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September 10, 2008

Googles Expands TV Biz with NBC

Given all the market volatility and really important macro issues, sometimes I feel bit odd writing about mundane fundamental factors for media stocks but maybe focusing on the micro is a useful distraction.

A couple of days ago news broke that Google has reached with NBC to access TV ad inventory across a wide array of NBC's broadcast and cable TV networks. This is a significant expansion of Google's entry into traditional media ad sales. Thus far, Google has worked with radio companies and some smaller, but not insignificant TV broadcasters. The idea is that Google will create a system similar to its search business to allow advertisers to access efficiently priced TV inventory.

For NBC, the upside is that Google may bring lots of advertisers who use search but have thus far never used TV. While it seems as those many of the search players would be too small to afford TV, if a system were in place where excess inventory was attractively priced, maybe these new advertisers would be truly incremental. NBC also benefits form getting into bed with Google as a partner and thus possibly controlling them as a competitor.

For media stocks in general, I see Google's entry as a broker of ad time as something to watch but not to worry about. Eventually it may be a worry as the possibility of an auction system for selling traditional media ad time could put sharp pressure on ad pricing. However, I think that changes like this tend to be overhyped. The change does happen but it is incremental. Eventually, a tipping point is reached. I see Google's entry into TV advertising as so far form the tipping point as to not be an investment worry. For now. But monitor.

Posted by Steve Birenberg at September 10, 2008 02:45 PM in Media