TV Ads-Do They Measure Up?

Google, of course, faces large barriers. Today’s Google TV Ads trial is still small with only one major provider. To win in the long-run, Google will need to access data from more TV operators and a greater share of households. A partnership with cable companies is unlikely given the position of Canoe Ventures. But, Google could make an acquisition to enter the STB game (such as TiVO), expand the existing partnership with Nielsen, or even launch its own software or build a Google STB. In the same way they launched Gmail providing email with massive, market-changing amounts of storage, the possibilities are endless for a new consumer-oriented STB (maybe unlimited personal video recorder capabilities, converged services?). Any of these options would allow Google equipment to enter the home to measure and analyze TV viewing behavior. With data in hand, Google would own a powerful competitive advantage to arbitrage or broker TV advertising inventory. Despite this short-term STB barrier, one could argue that Google may be further along than any other player because of its approach and focus on measurement.

Other players are also exploring this path. TiVo has started to offer second-by-second ad viewing data, Nielsen announced a DigitalPlus service aimed at providing more granular reporting, and Microsoft continues to invest heavily in this space.

This disruption in the TV advertising industry heralds a change that started with the Internet and is now migrating across media. Data and analytics are becoming the foundation of the industry, adding richness and rigor to buying decisions. One thing is true for any player—deep analytical capabilities and expertise are a requirement to compete and win in this new world order.

Daniel Chu is a Principal and Travis Keller is a Manager at Altman Vilandrie & Company. Elizabeth Wiley also assisted with writing this article.