those lines some day.
The privacy controls built into Google’s TV advertising system will depend largely on how well EchoStar shields the data collected from its set-top boxes, said Kurt Opsahl, a staff attorney for the Electronic Frontier Foundation, an online civil liberties watchdog.
“The more you aggregate the data, the less troubling it becomes” from a privacy rights perspective, Opsahl said.
The ability to quickly analyze how many households watched a specific ad is one of the best things about Google’s system, said Steve Jarmon, vice president of brand communications and partnerships for 1-800-Flowers.com
“We are really intrigued with the idea,” Jarmon said. “We think these measures could give us a much more accurate picture of how our money is being spent.”