The Wall Street Journal (subscription required) Saturday reported that Google Inc.(NASDAQ:GOOG) has begun testing a new advertising scheme on some California cable subscribers.

Google is implementing a smarter ad delivery system that will customize advertising to the demographics of the viewer. In its coarsest form, for example, subscribers in the San Francisco Giants baseball team's viewing area might see an ad for that team, while viewers across the bay in the Oakland Athletics market might be fed an ad for that team. Google hopes to carve out a niche as the middleman in this process, using a similar strategy to the user-defined ad content that drives their core business success.

How successful they might be in this depends on a couple of things. Since successfully customizing ad content to viewers taste depends on knowing what the customer is interested in, Google needs to find a way to gather information about viewers. They can depend on broad demographics such as income of the viewing area, but the home run would be tracking the viewing habits of customers and building a taste database. This would allow them to feed Home Depot ads to This Old House viewers, Bible ads to Bill Graham devotees, and beer to football viewers. It would also inspire a great deal of controversy from those concerned about privacy. Look for Washington to take up the question in the near future.

The second challenge is from the cable providers, who will almost certainly want in on the action.

This is just another step forward in the databasing of marketing. Don't be surprised to see newspapers, magazines, circulars, and other mass media following direct-mail and Internet marketing into content-specific advertising. Also don't be surprised to find Google waiting for you there, with an offer in your size, your color, and your favorite flavor.