Whenever cable companies feel threatened, they form a joint venture. The latest is called Project Canoe, an effort by all six major cable companies in the U.S. to deliver targeted TV ads to viewers through their set-top boxes. The NYT reports:
Collectively, the cable companies will initially put about $150 million behind the effort in order to build a national service that can sell targeted advertising across all six cable systems.
The cable companies may control the set-top boxes, but they only collectively control about $5 billion of the $70 billion spent each year on TV ads. Most of those are local spots. With better ad targeting through Project Canoe the cable companies hope to triple their take to $15 billion. But that may be wishful thinking.
Of course, all of this is a reaction to Google, which already is testing its own TV ads on EchoStar’s Dish Network (no satellite companies are part of Project Canoe). Just last week, some Google TV Ad beta testers were able to start buying TV ads through AdWords as part of their regular advertising campaigns. In other words, they can buy search ads on Google, contextual online ads across the Web, and TV ads on Dish all through the same Google interface.
Through its partnership with EchoStar, Google’s software is on millions of set-top boxes, anonymously monitoring everything viewers do while watching TV. Advertisers in the beta can bid on ad slots by geography, demographics, day, time, and network. Google gives them data on how many people saw their TV commercials, how long they watched the ads, and at what point they lost most of their viewers. These are similar to the same sort of detailed reports advertisers can get on the Web. As I suggested last November:
Any new video ad unit that starts to gain traction on the Web could be ported over to regular TVs—clickable overlays, contextual video ads, unobtrusive sponsorship icons. Why not even let viewers program their own ads with a laundry list of categories and companies to choose from? They might actually watch them.When it comes to advertising, Google is not shy about stating its ambitions. “We are confident we are going to revive the television advertising industry,” says [Google TV's Vincent] Dureau, “by bringing new advertising to it.” Already, Google is trying to make TV ads more relevant, easier to target, and cheaper to deploy. As a result, Google thinks it can attract more ad dollars from smaller businesses that may not have been advertising on TV before.
The fact that the cable companies are creating their own advertising tracking software does not bode well for Google’s TV ad project ever making it beyond satellite-TV networks. Why should they hand over to Google a cut of their ad revenues? But giving Google the high hat will just make it more likely that Google will go ahead with its own secret set-top box project. An Android-like open-source set-top box could end up being a lot more disruptive to the cable companies’ business than simply letting Google in the front door.
AdWords already has a strong presence among the very same small- and medium-sized businesses the cable companies are going after. The big opportunity here is bringing more local ads to TV because one of the most effective ways to target TV ads is (still) by geography. Just ask Spot Runner, which already lets small, local businesses buy TV ads over the Web and is planning on combining that with online ad buys as well.
The cable companies have an advantage in that they own the set-top boxes required to make ad targeting work on TVs. They are now paddling fast to catch up. But there are also some mighty currents working against them. This is not just about putting software on set-top boxes, it is about creating the right software that can make TV ads more relevant. Who is more likely to do that: Google or a multi-headed joint venture? Then the cable companies will have to create their own ad network as well, which will compete with the TV networks their business relies on. They’d better put that canoe in the water and start paddling fast.
(Photo via Jeff Kubina).
Perhaps the first line in Google’s Crunchbase summary should be revised to “Google is primarily a [media advertising] service aiming to organize …”
With current trends of the Internet (higher speed, many shows on demand, high-quality streaming from PC to TV, Joost & others), the cable industry is so doomed…
Nice try though…
I usually think of cable companies as big megaconglomerated monsters who exploit their monopoly and prey on subscribers.
But those guys in your Canoe picture are the cutest little fellows I’ve ever seen! I must have been wrong about them?
Google TV is coming ……soon.
Trust me….by 9/1…we will be able to put ads on TV (think GooglePrint…GoogleRadio)
And I thought all the couch-potatoes of the world were starting to move to the internet from the TV sets… Does Google do outdoor advertising like hoardings and those electronic billboards?? I’m sure they’ll move there as well, if they aren’t already doing it!!
