Google has finally made its long-anticipated move into television advertising after signing a deal with BSkyB that brings together two of the world’s most ambitious and forward-thinking media companies.
James Murdoch, Sky’s chief executive, has been making a habit of shaking up the television world – most recently with his share raid on ITV. Google, meanwhile, has been augmenting its dominance of online search marketing – which accounts for almost all of its multi-billion dollar revenues – with moves into press and radio advertising. However, most of its efforts to replicate its online model in the offline world have, until now, happened in the US – making the deal with Sky its first major move into offline in the UK.
The wide-ranging set of multi-year agreements between the two companies fall into three main areas: video, search advertising and communications. But perhaps most significantly of all, the two companies are promising to explore other forms of Web, TV and mobile advertising.
It comes on the back of Google launching video advertising across its global network in July – widely seen at the time as the start of a major assault on the TV market.
The partnership is being seen as a smart one by most industry observers. Paula Byrne, managing director of Pushbutton, the agency behind interactive TV ads for Guinness and Kodak, says: “Sky’s broadband service will benefit from this deal. James Murdoch is right on the money when he says splitting TV and online advertising into distinct halves no longer stands up. The future is rich interactive advertising that works seamlessly with TV content.” In an attempt to ape the success of YouTube, Sky will launch a user-generated video portal using Goggle’s video tools. The TV company says this will enhance the appeal of Sky’s broadband services, build community and “promote Sky content to online audiences”. Further details have yet to be disclosed but it certainly opens up the possibility of Sky posting its own television programmes on the site.
Sky has already been testing some broadband on-demand content, mainly around sports and movies. It has also been getting involved in internet access. Since it launched its Sky Broadband service in mid-July, around 1 million customers have registered their interest in signing up. The video portal, however, seems more ambitious.
Sky will also roll out a customised version of Google Mail. It will use the “@sky.com” e-mail address and will include instant messaging. Internet telephony may follow. On top of that, Sky will use Goggle’s search tools and targeted advertising across its portfolio of websites.
Voicing his ambitions in the interactive world, James Murdoch, chief executive of Sky, says: “Sky is on track to build a large and successful broadband business and is increasingly well positioned to participate in the rapid growth of online search and advertising.” With the UK being increasingly recognised in the US as a global leader in internet advertising, it makes sense for Google to tie up with an ambitious media company like Sky. As Google chairman and chief executive Eric Schmidt says, the UK is now “one of the world’s most dynamic markets”.
The challenge for Sky now is to maintain the strength of its brand and relationship with its customers when its bedfellow, Google, is stressing from the outset that this relationship is not exclusive.