Why Google Television will NOT make money
Another day, another Google promised targeted, measurable advertising revolution: Google TV!
Google CEO Eric Schmidt has long been seeking to realize his “fantasy” of controlling the media budgets of all advertisers, across all media. Unfortunately for Google’s advertising diversification dreams, however, the targeted fantasy remains off-target.
Google has a fine track record in announcing myriads of advertising tests, betas, trials…and in achieving massive media attention for its every advertising product development effort announced with Googley fanfare.
What about a track record in moving from advertising test or beta or trial, to a real honest-to-goodness marketplace ad product? Perhaps one that might even make money for Google?
Google has done numerous print advertising tests with newspapers and magazines, has made a $100 million plus acquisition of dMarc Broadcasting radio technology firm and has invested in radio ad sales infrastructure and personnel.
Google advertising diversification track record to date: Google is 0 for 3.
Google AdWords were revolutionary because Google created a new advertising market; Google introduced a new product, in a new industry, with a new value proposition. Google can not readily enter legacy advertising markets offline, however, and disrupt long standing market dynamics by simply stamping an automated by Google label on media buying plans.
Moreover, Google’s diversification into offline advertising requires it to act as a broker on third-party platforms. The super profit margins Google reaps in AdWords reflect that Google is a direct seller of advertising on its own property. Google as a reseller means no absolute control and lower margins, resulting in a much smaller Google piece of the offline advertising economic pie.
Reseller Google also is deprived of prime offline ad inventory to resell. Radio, print and television advertising properties will naturally retain their high-value advertising opportunities for direct sale to their prime in-house clients.
Traditional media advertisers enjoy the favored client treatment they now receive direct from radio stations, newspapers, television networks, such as high-quality advertising packages, financial incentives, make-goods. Why should top tier brand advertisers forgo their privileged direct relationships with offline media properties in favor of a Google middleman, an automated, hands-off Google centric one.
WHO NEEDS GOOGLE say television networks if it means splitting advertising revenues and diluting direct client relationships?
WHO NEEDS GOOGLE say television networks if it means downward pricing pressure on advertising inventory?
WHO NEEDS GOOGLE say television advertisers if it means being subjected once again to the Google black magic black box of blind auctions, quality scores, bid up your own price, Google is in multi-billion dollar control AdWords world?
Not many. That is why Google Television will NOT make money!
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