Google, the dominant player in the lucrative search advertising market, is hoping to move into television advertising through a new dealwith one of Britain's largest broadcasters.
British Sky Broadcasting becomes Google's first international partner for shared video, e-mail and content provision in a deal that could change the way television broadcasters deliver ads to consumers.
Google will provide British Sky Broadcasting with technology to offer e-mail and video search and sharing technology for the broadcaster's broadband product. They will also help Sky set up its own user-generated content site using technology it obtained through the $1.65 billion US purchase of video-sharing site YouTube in October.
Sky will also look at allowing its broadband users to access Google's voice-over-internet protocol (VoIP) telephone service and future products. The two companies will also share revenues from web advertising generated on the Sky sites and using Google's ad technology.
The alliance gives the broadcaster, owned by Rupert Murdoch's News Corp., a chance to enter the online world with an established partner. It also allows Google to get a toehold in television.
Under terms of the deal, announced Wednesday,Google will be able to extend the partnership in the future to Sky's television platform, replacing traditional 30-second television ads with commercials targeted to the user.
Google is looking to use information about viewing habits, obtained through Sky's set-top boxes, to produce targeted ads with the hopes of eventually tailoring campaigns to specific viewers and even storing ads on hard drives in the box itself.
James Murdoch, Sky's chief executive, told the Guardian newspaper that broadband services have made traditional advertising methods outdated.
"The weird thing about the media market is people have thought about it in two halves: online and TV. The truth is, in a connected market, everything is connected," Murdoch told the newspaper.
The alliance gives the broadcaster a chance to tap into younger audiences lost to user-generated content and social networking websites.