With Google's TV ad service, small companies can buy low-cost TV commercials on national cable channels
With nearly $18 million in annual revenue and 31 employees, ShoppersChoice.com, a Baton Rouge company that operates a handful of e-commerce sites, is substantial -- but it's no Wal-Mart. Yet for just $2,500 to $3,500 a week, commercials for BBQGuys.com, its online store for grills, run alongside ads for Wal-Mart on the Food Network and a few other channels.
Mike Hackley, founder and CEO of ShoppersChoice.com, launched his low-budget campaign using Google TV Ads, which lets businesses buy advertising time on national cable channels and the satellite service Dish Network. Google TV Ads essentially works like AdWords, except that instead of bidding on search terms, you bid on airtime.
After hiring a local production company to produce a 30-second spot for $2,500, Hackley began planning his TV strategy. Internal research had shown that most BBQGuys.com customers are 35 to 65 years old and make more than $80,000 a year. Hackley entered that information on the Google TV Ads website, and, using data from Nielsen and other sources, the site suggested shows, times, and channels that matched the target audience -- including programs on the Golf Channel, ESPN, and HGTV. Using a keyword search, Hackley also found shows about grilling. For instance, a search for barbecue grill comes up with programs like Food Network's Boy Meets Grill as well as an episode of Family Guy on TBS, in which the world's dictators attend a barbecue.
Then Hackley bid on his choices using Google's auction system. Advertisers set a daily budget and a maximum price they will pay for their ads to be viewed 1,000 times (also known as a cost-per-thousand impressions, or CPM). Google then auctions the time slots, so the winners pay an amount equal to or less than their bids. For a program with a weekly audience of 30,000, a $7 CPM would cost roughly $210. Hackley found he was able to reach 1.5 million to 2 million viewers for about $3,000 a week.
The spot initially ran on a mix of programs on 10 channels. "From there, we were able to see our results and adjust accordingly," says Hackley. Just as with AdWords, Google TV provides real-time analytics. Using data culled from the set-top boxes of 4 million Dish Network subscribers, Google calculates how many people watch each commercial.
Google also tracks how many seconds viewers watch before changing the channel or hitting Fast Forward on their DVRs. Advertisers aren't charged when viewers watch less than five seconds of the ad or if they watch it later on a DVR, but if there are a lot of channel jumpers, that may indicate the ad isn't a good fit for that time slot. "It's like buying a banner ad, except when someone clicks the remote, it means that it wasn't relevant to them," says Michael Steib, director of Google TV Ads.
ShoppersChoice.com also measures a time slot's effectiveness by monitoring direct Web traffic -- in this case, visitors who type BBQGuys.com into their browsers -- after the commercial airs. Plus, each ad carries a unique toll-free telephone number.
Hackley and two employees review their Google TV Ads account each week and make adjustments. "We tried the Golf Network, but that didn't really pan out for us," says Hackley. BBQGuys.com did best on HGTV, particularly on makeover shows like Yard Crashers and Indoors Out. "We'll let our ads run on a channel for a week or two, and if we're not seeing a return, we cut it and try something else," says Hackley. Since the ads began running in March, sales have gone up 36 percent compared with last year's figures.
The experience is in stark contrast to what happened nine years ago -- the last time Hackley ran some commercials on a local television station. At the time, he paid almost $10,000 for about 20 spots to run over the course of a month. The contracts were signed weeks in advance, and Hackley had little say over when the spots would run. "We could only do it once or twice a year, because it was way too expensive," says Hackley.
Still, Google TV does have some shortcomings. Until recently, the service's universe was limited to the 13 million households that get TV service through the Dish Network. Google has made some strides in branching out this year, making deals with several national cable networks such as CNBC, Bravo, MTV, USA, and MSNBC, which Google says increases its reach to 95 million households. But so far, none of the four major broadcast networks are available on Google TV Ads. Plus, viewers are increasingly watching television programs online. In response, Google began beta-testing a new feature in April that allows businesses to run commercials on online shows, too, including those on YouTube. Unfortunately, the service doesn't include episodes on Hulu, the third-most-popular video site, which carries programming from ABC, Fox, and NBC.
Despite those drawbacks, Google TV Ads is a great tool for smaller firms, says Bob Purcell, chief marketing officer of Golden Gateway Financial, a 25-employee start-up in Oakland, California, that markets reverse mortgages to seniors. Prior to joining Golden Gateway, Purcell spent two years as a senior marketing executive at Dunkin' Donuts. In that role, he had a national TV budget of $30 million and three different media-buying agencies at his disposal. These days, he is Golden Gateway's one-man media planning agency. Using Google TV Ads, he can buy a time slot as little as 24 hours before airtime. At his old job, booking a spot took weeks of back-and-forth negotiations between the company, its media buyers, and the networks.
Golden Gateway Financial has had success with ads on Fox News and the Hallmark channel. The commercials also perform very well on religious-themed programs, which Purcell hadn't considered until he started using Google's tools. Turns out more seniors watch TV on Sundays than on Saturdays. "That surprised me, because Saturday is usually one of the more successful direct-response days," he says. Since the company began advertising on television, traffic to Golden Gateway Financial's website has tripled. "One of the good things about Google TV is that it really allows you to test," says Purcell. "We were able to fairly quickly ascertain which days and times worked best for us."
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Staff editor KASEY WEHRUM has written for Inc. magazine on subjects ranging from the businesses behind professional bull riding to gadget inventor and father of the infomercial, Ron Popeil. His work has appeared in the New York Times, Worth, Budget Travel, and on MSNBC.com. He lives in Brooklyn.