There are Google 411-info billboards….already…
This is a sinking ship… pun intended.
Cheers,
Aidan
http://www.MappingTheWeb.com
Mike T (#2) the cable and phone companies will just charge you more for the high speed internet access. Projecting doom for those providing the bandwidth!? Pssh.
Google is moving fast but their solutions is many time coming from an tech corporate culture. They see the solutions and the money but not what it means for consumers - small business will provide not good advertising that will affect their media channel. But they will learn fast for this means less profit.
Cable companies are not doomed at all. In fact, I think that all this talk about Google TV, Adwords on TV, set top box data and Spot Runner only increases the relevance of cable television and the demise of broadcast TV. Broadcasters should be worried, yes, but not cable operators. Canoe will help standardize the oh-so fragmented cable industry and that could spell trouble for Google TV.
open up guys open up …
otherwise fail…
The cable companies may be forced to let Google in. As you said Erick, who is better suited to rule, Google or a group of cable operators? If you can do all ad (web, print, tv, radio) in one place and you can see detailed results, better than what the cable companies can show, then why not do it?
Google Ads is a terrific product! Specially for advertisers. Now advertisers will get better deals on TV Ads and as far as I can see it will do for TV Ads what AdSense did for online advertisement.
And I tell you more: This is a first step for ads on online broadcasts. Soon you will see.
Hi,
If 2 networks can come up with Hulu, then why can’t cable companies do atomic-ad-targeting?
It is so of the fanboy net-crowd that google is doing well, so let google do it, but that ignores all long-term logic and business-interest. The Murdochs, Gates, Malone’s and Redstone’s of the world didn’t get anywhere by giving in when losing!
There are so many possibilities for the future of media-Internet-Cable, and we aren’t even on the 2nd step yet. If people want to get really scared, they should think of Phorm and rfid and last.fm……….
Best wishes,
Shakir Razak
Adwords on TV is an interesting of a very likely future, but. And this is a big but. There is more to advertising then simply getting an ad to screen.
I understand Adwords is a reasonably complex system but in my experience in Post Production, a high proportion of ads are very localised. So much so, I cannot see automated systems servicing a large proportion of advertising needs for TV.
This indicates that Adwords for TV is likely to be part of the future but not the be all of the future.
Adwords TV is likely to work reasonable well in the US, but not so much everywhere else. Where population centeres are not as large and are spread out more. The number of variables becomes to great and to different for automated systems to tackle to well.
Google will have to become a huge company with real world people dealing with real relationships with real companies to facilitate this properly.
Something I am not seeing.
James
It has nothing to do with desire. The cable industry is very fragmented and within the system are dozens of proprietary technologies all controlling different aspects of the delivery of that signal. Google deal with the satellite companies is nothing. Why? Because the satellite systems are ONE WAY. They have no method for communicating back to the ad server to deliver a dynamic ad.
So people can dream all they want but its going to be years before the technologies come together to allow for the dynamic delivery of advertising to your TV.
Clearly the cable companies have a lot of work to do to pull this off, but the prize is huge. Forming a viable coalition where incentives are aligned to encourage continued cooperation in the long term is a major step forward.
If the cable companies are successful, Google will to an extent become a victim of it’s own success. Incumbents in other industries will do whatever they can to prevent Google becoming a dominant cross-media ad platform. This coalition has been spurred on by Google’s aggressive moves into new spaces. However the cable companies also have a significant revenue upside (this is not just a defensive move but one designed to increase their share of advertising revenues).
The first hurdle was to form a viable and well structured long term coalition. Assuming they can overcome the technology integration issues (not a trivial matter), the next hurdle will be negotiating terms with the content providers on how the revenue for targeted advertising will be split, and how much advertising will become targeted. It will be interesting to see how (and how soon) this plays out.