When it comes to the Internet, there's no question that Google is the king of search, which -- not surprisingly -- also makes it the leader in search-related advertising, with an estimated market share of about 70 per cent.
That's not enough for Google, though. For some time now, the search giant has been trying to take its dominance on the Web and extend it into the offline world -- namely, traditional TV, newspapers and radio.
In one of the company's latest moves, it announced a partnership this week with EchoStar, the U.S. satellite TV broadcaster, in which Google will use its search-based algorithms to provide contextual advertising to EchoStar's 13 million subscribers.
So that's it then. Google will inevitably become the leader in TV advertising too, right? And then radio, then newspapers, and so on.
We've gotten so used to thinking of Google as a dominant force that it's tempting to see the company as a kind of juggernaut, dominating whatever new marketplace it decides to enter. But translating the company's expertise from the Web to the offline world is not as easy as it sounds.
One of the key differences between the online advertising game that Google has come to dominate and the traditional TV, newspaper or radio ad business is that in the offline world, the connection between the behaviour of a reader (or listener or viewer) and the ads they see is a lot less direct than it is online.
When you go to Google and do a search, the company takes your search and runs it through its algorithm and displays the ads that various advertisers have paid for based on certain keywords. It then knows the ads you click on, which in turn helps fine-tune its knowledge of which ads to serve up next time.
In the offline TV world, however, the ads you see are not tailored to your specific interests, to things you may be searching for. They try to be, but because you watch what's on (or what you've recorded) and, by extension, the advertisements broadcast during the show, the connection between the ads you see and your particular interests is imperfect at best and, at worst, non-existent.
The same thing applies to newspaper and radio-based advertising. The strengths that Google brings to the online world -- the ability to track where someone comes from, what they click on after doing a search and where they go next -- not only don't work as well in the offline world, but in most cases aren't even possible (at least not with current technology).
There's no question that the company's thousands of programming geniuses will likely be able to do a lot with the information that EchoStar's set-top boxes give them about viewers' behaviour, and use that knowledge to serve relevant ads stored on those set-top boxes by advertisers who agree to take part in the program. But that's not the only thing standing in Google's way.
The other main stumbling block is that existing cable TV providers, radio stations and newspapers have little or no incentive to play nice with the company as it tries to extend its business. If Google is successful, it stands to usurp a lot of the power that traditional entities have when it comes to their relationships with advertisers. Where's the upside in that?
Google has been able to achieve the kind of dominance it has in part because very few large media companies have paid any attention to the Web, at least until recently. To some extent, the online world was a market looking for someone to dominate it. The offline world already has plenty of big players, however, and they are a little sensitive about their dwindling power.
What this means is that even those newspapers, radio stations and TV providers who have agreed to play nice with Google by doing advertising trials aren't exactly opening the kimono too wide. In most cases, they are giving Google only the "remnant" ads that they haven't been able to sell through their traditional networks -- the equivalent of table scraps.
It's possible that Google's ability to generate relevant advertising will be so powerful that existing media conglomerates will feel compelled to work with the company, despite their misgivings about Google's growing power. But all those PhDs at the Googleplex definitely have their work cut out for them.
Read Ingram 2.0 every Monday on globetechnology.com mingram@globeandmail.com
