Internet May 24, 2010, 1:12AM EST

Advertisers Give Google TV a Warm Reception

Google's interactive TV platform might lower costs and improve the targeting of ad spots. Could 'smart' TV redefine advertising?

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Say you're watching TV and an ad for Chevy's Silverado pickup catches your eye. Come this fall, viewers using Google's new interactive television technology will be able to type the object of their desire into an onscreen search box and launch a YouTube GOOG video or surf over to Chevy's (FIATY) website.

Advertisers foresee a new medium to get their message to consumers. "Google is going to revolutionize the way we use media," says Shattuck Groome, president of New York ad agency Gotham Direct Interactive, which buys TV ads for brands that include M&M's candy and Zappos.com (AMZN). "It's the future of advertising."

Gotham Direct already buys TV ads for clients through a prior initiative called Google TV Ads, an online marketplace where advertisers can upload video spots and place them on more than a dozen networks, including ABC Family (DIS), through services from the DISH Network (DISH) and TiVo (TIVO). Groome says he's looking forward to being able to measure precisely who is viewing the ads Gotham creates—and to pay only for ads that viewers actually watch.

Google announced its plans for "smart" TVs at its Google I/O developer conference in San Francisco on May 20. Google software will put Web content on televisions and will work with Intel (INTC) chips in TVs from Sony (SNE) and a set-top box from Logitech International (LOGI) that will allow Google TV to run on generic sets. Using Google TV, viewers will be able to search for Web programming through an onscreen search box that presents the results on their TV screens.

Big savings for Advertisers?

Advertisers say Google TV will let them reach TV viewers faster, more cheaply, and more effectively than via traditional TV spots. With Google, advertisers will know exactly who viewed their ad, how many people clicked on it, and how many people chose to use a "click-to-call" feature to contact advertisers immediately.

The platform could make TV advertising more affordable, too. Today advertisers pay thousands or even millions of dollars per spot to push fast food, cars, and beer. But an online video ad costs about only $30 per 1,000 viewings, according to the Diffusion Group, a market researcher. Jeroen Coppelmans, vice-president for the Americas at Spotzer Media, which produces video ads for small businesses, says that "someone with a budget of a couple of dollars a day could do TV advertising."