• by John Motavalli , Columnist, May 4, 2016

When Google wants to show off to advertisers, it has both the cojones and the stats to back it up. When she wanted to appeal to sports marketers, for example, Kate Stanford, director of YouTube advertiser marketing, trotted out this interesting statistic: In the last 12 months, Google’s YouTube racked up 30 times more watch time for “sports like track and field, gymnastics, swimming, and volleyball” than “all the estimated content ever broadcast on ESPN.” That is staggering, a show of force that no other company could even contemplate.

For auto advertisers, Google offers statistics from a Luth Research opt-in panel, which cites a typical car buyer, 32-year-old Stacy. “During the three-month period leading up to her decision to lease a car, Stacy's research included over 900 digital interactions where she intentionally sought out information related to an auto lease or purchase,” including 139 Google searches. “71% of Stacy's digital interactions occurred on mobile. These interactions — which took the form of searches, visits, video views, and clicks — were on Google, YouTube, manufacturer websites, dealer websites, and review websites.”

Advertisers thinking of cable ads? Listen to Google: “As TV time goes down, time with online video goes up. By 2025, half of viewers under the age of 32 will not subscribe to a pay TV service. Six out of 10 people prefer online video platforms to live TV. In an average month, eight out of 10 18- to 49-year-olds watch YouTube. In 2015, 18- to 49-year-olds spent 4% less time watching TV, while time on YouTube went up 74%. YouTube reaches more 18- to 49-year-olds than any broadcast or cable TV network. Among Millennials, YouTube accounts for two-thirds of the premium online video watched across devices. The time people spend watching YouTube on their TV has more than doubled year over year.” 

Why do such pitches work so well? Because, for one thing, they have the ring of truth and inevitability to them. It’s obvious that that’s how today’s more sophisticated car buyers operate, that Google and YouTube play a major part. Throw in any other media name, such as Yahoo! or AOL, and the equation dims, but you know Google and YouTube were involved with Stacy’s car buy. Likewise, it’s very difficult to argue with the trends in video; they are all toward mobile and YouTube.

The Magna Global/YouTube Deal
That’s why today’s news that Interpublic's Magna Global unit and Google have struck a $250 million “newfront” deal for Magna's clients to run on YouTube really shouldn’t come as a surprise.

Recently, Daniel Alegre, Google’s president of global partnerships, gave a reassuring speech to the NAB on how TV is not dead, according to MediaPost’s Adam Buckman. It was long on stats about how TV is still being viewed, but not characterized by the inroads YouTube and Google are making on TV’s ad business, such as the scary info that Viacom’s U.S. advertising declined 5%, with international advertising slipping 1% for its quarter ending March 31. Viacom attributes this to declining ratings. 

And why are those ratings declining? Can’t we attribute much of it to young consumers obsessed with mobile, YouTube and Google? Google does, at least when it’s talking to its advertisers. Here’s a Google quote from a recent marketing effort: “As TV time goes down, time with online video goes up.”

Or how about this Google pitch to TV advertisers: “One in three consumers say they've never had cable or no longer do. The result is that the old way to reach consumers has gotten harder and more expensive. The good news is, there's an easy way to reach ‘cord-cutters’ and ‘cord-nevers': online video.” 

How much clearer can you get?

Others Blew Their Chance
Is there something sinister at work here; does Google talk nice to TV guys and blow them away to their advertisers? Sure, but Google got to where it is honestly. It created the best search engine, while Yahoo! was content to rent its from Inktomi and later Google itself. If hoary old search companies like AltaVista could have competed, they should have. But they didn’t.

An interesting 2011 book by Douglas Edwards, Google Employee Number 59, makes it clear that when he was hired as a Google marketer in 1999 from the San Jose Mercury News, the company didn’t know from advertising. When Edwards had lunch with founder Sergey Brin, asking Brin how the company was going to make money, the search superstar allegedly answered, vaguely, “We’ll figure something out.” The company didn’t even have a strategic plan. Google’s AdWords didn’t launch until 2000. 

In other words, media companies losing their lunch to Google had years to see it coming. We could go on for thousands of words on all the missed opportunities here — media companies that could have and should have invested in Google when their valuation was tiny, but didn’t. That was left solely to Silicon Valley types like Kleiner Perkins. And so-called portals who didn’t think search was important. Why didn’t media companies buy YouTube in 2006, instead of Google? Wasn’t it obvious what a genius product it was? The investment of less than $2 billion was peanuts for the big media companies, but they let Google win. 

It’s the same dynamic that explains the bizarre fact that the three main TV networks, which each had expensive news divisions, stood back and let Ted Turner launch CNN on a satellite, rather than risk their own investment. And such it is in the online world.

There is a true story out there, from back in the ’90s. Viacom sent individual legal letters out to online fan sites for Star Trek and other Paramount properties, warning the sometimes-teenaged operators that they were messing with copyrights and should desist. That kind of finger in the dike stupidity is the main reason Google won. You can just see the 2006 boardroom hijinks at Time Warner and Viacom. Someone pipes up and says, “I hear YouTube is for sale.” And a company lawyer nixes that in the bud. “No way, they’re violating our copyrights left and right. It will all end up in court.”

Seeing new paradigms being born is tough. Few are good at it, as history proves.