Google's content role in spotlight at NATPE

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LAS VEGAS -- As vp content partnerships at Google, David Eun is the search giant's point man in Hollywood. Eun spoke Thursday with The Hollywood Reporter digital media editor Andrew Wallenstein during a "Coffee With ..." session at NATPE about where his company stands, what the offline advertising market might yield and what the company has learned from its deal with MTV Networks.

The Hollywood Reporter: A company of Google's size is going to invite controversy. Do you think the company is misunderstood?

David Eun: Yes, but not by everyone. I think there's a lot of questions, but if you take a step back, we're an 8-year-old company. So we're still very young. Things move quickly for Google as well as the space that we're in. So when you get into a space like content, and you come at it from a technology perspective, I think what we haven't focused on as much -- and this is something I'm trying to do -- is really explain in (plain) English what it is we aspire to do and what frankly our objectives are. Fortunately or unfortunately, depending on your perspective, there's a lot of noise out there about us trying to get into certain businesses or having designs to do X, Y and Z.

THR: Why is there such "noise?" I think of WPP Group chairman Martin Sorrell's recent comment about Google, calling it a "frenemy."

Eun: I think it's because frankly we don't know exactly how the online video space is going to go. It's still very, very early and the entire market is, depending on which analyst you use, is a $200 million market, which is still very, very small. So because we don't have a lot of data, there's a lot of questions out there. At Google, we don't have a clear idea of how the market is going to shape up, but we're really certain about the things we want to do. So if it seems like we know what's going to happen and maybe you don't, my theory is that there's a perceived imbalance you might feel, when in fact we have lots of questions, too. Honestly, maybe this is a little out of school, but I think sometimes people with adjacencies to our businesses look at how our businesses have grown and they think with a mixture of respect and frankly, maybe I don't know what the right word is, they want a piece of that as well.

THR: One area Google is making headlines is the prospect of Google going out there and selling ad inventory offline -- like newspapers, where you've done it already -- to radio and TV potentially. There has been speculation for weeks that Google is going to announce a huge deal across many of these businesses with CBS. Is that something you can comment on?

Eun: I really can't comment on rumor or speculation, but I can comment and say we're really interested in working with partners that want to explore these questions. We literally do hundreds of deals per quarter with content owners big and small across the world to provide a platform for promotion and distribution and, more recently, to explore ways that we might monetize their content. What we've developed is this slightly different approach where we can insert targeted ads, provide metrics and reporting on it and make sure all the advertisers and publishers of Web sites that host these ads get the highest return on their ads. If you apply that technology, whether it's a newspaper, radio or television, there's a lot of inventory out there that isn't sold as efficiently as you'd like, or perhaps not sold at all. Our question is, is there opportunity for us to place the technology on these platforms? In newspapers, we experimented with close to 70 newspapers, and what we're testing is whether we can bring new advertisers in, increase the efficiency of their buy, provide them with metrics and reporting so that a buy makes sense for them. So far the results have been really, really compelling. We think there's an opportunity as a technology company to be of service for the television world. If you're a local station and there's local avails, maybe there's an opportunity to take and increase the quality and return on the inventory by using this technology.

THR: How much of the TV advertising business does Google aspire to take?

Eun: We paid out over $780 million last quarter alone to the Web sites we've asked to have relationships with. We do that not by going after the big advertisers. You've heard of the long tail of content -- there's a long tail of advertisers, too. There's the successful entrepreneur who owns 20 different retail establishments who would love to find a way to advertise online, through newspapers and perhaps local TV, but they don't know how or it's just too difficult or it seems scary or inefficient. It will go as far as the people who want the inventory want it to go.

THR: Are we going to see more deals on the order of the $900 million search deal Google did with Fox Interactive Media or the video syndication deal with MTV Networks?

Eun: That's something that I think has a lot of potential. In addition to having people come to one place, the question is what can we do to syndicate or distribute content to where they are? The Google AdSense business, which provides ads across thousands and thousands of Web sites, is the perfect place to do that. We worked with MTV on a trial to produce channels of content, short clips, and we offered it up in our AdSense network and said (that) instead of having just text in there, we'll provide a video player and high-quality video and in between clips there will be video ads. Users will be able to pause, and it will be in their control. So we put it out there, and it was really interesting to see the results. The click-through rates on the video players were much higher than we thought. Some of the interesting feedback we got from our users was (that) they appreciated how much we refreshed the content, but they were complaining that we didn't refresh the ads enough. People were paying attention. For us, it's the beginnings of a learning. In this world of user control, it's not that people don't like ads; it's that they prefer ads that are more relevant to them. If we put in more relevant ads, click-through and retention of those ads will also increase. We're going to do another content trial with more content partners and more publishers very soon. Over time, what we hope to do is evolve it into a business where anyone with content can have some content on YouTube, some content on their own site and also distribute content across the Web -- essentially syndicating the AdSense network. Over the coming quarters, we'll get a little smarter about how best to do that.

THR: Since Google acquired YouTube, what has been done strategically with Google Video to ensure they coexist and do not cannibalize each other?

Eun: We've all seen what happens when the larger company acquires the smaller company, and even with the best of intentions they sort of suffocate them sometimes with myriad different agendas. What we're trying to do is for YouTube to have its space, to continue to operate in an independent sphere. At the same time, Google Video continues to be the No. 3 video destination online. So obviously, we don't want to be cannibalized. It's only been a month and a half since we got approval on the acquisition. We're still working things out, but what we want to do is emphasize the strengths of both and have them complement one another. At its core, Google is a search and technology company that provides tools and service. So over time what I think you'll see Google Video do is focus on video search so that people can come to Google Video and search for video across the Web. YouTube, meanwhile, will continue to be consumer destination site where people will go to find information, get entertained, find community, share and connect with one another.

THR: Is more going to be done to improve the filtering technology on YouTube that hasn't been to the satisfaction of many in the content community?

Eun: Go back to (the Digital Millennium Copyright Act) and go to Google Video and YouTube -- we adhere very strictly to it. I would say both have gone beyond what's been required by the DMCA by investing in content takedown choices, which isn't required, but we think it's the right thing to do. The bigger question for all of us is this: What do users want to do? How are they interacting with content? Putting aside any specific company, I think we need to understand what is at the core of it, a behavior that has absolutely morphed and evolved over time. They're not intellectual-property experts; they don't have the agenda to change the legal landscape. They're a marketing dream come true. They're going out of the way to say, 'I like this content so much I want to go out of my way and share it with everybody.' Is there a way to channel this behavior and give content owners more tools? In the context of a larger strategic relationship, we ask them, 'What do they want to do?' Their content is being uploaded. Instead of being defensive, can we turn this into an offensive opportunity? Why not put promotional links around this uploaded content? If people like a clip from a particular show, you go to the official Web site. Maybe over time, we can take the upload and put advertising on it so that you can monetize the behavior instead of killing the behavior. There's a lot we have to test and learn about this. I think what you'll see in the intermediate term, not the short term, are a group of content owners who are going to be aggressive about trying to understand that behavior and get in front of it, and use it as an opportunity to create a relationship with users.
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