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International: Google lays groundwork for TV scatter sales sortie<br>Advertises for TV ad chief, negotiates to peddle upfront spillover

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International: Google lays groundwork for TV scatter sales sortie<br>Advertises for TV ad chief, negotiates to peddle upfront spillover

Google is looking for a head of national TV sales. The recruitment ad, posted on its website, says the winning candidate will build a "world-class national TV-advertising-sales team and lead the effort to both sell television solutions and shape a next-generation advertising platform."

TV ad market

The ad goes on to say the search giant is looking for a candidate with "extensive senior-level relationships with advertisers, both with agencies and clients directly." What it doesn't say, at least not in so many words, is that Google is desperately trying to wedge itself into the $65 billion U.S. TV-ad-sales market.

Those close to some of the talks the search giant has had with TV executives said Google's first priority is to persuade broadcast networks to let it sell their 30-second spots. To that end Google has had talks with the broadcast networks, cable programmers and several cable operators, including Comcast and Cablevision.

Start with scatter

"They want to start with scatter first and then move to local," said one executive familiar with Google's plans. Scatter refers to TV ad inventory that is not sold to marketers ahead of time, during what is known as the upfront, but is negotiated and bought each quarter. The price of scatter inventory rises and falls in relation to whether there is a lot or a little available, making it a market perfect for the auction-style ad system at which Google excels. The search giant has already attempted to apply its sales tools to radio and print-ad sales, and TV executives have long been wary of allowing Google to get a toehold in their business.

TV executives argue that they don't want to see their products commoditized, and that auctions could depress pricing. Google argues the opposite, claiming it will bring new customers to the market, possibly increasing prices.

"We've acknowledged publicly we're interested in pursuing TV," a Google spokesman said. "But we haven't disclosed any specific product direction. It's an area we're looking into."

Worldwide talks

"Television remains the single most important source of information and entertainment for billions of people around the world," reads one of the Google classified ads for a TV software engineer, underscoring just how important it sees the TV-ad-sales business. Its ambitions are by no means limited to the U.S. Google is also talking to the BBC about offering the broadcaster's video content on a worldwide basis.

Google already has hired two senior executives from NBC -- Michael Steib, who was general manager of strategic ventures at NBC Universal and is believed to be heading the TV auction business, and Jordan Hoffner, who was tapped to help Google become better at partnering on content.

Of course, there's already a player in the online-TV-auction business: eBay, whose Media Exchange service is backed by a number of major advertisers, including Microsoft, Intel and Lexus. Media Exchange was tested in late January but has yet to win a commitment from a TV entity to sell live inventory.

Architecture of TV-ad-sales business

But Google's TV ambitions go beyond auctioning 30-second spots. Google also is looking to compete with Microsoft by offering the architecture of such ad-sales ventures. Last week, the Television Bureau of Advertising unveiled plans to automate the archaic business of buying local airtime. Google is a contender to build that platform.

More significantly, Google is pitching a potential venture with Discovery Communications, now headed by former NBC cable chief David Zaslav. While details about that venture are scant, one executive close to the project said Discovery was "open" to a content partnership. But another executive said Discovery had to be careful about how such a joint venture would be received by the cable operators.

Google has many hurdles to overcome if it is to succeed in the TV business. First and foremost, it must resolve the copyright issues it faces with its newest unit, YouTube. Content companies appear to have a newfound confidence in the value of their video clips, something that executives say derailed talks between YouTube and CBS.

According to one analyst, Google is willing to offer somewhere between $70 million and $140 million to compensate media companies for copyright violations connected with YouTube, but CBS and others feel that offer is too low. The analyst said Wall Street is waiting on Google's first deal with an entertainment conglomerate to decide what value to ascribe to traditional TV content as it migrates to the web. That may be a long wait.

"No one wants to be the one that lets Google into the henhouse," said one network executive.

Source: Adage


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