Internet May 24, 2010, 1:12AM EST

Advertisers Give Google TV a Warm Reception

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Google hopes Google TV will help it create revenue streams in addition to that from ads linked to searches conducted by computer users on PC Web browsers. Those ads contributed the bulk of the company's $23.7 billion in 2009 revenues. TV advertising in the U.S. accounted for $83 billion in spending last year, according to the Diffusion Group. If Google were able to grab even a small chunk of it, the company would tap a lucrative source of revenue.

smartphone-like remote controls

Google TV brings the company's familiar search box into the living room. The company describes the technology as creating an "entertainment hub" that lets viewers search channels, record shows, and find websites. "Many times, I see an interesting commercial and can't do anything with it," Rishi Chandra, a Google senior product manager, said at Google I/O. He added in an interview: "Now your TV advertising becomes interactive …. Every advertiser has a website."

At first, advertisers won't know whether the ads they buy through Google's advertising network are being viewed on PCs or on TVs. Google plans to let advertisers tailor messages for Google TV viewers, however. "We are looking at ways for advertisers to target specific devices," says Chandra. To facilitate typing, he says, manufacturers are working on remote controls that might resemble smartphone keyboards.

Although TV, cable, and technology companies have been pushing the idea of interactive TV since the early 1990s, the concept hasn't taken off. Among Google competitors pursuing interactive TV are Apple (AAPL), Microsoft (MSFT), Yahoo! (YHOO), and Wal-Mart Stores (WMT), which bought online movie rental service Vudu on Feb. 22. Nearly half of the flat-panel TVs sold in 2013 will be Web-enabled, up from 19 percent this year, according to consultant ABI Research.

Do consumers want full TV Web access?

Yahoo may roll out a TV advertising program in the coming months, says Russ Schafer, a senior director of marketing at the company. Yahoo's Connected TV service, which was launched last year and lets users stream movies online from Amazon.com and Blockbuster (BBI), is available on more than 2.5 million devices from Sony, Vizio, Samsung, and LG Electronics. Yahoo recently demonstrated the ability to show TV viewers a Macy's (M) ad and let them forward a related coupon to a cell phone.