http://www.contracostatimes.com/mld/cctimes/news/local/states/california/16893029.htm

Perhaps the most important advancement in the field of advertisement and maximizing revenue from advertising was Google’s innovation to auction off ad spots based on the keywords entered into their search engine. This enabled companies to display their ads only to search engine users who likely had some interest in their product–it would make no sense for a car dealership to spend money on advertising to people who were specifically interested in purchasing used books. This innovation has catapulted Google above all other search engines, and currently accounts for essentially all of the company’s revenue. However, this article mentions that Google is now attempting to apply their principle of auctioning ad spots to the forum of television advertising. This is a potentially highly lucrative endeavor, but the project is still in its early stages, and cable companies are hesitant to allow Google too much power in controlling their advertising.

Ultimately, the plan is to enable different viewers to be sent different commercials at given times during a television program, such that the advertisement sent to each viewer is relevant to his/her particular interests. Initially, such allotment of commercials would be accomplished not by singling out each household but by characterizing neighborhoods based on their demographics and sending commercials tailored to that demographic. For example, in a collegetown, residents would ideally be sent more fast food or beer advertisements than minivan advertisements. The ultimate benefit of such a system is that companies will pay significatnly higher rates for targeted advertisements than ones that are shown to all viewers, because the targeted viewers would be much more likely to purchase the company’s product than an untargeted viewer picked at random. This could enable television and cable companies to earn significantly higher profits from selling advertising and accounts for their interest in allowing Google to experiment with an auction procedure similar to the one it uses to auction advertisements on its web site.

 While the entire endeavor seems logical if not brilliant, so far Google has had minimal success applying its advertisment auction procedure to more traditional media forums (i.e. television and radio). There have been problems selling printed advertisements, and little revenue has been generated through radio advertisement auctions. There remains much money to be made in the television advertising industry, but Google is still far from extending its online empire over the airwaves.