Google Shuts Off TV Ads Business

From my Forbes.com blog The New Persuaders:

After five years of trying to sell ads on television using the automated buying system that works so well for its signature search ads, Google has finally given up. In a blog post this afternoon from Shishir Mehrotra, VP of YouTube and video, the ad giant said it will shunt the group’s staff to other projects:

Video is increasingly going digital and users are now watching across numerous devices. So we’ve made the hard decision to close our TV Ads product over the next few months and move the team to other areas at Google. We’ll be doubling down on video solutions for our clients (like YouTube, AdWords for Video, and ad serving tools for web video publishers). We also see opportunities to help users access web content on their TV screens, through products like Google TV.

The shutdown is clearly a disappointment for Google, yet another sign that its math-driven advertising systems don’t readily translate to traditional advertising. Back in 2009, the company shut down radio and print ad efforts for lack of interest.

Mehrotra’s not being entirely disingenuous when he says that Google’s efforts are better spent on online video advertising. After all, more and more TVs get connected to the Internet and more and more people watch TV shows on their laptops, smartphones, and tablets. With its Google TV project and its fast-growing YouTube video service, Google remains in a prime position to vacuum up ad revenues as big advertisers start to follow their audience onto the Web.

Indeed, YouTube especially has shown considerable traction in attracting new ad spending–$3.6 billion this year, by the reckoning of Citigroup analyst Mark Mahaney. As I wrote in a recent story, YouTube is where Google is placing its television-scale bets:

Now Mehrotra’s goal is to try to grab a big chunk of the $60 billion U.S. television business. But to do that, and fend off TV-content-oriented online rivals such as Hulu, YouTube has to become a bit more like conventional TV. To that end, it organized itself last year into TV-like channels, investing $100 million in cable-quality launches from Ashton Kutcher, Madonna, the Wall Street Journal, and dozens of others. More and more TV advertisers are being won over, says David Cohen, chief media officer at the media buying agency Universal McCann. “They’re getting marketers to think about YouTube as a viable outlet,” he says. 

Mehrotra, who last year became ­YouTube’s vice president of product, envisions millions of online channels disrupting TV, just as cable’s 400 channels disrupted the four broadcast networks. “We want to be the host of that next generation of channels,” he says.

In other words, Google’s strategy is to attack the TV ad business from where it’s strong instead of from where it’s not.

About these ads

Consumers Juggle Four Screens Daily–But Marketers Haven’t Yet Followed Them

From my Forbes.com blog The New Persuaders:

Lots of investors are worried that Web companies such as Google and Facebook don’t have a clear way to make money as people increasingly access their services on smartphones and tablets instead of personal computers. Small screen sizes, the intensely personal nature of phones, and other factors mean it’s not readily apparent what kind of advertising will work best on mobile devices.

But new research commissioned by Google indicates the problem is even more complicated: People aren’t just going mobile, they’re using those mobile devices at the same time as, or right before or after, watching television, using their PC, or settling into the couch with a tablet. That means that it’s not enough simply to reach people on smartphones and tablets alone. Marketers must understand how people juggle those four screens for various tasks and types of entertainment throughout the day, so they can target ads that are most likely to appeal to them on each device given the different things they’re doing on each device.

Google’s research (full report here), conducted by branding and design firm Sterling Brands and market researcher Ipsos and summarized in the infographic below, provides some insights into this complex mix of devices and activities. But here are some of the highlights of the report, entitled The New Multi-screen World: Understanding Cross-Platform Consumer Behavior, that might be most relevant to marketers trying to figure out this whole mobile thing:

* Some 90% of people shuttle between various devices to get a task done, such as seeing a car ad on TV, checking it out further on a smartphone or tablet, then doing more intensive research on their PC.

* People use multiple screens in two ways: sequentially (going from one screen to another) and simultaneously (using more than one screen at once). The former is more for targeted tasks, while the latter is mostly supplementing TV watching with browsing on another device. …

Read the complete post at The New Persuaders.

How YouTube Turned Into a Real Business By Making Ads Optional

From my story in MIT Technology Review:

In 2008, when Shishir Mehrotra joined YouTube to take charge of advertising, the booming video-sharing service was getting hundreds of millions of views a day. ­YouTube, which had been acquired by Google in 2006, was also spending as much as $700 million on Internet bandwidth, content licensing, and other costs. With revenue of only $200 million, YouTube was widely viewed as Google’s folly.

Mehrotra, an MIT math and computer science alum who had never worked in advertising, thought he had a solution: skippable ads that advertisers would pay for only when people watched them. That would be a radical change from the conventional media model of paying for ad “impressions” regardless of whether the ads are actually viewed, and even from Google’s own pay-per-click model. He reckoned his plan would provide an incentive to create better advertising and increase the value for advertisers of those ads people chose to watch. But the risk was huge: people might not watch the ads at all.

Mehrotra’s gamble paid off. YouTube will gross $3.6 billion this year, estimates Citi analyst Mark Mahaney. The $2.4 billion that YouTube will keep after sharing ad revenue with video content partners is nearly six times the revenue the streaming video service Hulu raked in last year from ads and subscriptions. And that suggests Mehrotra has helped Google solve a problem many fast-growing Web companies continue to struggle with: how to make money off the huge audience that uses its service free.

In 2008, Mehrotra was working for Microsoft and hankered to have his own startup, but he agreed to talk to a Google executive he knew about working there instead. He decided against it—but that evening he kept thinking about how the exec was frustrated that most ad dollars go to TV, even though nobody watches TV ads. Yet at his Super Bowl party two weeks earlier, Mehrotra recalled, guests kept asking him to replay the ads. Was there a way, he wondered, to make TV ads as captivating as Super Bowl ads, every day?

