Google Aims to Connect Ads for TV, YouTube

Internet Giant Also Plans to Pare 200 Sales and Marketing Jobs After Years of Rapid Hiring

Google Inc. is developing technology to connect its TV-ad brokering business to YouTube and eventually video on other Web sites, as it struggles to lure bigger advertisers to both services.

The Mountain View, Calif., company also disclosed it was cutting its sales and marketing staff by nearly 200 positions, the company's biggest round of layoffs not associated with a merger.

Google's director of television ads, Michael Steib, said in an interview that the company is working on technology that allows advertisers to buy ads across Google TV, which sells on-air commercials; YouTube; and video on other Web sites through the same interface. Google is testing the service, called Google TV Ads Online, with a small group of advertisers, he said. People familiar with the matter say the service -- which would leverage Google TV's targeting technology -- is likely to be introduced in the coming months.

The company is hoping that the new service will make it easier for bigger brand advertisers to spend across both services, which are under pressure to ramp up their business despite the sour economy.

Associated Press

Google's layoffs are the biggest in the Internet giant's history outside of a merger restructuring.

But the feature is also part of Google's bigger vision of tying together various platforms to make it easier for advertisers to manage and measure their spending across traditional and online media, says Shishir Mehrotra, YouTube's director of product management for advertising. Google earlier this year canceled its efforts to broker ads across print and radio, but the company says it is confident that TV and video will be different.

For the new effort to work, YouTube needs to secure longer-form video such as TV shows and movies, for which users are often willing to tolerate longer ads. While it is in talks with major media companies, YouTube to date has only signed a small number of full-length content deals with companies such as CBS Corp.

Whether Google TV advertisers -- many of whom are just experimenting with the service -- will take advantage of the online video integration remains to be seen. Some TV ads may not be suited to run before or alongside online video. Mr. Steib said Google is working to determine the best formats.

There are big strategic battles at stake. As more consumers watch TV online, Google and other Internet companies see fresh opportunity to wrest business from traditional TV-ad sellers such as stations and cable companies. But those companies are fighting back by creating their own online services and ad-selling platforms that compete with YouTube and Google TV.

The service could position Google to sell ads against Internet-delivered TV as well. The company has been striking deals to make YouTube available through devices that play Internet-content on television, such as Apple Inc.'s Apple TV.

Google is working on the new service as it continues to experience shakeout from the broader economic turmoil. The company laid off 100 recruiters earlier this year and has significantly cut back on temporary workers, terminated products and trimmed perks. Google ended the fourth quarter with 20,222 full-time employees.

The latest staff cuts suggest that Google, whose ads alongside search results still sell relatively well, expects that the tough times will continue and could get worse. While it has been trying to diversify, 97% of the company's revenue still comes from online advertising. Google, which hired thousands of employees annually several years ago, has been scaling back that growth.

In a blog post announcing the changes, Omid Kordestani, Google's senior vice president of global sales and business development, said the company "over-invested in some areas in preparation for the growth trends we were experiencing at the time."

Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com

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