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Behind Google’s Android TV Ad Pilot

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Apr. 10 2019, Published 7:52 a.m. ET

Google to let providers promote content

A recent Android TV software update came with a surprise advertisement feature, sparking conversation on social media and digital forums about what Google (GOOGL)—which is behind the feature—might be up to. The Android TV advertising feature appears in the menu launcher on certain set models and is labeled “Sponsored.” According to a response provided to 9to5Google, the Sponsored feature will provide a place for TV programmers to promote their content.

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According to Google, content discovery in smart TV sets is generally a challenge for customers. Therefore, the company is experimenting with the Sponsored content feature to see if it can fix that problem. To help with content discovery and improve the experience for Android TV viewers, TV programmers could use the Sponsored content row to showcase their new shows and movies.

A new advertising revenue stream for Google?

At the moment, it’s not clear whether Google intends to use the Sponsored content feature to capture extra advertising dollars from TV content providers even as it eyes improving the viewing experience for Android TV users.

Advertising is Google’s principal business. The company generated $32.6 billion in advertising revenue in the fourth quarter, representing an increase of 20% YoY (year-over-year). Advertising revenue rose 30% YoY at Facebook (FB), 23% YoY at Twitter (TWTR), and 12% YoY at Yelp (YELP) in the quarter. Baidu (BIDU) and Yandex (YNDX) recorded 10% and 18% YoY increases in advertising revenue, respectively, in the quarter.

Advertising contributed 83% of revenue at Google’s parent, Alphabet, in the fourth quarter.

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