The answer came to him in a flash. …

Read the complete story in MIT Technology Review.

Those Awful Apple Olympic Ads? Eliminated!

From my Forbes.com blog The New Persuaders:

Mayday, indeed.

You know those new Apple ads that began running during the Olympics, featuring an Apple “genius” helping out clueless Apple users in completely Contrived situations? Gone. Eliminated. Expelled.

Mashable reports that Apple’s ad agency, TBWA\Media Arts Lab, says that short run the first weekend of the Olympics was the intention all along. But it’s hard not to think that the storm of negative reaction had a lot to do with the ads getting tossed almost as fast as those slacker badminton teams.

By many viewers’ estimation, the ads, including the “Mayday” spot above, made Apple users look like idiots, something that clearly didn’t fit Apple’s brand. That ad, for instance, got 241 “likes” and 1,867 “dislikes” on YouTube.

Still, regardless of whatever face-saving excuse is being offered today–who can really believe a multi-spot campaign with a new recurring character was planned to run only a few days?–it’s to Apple’s credit that it spiked the campaign before it did any more damage. The twin themes of Macs being easier to use and Apple offering great customer service are fine fodder for ad campaigns–but separate ad campaigns, not mashed up into one frenetic, unrealistic set of spots.

One set of bad ads won’t hurt Apple much, but like few other companies, Apple must maintain its image as the elegant and cool alternative. It’s pretty clear execs decided these ads didn’t do the job.

Facebook Social Ads: What’s Working, What’s Not

From my Forbes.com blog The New Persuaders:

One of the biggest uncertainties about Facebook is how well its social ads work. The social network and its partners have trotted out study after study showing that people more often click on Sponsored Stories and related ads that contain a friend’s name, but advertisers and especially investors are not yet universally convinced.

Today at TechCrunch’s Crunchup conference in Silicon Valley, we got the skinny from two people who know as much about Facebook advertising as anyone: Greg Badros, Facebook’s vice president of engineering and products and the guy in charge of advertising engineering; and longtime adman Tom Bedecarre, chairman of digital agency AKQA, now a unit of ad giant WPP. Here’s what they had to say in conversation with TechCrunch’s Josh Constine.

The bottom line: Both men indicated that Facebook is just at the start of the opportunity. But the guy with the checkbook really wants more kinds of ads than Facebook currently provides–and implied that the size of those checks in the future depends on getting them. …

Read the rest of the post at The New Persuaders.

Don’t Pay Any Attention To Facebook’s Q2 Earnings Report

From my Forbes.com blog The New Persuaders:

To hear almost everyone tell it, Facebook’s earnings results Thursday will be a huge test of whether it will become the blockbuster business success so many investors have bet on. “Facebook Efforts on Advertising Face a Day of Judgment,” intones the New York Times. “Big financial test for Facebook,” blares the dead-tree version of the hometown Mercury News. “There is a lot on the line,” writes the Wall Street Journal.

It’s all a crock. Manufactured journalistic drama. Not that any quarter for such a fast-growing, newly public, highly influential, and closely watched company is unimportant. Of course it’s important. Especially given the underwhelming IPO, investors have a right to information that might tell them if their shares will be heading up or down.

But this won’t be a bellwether for Facebook’s long-term future. Fact is, no one should look to this quarter, or even the next, to determine whether Facebook can fulfill expectations that it will become the next Google.

Why? Because it’s too early. Way too early. Nobody, probably including Facebook, yet knows for sure what kind of advertising and marketing works at large scale in social networking. Facebook is clearly experimenting with a variety of ad formats, such as its socially infused Sponsored Stories. Just as clearly, it’s not apparent that it has found its equivalent of Google’s search ad or television’s 30-second spot. …

Read the complete post at The New Persuaders.

Still Following Apple Playbook, Google Debuts Cute Ads For Nexus 7 Tablet

Adapted from my Forbes.com blog The New Persuaders:

Next to its elegant products, Apple is best known for its iconic advertising–all the way from its famous (or infamous) IBM-baiting “1984” Macintosh ads to its “Think Different” campaign to its minimalist iPod spots. Now Google is borrowing Apple’s marketing mojo to promote its new Nexus 7 tablet computer.

Despite a deserved reputation for not doing many ads for its own products, Google was already making a small name for itself with a few scattered spots–even ones during the Super Bowl in 2011 and 2010–for selected products such as its Chrome browser. Some observers have noted how Apple-like the “Dear Sophie” and “Parisian Love” ads were–Apple’s FaceTime ads and “Get a Mac” ads, in particular, are pretty cute–so Google must have figured it might as well stick with what works.

Today, Google debuted a TV commercial for the Nexus 7 tablet that once again follows the Apple playbook: simple, cute ads with music that walks the edge of heartwarming and treacly. This one has a father and son using the tablet while camping–and if that sounds strange for a device that requires a WiFi connection, well, watch the ad to discover the twist.

Will the ads work? As the Atlantic points out, this one may not work as well as the others for several reasons that have to do with that twist. Others love it.

The only mystery is why Google is running these ads now, when the pricier version of the Nexus 7 is sold out. Yes, a product shortage–another buzz-producing page from Apple’s playbook. But if Google keeps up the high level of emotional connection its ads routinely forge, it seems likely to set its own example for tech advertisers.

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