Google looks to jump into TV ad tech space

Dive Brief:

A day after Google disclosed plans to move into the $70 billion TV ad space, parent company Alphabet posted a first quarter earnings miss while Google revenue rose 17%.
At the National Association of Broadcasters meeting on Wednesday, Google announced the launch of DoubleClick Dynamic Ad Insertion, a product that would create individual streams for viewers using server side ad insertion.
The move would put Google in direct competition with online video ad-serving platforms like Comcast's Freewheel, according to Ad Exchanger. Google's product will be compatible with live and on-demand TV, as well as directly sold and programmatic ads.

Dive Insight:

As more consumers turn away from traditional TV and toward digital TV or internet-connected-apps, Google's new DoubleClick Dynamic Ad Insertion product aims to help advertisers better target their ads. The product's launch is reflective of the growing opportunity to personalize video ads to consumers on streaming devices.

Google parent company Alphabet also reported earnings on Thursday, missing on expectations. The company said higher mobile phone usage as well as growth in automated ads caused the earnings miss. Google's core ad business has continued to expand, but growth has slowed. And as smartphone use grows and more people have access to Google's services, it means the company "has to pay more to partners to reach people on their phones," as Bloomberg put it.

As for traffic acquisition costs (TAC), the portion of the company's business that runs ads for other websites rose nearly 6% to $2.57 billion, thanks to programmatic advertising. "The TAC rate is higher on mobile. Mobile’s growing at a faster rate so what you’re seeing here is a mix shift," Alphabet CFO Ruth Porat said on an earnings call with investors Thursday.

While Alphabet missed analyst expectations, the Google division of the company saw a strong year-over-year revenue increase, with total advertising revenues up 16% from a year ago. Paid clicks were also up nicely (29%) year-over-year, though the average cost-per-click was down 9% from last year and flat compared to the last quarter.