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What If Television Ads Got Smarter?

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What If Television Ads Got Smarter?

What If Television Ads Got Smarter?

What If Television Ads Got Smarter?

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This story is the second in a five-part series.

Jordan Hoffner

Google's Jordan Hoffner says his company is not looking to get into the TV production business: "We don't view ourselves as a content company. We view ourselves as a technology company." Google hide caption

toggle caption Google

How can focusing on the niche help broadcasters? Read an interview with Chris Anderson, author of The Long Tail: Why the Future of Business Is Selling Less of More

Men stand before erupting bottles of Diet Coke

The duo of Eepybird earned a revenue-sharing deal with Google based on the popularity of its videos featuring the explosive combination of Diet Coke and Mentos. hide caption

toggle caption

Most of us change the channel, or get up to do something else, when a commercial break comes on. But what if that toothpaste ad came on while you were searching for "tooth whitening," and not while you were watching, say, Oprah?

Google is trying to make advertising more of an aid than an interruption. Jordan Hoffner, head of news and premium content partnerships for Google partner YouTube, says his goal is to make ads more relevant for the viewer.

"I don't think that the broadcast networks can really target the way Google can target," Hoffner says.

Ad sales for Google are projected to reach more than $11 billion this year. Last year, according to the company, it paid almost $1 billion in revenue to content partners.

Google and YouTube can be tools for content producers in a few ways. CBS, for example, says that posting clips from The Late Show with David Letterman to YouTube, where they can be viewed by anyone for free, has boosted the show's ratings.

Eepybird, a small comedic team known mainly for producing videos demonstrating the explosive union of Mentos and 2-liter bottles of Diet Coke, ended up turning the popularity of its content into a sponsorship deal. They became the first amateur video producers to make a deal with Google to share ad revenue for their subsequent video, which Mentos and Coca-Cola have sponsored.

"It was really enabling a content owner to get paid, and enabling a sponsor to get their message across in a unique way," Hoffner says. "That's a very strong Google application to the media industry."

But isn't Google worried about the prospect of driving people away by becoming the kind of advertising machine that the television networks have become?

Hoffner thinks it's a matter of how well matched the content and advertising are.

"It's part of the content and the search experience. If you're engaged, you're engaged. I think that's the key to all of it, user engagement."

Television and 'The Long Tail'

Long Tail
Courtesy of Hyperion

Google's success with targeting ads online is one illustration of "the long tail," where a focus on many successful niche markets can produce revenue that equals or surpasses that of a mass-market pitch. Chris Anderson, editor-in-chief of Wired magazine, coined the phrase in his book of the same title. He talks with NPR.org about television and the long tail.

First, let's start with an overview of the long tail concept. Can you describe it briefly?

It's about life beyond the blockbuster: what happens to our culture and our economy as we shift from mass to niche markets. Click here to read a fuller explanation at Anderson's Web site.

How do you see this playing out in the television industry?

TV is a classic example of [the] incredibly powerful economics of broadcast, where you can reach many for the same price of a few, [but it] has come with a cost: You can only do it with a small number of shows.

[Television is] a one-to-many distribution mechanism. You have to settle for the content that suits lots of people. You end up with classic formulas that touch on the commonality of taste, and that's lowbrow sitcoms and other relatively generic fare. That's not any reflection of the tastes of the programmer; it's what TV requires.

The economics of Internet distribution are just the opposite. In that model, the opportunity is to do the sort of things that don't necessarily correspond with the taste of a concentrated audience, but [rather] a distributed audience. You don't have to adhere to formulas or commercial standards or formats. Because the costs are so low, the costs of experimentation are very low.

The long tail concept seems to make sense for retail sales. But how narrow can you get in a medium that depends on advertising to a certain number of eyes for its revenue?

First of all, as Google has proven, you can make a lot of money as an ad network around niche content. Those ads are highly targeted ads, running on very specific searches or on blog content... You can absolutely make ad money off content. [But in this case] a lot of that money is going to Google.

So does the Internet represent a viable revenue source for networks and content producers?

It's a business. Nobody knows. YouTube is a fantastic cultural phenomenon, but... you don't have network-sized revenues. That is the big question: We know that the television audience is shifting to the Web, [but] we have not figured out how to shift the business model. It will come, though. It's just a matter of time.

How great is the potential for failure in networks trying to capitalize on this?

I'm not sure [the long-tail strategy] is appropriate for networks. Not everybody should have a long-tail strategy. Major broadcasters are the head, and YouTube is the tail. They can use these channels to promote their stuff, but I wouldn't suggest networks try to commission video bloggers [for example]... It used to be one market for television, [and] now there's two markets. It's turning out that second market is not replacing the first, but it's emerging as a market of significant size... I think networks should continue doing what they do best.

Another aspect of this that we haven't been talking about is the long tail of time... There's a huge potential in the archives of television, which the networks can participate in. But that's another dimension entirely.

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