Who wins when Google sells airtime?

In case you’ve missed it, Google have officially announced a tie up with Nielsen to provide demographic ratings data for their new TV advertising service (similar to Google Adwords) - http://www.nytimes.com/2007/10/24/business/media/24adco.html?ex=1350964800&en=e65d0a27003a1153&ei=5124&partner=permalink&exprod=permalink). This deal will enable Google to collect immediate demographic data from Nielsen to estimate who was watching the commercials that they had placed on advertisers behalf. The most interesting thing about this for me is the immediate benefit for advertisers in being able to effectively buy media space more efficiently and effectively.

Although Google are starting small (limited release for the US market only), it’s only a matter of time before they branch out into other geographies and media channels. They already offer a similar limited service for Print and Radio advertising in the US and don’t expect to see Cinema, Outdoor and other channels too far behind. The cat is already out of the bad and it’s not looking good for some.

So who wins from this deal?

1. Large Advertisers – Maybe not – although the beta testers for such a service, I doubt that they will be getting as great a discount on media buying once small and mid size advertisers find it easier to compete with them for airtime. Under the current system, large advertisers are effectively offered preferential treatment by media agencies and should (although do not always) pay lower rates for media brought
2. Small and Mid Sized Advertisers – With Adwords, any business could dabble in advertising at almost no incremental cost. Whilst TV advertising is more expensive in creative terms (and expect to see many more home movie style commercials) small and mid-sized businesses will now be able to dabble in a medium with its notorious entry costs slashed. That’s got to be good news for them.
3. Media Agencies – Unlikely to be good news. Arguably Adwords has made online agencies a ton of money in the past five or so years. However my feeling is that Google have been taking a long term view of this and subsidising this market to build acceptance to advertisers of the medium. Google are continuously improving their campaign management tools for aAdwords and at some point, the incremental benefit of using an online agency to manage this portion of spend will diminish. Furthermore, we can fully expect Google Analytics to get a major update for their premium customers who advertise across channels. Advertisers and agencies alike will have unprecedented access to data about their commercials and the ability to purchase spot by spot against testable targets. In other words, Google permit advertisers to sidestep agencies if they choose to do so. Expect to see many media buyers go client side once they’ve mastered the Google system!
4. Creative Agencies – A likely win – there’s going to be more work available for those that can turn around work quickly and effectively. They can even start in-market creative testing very early on.
5. Nielsen – On the face of it, Nielsen have signed a great deal. They’ve associated themselves with a top organisation and positioned themselves as the premier supplier of demographic data on the US TV audience. In reality they had no choice but to do this deal if Google came their way. However in the long term, I can see other ways appearing of getting the same data at far lower cost (mobile phones with RFID chips anyone) so the incremental benefit to Nielsen is likely to reduce over time. Maybe they can sell themselves to Google...
6. Consultancies – consultants (independent up to the big boys) have an opportunity to draw on the superior analytical skills they possess “en mass” vs. media agencies. When media buying comes down to the numbers, the agencies only have a handful of specialist analysts who can analyse data effectively. Many consultants feel more comfortable with the numbers and I can see them licking their lips at “outsourcing” another section of their clients businesses.
7. Media Auditors – a big loss. No need for auditing if there’s no debate over the price you pay.
8. Google – the big winner. Online advertising is still a fraction of the size of the TV and Print channels and Google’s technology addresses the key weaknesses in the media buying systems of these industries. Google have effectively decided gone from having a massive share of a mid-sized market to a smaller one in a far bigger ocean. Assuming that they can maintain service levels, continue to offer low entry costs, build the “test and learn” ability that online provides into other media channels, it’s inconceivable that they will lose out isn’t it?
9. Microsoft – the potential fly in the ointment for Google? Do they have deep enough pockets to offer an alternative quickly? Undoubtedly. However they don’t have the same track record in developing online advertising so it’s going to be a big challenge.

The Caveat - There is of course one big assumption with all of the above. There’s not going to be a feedback channel as there is with online advertising. How can you measure effectiveness when all you know is who saw the adverts? The answer is that Google is going to have to sign up retail partners as data providers in order to create the perfect “mash up” across channels. Once Walmart, Best Buy or even organisations such as Visa on board, the proposition will look unbeatable.