Google to Auction EchoStar Ads

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Marking its biggest push into the television business, Google hooked up with EchoStar Communications to use an auction system to resell a portion of the ad inventory on Dish Network’s 125 national channels.

EchoStar executive vice president of commercial and business services Mike Kelly said a “small percentage” of Dish’s total ad inventory will be resold by Google. “We think it’s an opportunity to leverage the viewer information that we can gather from our set-top boxes,” he added.

The system -- scheduled to begin trials in May -- will sell ad space in an auction format only on cable networks, including ESPN, CNN, Discovery Channel, Lifetime Television, Nickelodeon and Disney Channel. No national broadcast channels or local affiliates are part of the initial trial.

Google and EchoStar did not disclose financial terms of their agreement.

The companies said Google will sell spots for all day parts on all 125 networks and all tiers, but they didn’t name specific programming that would be in the mix. “There’s tons of premium inventory in there,” Google TV ads director Michael Steib said.

At first, the system will be by invitation only, limited to an undisclosed number of advertisers. Steib said Intel, E*Trade and 1-800-Flowers will be among the charter advertisers, and participating ad agencies include OMD Worldwide and Publicis.

What does Google bring to the party? Primarily, Steib said, Google’s TV ad system is designed to provide reliable and detailed viewer statistics to advertisers. With EchoStar, Google will compile viewing statistics from several million of the set-tops used by Dish’s 13.1 million households. (Metrics from certain older Dish set-tops cannot be retrieved.) The viewing statistics, extrapolated across the entire Dish footprint, can be analyzed by program, network, time of day and other variables.

“We know second-to-second whether TV sets stayed tuned into the channel or tuned away,” Steib said, adding that Google will provide a way of factoring in assumptions about which TVs have been left on too long with nobody watching.

Advertisers are allowed to see viewer stats only on ads they’ve bought, and they then pay for the actual number of viewers Google estimates saw the ad. For example, if an ad placed for a program expecting an audience of 1 million at a winning bid of $10 cost per thousand homes (CPM) actually delivered only 900,000 viewers, the advertiser would pay $9,000.

“We don’t have any ‘make-goods,’” Steib said, referring to industry lingo for airtime provided to an advertiser when a guaranteed number of viewers isn’t delivered.

Kelly cited another advantage: By crunching statistics from several million set-tops, Google can provide a more accurate reading of shows with fewer than 1 million viewers.

“There’s a great opportunity for us to apply great analytics across the long tail that isn’t rated by Nielsen [Media Research],” he said. “It will let us target advertisers better, and we’d hope to see increased CPMs.”  

Both Kelly and Steib made a point of noting that the companies will not be targeting ads to set-tops based on an individual subscriber’s information. “We’re just giving advertising agencies better data,” Steib said.

Google’s deal with EchoStar follows a much smaller trial the Web giant has been running with cable operator Astound Broadband, which placed local commercial spots in systems serving about 25,000 video subscribers in Concord and Walnut Creek, Calif. Google has been in discussions with some large MSOs about using the TV ad system, Steib said, but operators’ ability to track ad-viewing metrics -- critical to the whole approach -- varies.

Meanwhile, Google is rumored to be part of a bidding war for online-advertising firm DoubleClick. According to a report Monday in TheWall Street Journal, Google offered more than $2 billion for DoubleClick. The newspaper, citing unnamed sources, said DoubleClick also attracted the interest of Microsoft, Yahoo and AOL.

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