NBC dumps Google’s TV ad network; a sign of things to come?

Google TV The first Google TV-enabled devices haven’t even hit stores yet but the technology may already be shaking things up in the TV business. On Wednesday, Adweek reported that NBC Universal has discontinued the ad-sales partnership it formed with Google two-plus years ago.

“We’re not currently contributing inventory into the Google marketplace, but we continue to work with Google on multiple projects involving advanced advertising,” NBC said in a statement.

In a separate statement, Google added, “While we are no longer offering NBC Universal inventory through Google TV Ads, NBC Universal continues to be a great partner to Google. Both NBC and Google are committed to bringing more relevance to TV viewership and advertising.”

NBC-U was considered a big “get” for Google when it launched its TV ad sales unit back in 2008. It gave the fledgling ad service access not only to NBC’s broadcast programming but to some of the highest-rated cable networks as well, including CNBC, MSNBC, Oxygen and SyFy. But the TV ad business has remained a tough nut for Google, largely because it has been unable to leverage its core strength in search.

“What Google is good at—the matching of actual or implied intent with relevant messaging—is really hard [on TV],” North American CEO of WPP’s GroupM Rob Norman told Adweek back in January. “As a result, it’s hard to get very excited about the proposition, even if you are a long-tail advertiser.”

Unlike its search-driven flagship AdWords, Google TV Ads simply makes existing network inventory available to the highest bidder through an online auction system. While that brings some efficiency to the ad-buying process, it does nothing to increase the overall pie by bringing new advertisers into the market because the aggregate amount of inventory remained basically fixed, keeping prices high.

As a result, the interests of Google and the networks were not fully aligned.

“Any marginal benefit that NBC might have seen was not sufficient to outweigh the much larger benefit of maintaining a relationship with their advertisers,” Sterling Market Intelligence founder Greg Sterling told the LA Times. “Google has become this force sitting between companies like NBC and their customers. These media companies want to have a direct relationship with their readers, TV viewers and advertisers.”

It’s not a slam dunk that bringing search to the TV interface, as Google TV seeks to do, will align those interests any better, however. In fact, it could make the misalignment worse. At least in the near- and medium-term, any new ad inventory Google TV is likely to create will be on the home page and surrounding the search results, just like AdWords.And the money for that inventory will flow largely to Google, just like AdWords. Depending on how the cable and satellite providers play it on Google TV integration, some could come their way as well (DirecTV and Dish Network are already partners with Google in Google TV Ads). The one place it’s probably not going to, however, is to programmers.

Some networks may be able to leverage Google TV’s ability to overlay web content on live video to create new ad opportunities for themselves, as in fact NBC-owned CNBC, shrewdly, is doing by creating a web channel optimized for Google TV. That will give the network a ringside seat to Google’s latest effort to crack the TV market even as the two part company on Google’s first effort.

Most networks, however, are likely to find Google again standing between them and potential advertisers. Only this time, Google could have something of real value to sell.

Further reading:

Sony To Start Sales of Google TV

Sony’s Take on Google TV

NBC Puts an End to Google TV Ad Deal