Opinions Video

Business Models Cord Cut, Too. Google’s Move Away from TV Advertising

Posted by Atul Patel on September 28th, 2012 at 5:30 am

Google TV Ads

Cord cutting isn't just a consumer topic.  Business models can fall victim to the trend, as well.  Google recently announced that it will be shutting down its marketplace for traditional television advertising to focus on digital video solutions such as YouTube, AdWords, and ad serving tools for web publishers. With this decision, it’s clear that even the largest advertising platforms can no longer invest in trying to better the 'old' system, and must move full-steam ahead with digital video to stay competitive. Google is just the precursor to a future where successful media companies will fully embrace digital video across all platforms as a means to re-engage audiences’ fragmented attention.

Even though efforts have been made to rework television advertising products by mimicking digital innovations, fragmented audience attention, layered with dated systems and workflows, makes this incredibly difficult to support. While it’s true that the majority of video is still consumed via traditional television, viewers’ attention is more often focused on the connected device in their hand than what’s on screen. According to a report recently released by Google “90% of people move between devices to accomplish a goal, whether that’s on smartphones, PCs, tablets or TV.” With so much multitasking between connected devices, capturing 100% of target audience attention on the television is near to impossible.  Google tried to remold the TV advertising model by bringing online video advertising features to the television set, which included an online marketplace for small businesses, the opportunity to pay only for delivery using Google AdWords, and the availability of granular performance metrics. However, these solutions could not alter the existing structure of a medium that was not designed to be interactive for shortened attention spans, nor was it built with the same capabilities afforded to digitally-focused advertising platforms.

Media companies must have the foresight and means to move over to digital video before TV advertising models keep them, and their partners, behind. Google is forward-looking, diversified, and nimble enough to have understood the changes on the horizon in time to adapt, and to focus their energy on where the future is going, instead of where the past has been. Not everyone has been so prepared. Companies like Canoe Ventures promised to breathe life back into cable television advertising. But even with the backing of six of the largest US cable companies (Time Warner, Comcast, Cox, Charter, Cablevision and Bright House) and TV ads that gave incentives to interact through the remote, the platform proved cumbersome when applied to the existing model, systems, and workflow. Instead of simply purchasing nationwide spots as they were used to, advertisers had to navigate varying technologies and standards of the different cable operators and many chose to simply not opt-in, forcing Canoe to downsize dramatically last February and scale back to VOD only.  By simply comparing the slow adoption speed and many stumbles of EBIF, where commentators are still questioning whether or not audiences will use it,  to the rapid and broad scale adoption of VAST/VPAID within its first year alone, it is evident that digital can evolve more rapidly.

Instead of trying to squeeze long-standing TV advertising models into digital frameworks, the simpler and wiser solution would be to spend the same amount of effort moving to online video and connected devices. Unlike traditional television advertising, audiences cannot simply walk away or fast forward on the DVR when an advertisement comes on screen. Whether researching a product or reading an article, audiences are fully engaged with the online content on connected devices. They searched out the ad-supported content with the understanding that viewing the ad is part of the requirement for accessing it. And because digitally-connected platforms allow for granular segmentation around interests and demographics, the chances of an ad ringing true with the viewer are much higher. The fact that audiences are already engaging in this way means that companies don’t have to expel energy trying to make the system connect with them and can better apply themselves to creating brilliant creative ad units.

The shift to digital video advertising is being accompanied with similar migration of the content it is supporting.  Whether they are on the cable dial or not, large media companies are investing in publishing content to as many digital platforms as possible.  Dow Jones’ WSJ Live apps available across all connected devices are great examples of the opportunities that lie ahead for video producers and advertisers alike.  Google is not the first or the last large platform to make the switch to digital video.  Within the coming year successful media companies will realize that video ads and content delivered through apps, websites, and other digital television and video platforms hold more promise for reuniting fragmented audiences and delivering ROI.

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