Google Confident in Future of TV Advertising

The use of digital set-tops to provide second-by-second measurement of viewing habits will have a much bigger impact on the TV-advertising business for smaller networks and secondary digital channels than it will for major programmers. That’s according to Google advertising executive Tim Armstrong, speaking Tuesday at the UBS investor conference in New York.

“TV is doing very well in terms of the monetization of the network,” said Armstrong, Google’s president of advertising and commerce for North America. “And if you’re a major network, you’re probably doing OK right now.”

Smaller networks and more niche programming is “where there is a big difference in CPMs [cost per thousand homes],” noted Armstrong, who briefly discussed Google’s use of set-top data from satellite operator EchoStar Communications in selling commercials through its Google TV Ads online-delivery platform. Google also has a deal to grab set-top data from measurement giant Nielsen.

Second-by-second set-top data should allow “advertisers to really see value of the programming,” Armstrong said, much as Google has been able to monetize niche Web sites online. Such data should be particularly vital for small digital networks that aren’t currently rated by Nielsen.

“It’s going to give a different way of looking into these channels,” he added.

When asked whether TV networks and cable operators should be scared of Google stealing advertising revenues from them, Armstrong portrayed Google as a partner, not competitor, to existing TV players -- much as Google CEO Eric Schmidt did in a keynote address at the National Association of Broadcasters' show last spring.

Armstrong noted that Google recently hosted a “TV Day” at its headquarters that drew some 200 TV executives, and he described how major advertisers like Yum! Brands still see TV as the place to market a product launch. He added that programmers have bought into the premise that more precise measurement of TV consumption will help, not hurt, their businesses and pointed to the recent deal between NBC Universal and TiVo for set-top data as an example of their new thinking.

“They’re at the point now where they’re saying more measurement is actually good,” Armstrong said. “They know they’re providing ROI [return on investment], but they think it would be great to actually prove the ROI in a new way.”