Google Inc. has struck its first major deal to enter the television advertising business with U.S. satellite TV operator EchoStar, a move that promises to upset the cozy way TV ad impact has been measured.
EchoStar Communications Corp. and Google Monday said they have a partnership to create an automated system for buying, selling, delivering and measuring the impact of TV ads running on EchoStar's national, 125-channel DISH Network.
Google, whose pay-per-click Web search ad system has transformed the effectiveness of online advertising, is aiming to bring the same measurability to offline media including radio, print -- and starting in May -- through Google TV Ads.
Caval Desai, director of product management for Google TV Ads, said the new service allows network operators and ad buyers to reach ever-more fragmented TV audiences. "If you are a niche network, you don't get measured today," he said.
But industry analysts said Google is likely to meet with resistance from bigger cable TV operators like Comcast, Time Warner Cable Inc. or Cox Communications, who jealously guard data their cable systems generate on customer-viewing habits, seeing it as the crown jewel of what they sell to advertisers.
It also must face off against Nielsen Media Research -- the incumbent media measurement company synonymous with TV viewing ratings in the United States -- and hot start-ups like Spot Runner, which is backed by WPP, Interpublic and CBS.
At stake is the roughly $70 billion a year U.S. television advertising business -- still far and away the biggest place where corporate brands spend their vast marketing budgets.
"This is pay-for-performance," Caval said, applying the terminology now commonplace in Internet advertising markets but strange to TV markets.
Once established in the U.S. market, the company plans to expand internationally, officials said, but gave no timeframe.
Advertisers given early access to Google TV Ads say the accountability the new service promises in measuring how specific ads perform with target audiences is long overdue.
"Today, when I run a 30-second television spot, I would have to be watching TV to know whether it actually ran," complains Steve Jarmon, vice president of brand communications at online florist 1-800-Flowers.com.
"I have to wait weeks for data to come back from network operators about how many views saw an ad," he said.
1-800-Flowers spends half its marketing budget online, and the other half -- some tens of millions of dollars a year -- on TV, radio and newspapers. Mostly that's at holidays -- Mother's Day, Valentine's Day and from Thanksgiving to Christmas.
"What Google and EchoStar are doing is turning that whole process on its ear and making it far more attractive to me."
Instead of finding out how any particular ad performed weeks after a holiday, Jarmon said the new system could give him near real-time feedback that will allow him to do far more specific targeting and even change his ad strategy midstream.
The EchoStar deal marks the first national test of by a pay-TV provider and Google's approach to buying and selling TV ads. Google also confirmed it is testing ads with Astound Broadband, which supplies local cable TV service to 26,000 customers in Concord, a suburb northeast of San Francisco.
The ad-buying system takes advantage of the two-way signals that many of EchoStar's 13.1 million customers have installed in their homes that measure which shows are watched when. Using Google TV Ads online system, advertisers can locate available time slots, upload video and track subsequent viewership.
The system allows ad buyers to target customers by geographic or demographic groups down to audiences as small as a dozen viewers, officials said. No information on individual viewing habits is available, only aggregate, anonymous data.
Measurement has long been the Holy Grail of mass marketers -- retail pioneer John Wannamaker once said half the money he spent on ads was wasted, he just did not know which half.
"Once you can measure performance, advertisers are more likely to spend," said Bill Harvey, a media measurement consultant whose client list reads like a Who's Who of major U.S. and European brand advertisers.
Many TV programming audiences overlooked by traditional Nielsen sampling -- which only captures data on tens of thousands of viewers each week -- will be measured by Google.
Mike Kelly, EchoStar's executive vice president of advertising, said his company will allow Google to sell anywhere from two minutes to 10 minutes of ads per hour across its network. Typically, up to 12 minutes of ads run per hour.
Live testing of the Google ad system is set for May, he added.