By Jeanine Poggi
Advertising Age

Canoe Ventures has hit rough waters.

Canoe, the cable-industry consortium aimed at developing interactive TV commercials through use of a set-top box, said Wednesday that it would shutter that part of its business and lay off 120 employees, closing its New York office in the process.

Canoe will focus solely on creating ways to advertise alongside video-on-demand content. CEO Kathy Timko, who was named to the position just last summer, is also set to leave as part of the company’s shift in direction. Canoe’s slimmed staff will be headed by Joel Hassell, previously chief technology officer.

"This is in line with Canoe’s founders’ original vision, which is to make cable-television households the most attractive platform for advanced advertising," Mr. Hassell said in a statement. "National standards and practices for dynamically inserting ads into cable’s on-demand content will monetize and support the on-demand platform as well as the MSOs’ investments in TV Everywhere deployments. Canoe is committed to making this happen."

Canoe’s bump is a sign of just how fleeting the promise of so-called interactive advertising has become. Once heralded as one of the technologies that would make TV ads more valuable even as audiences for TV content splintered, ITV has been hard to master. The idea of running commercials that viewers can respond to with a click of their remote has appeal. But big TV advertisers have been accustomed to playing commercials across the nation with a few simple buys. Because the interactive ads use set-top boxes, and because many cable and satellite companies have varying standards and policies for technology, creating a simple solution for marketers has proved a more challenging task than some imagined.

"This really set ITV back and could even be the death of it," said Tracey Scheppach, exec VP-innovations director at Publicis Groupe’s Vivaki/Starcom MediaVest. Collaborating at Canoe "was the right idea, but not everyone was in the same boat rowing in the same direction. It wasn’t inclusive to everyone needed to change the TV business, namely consumers and advertisers. Canoe was so focused on operators and programmers. This is a serious wake-up call for operators. It will be much harder for [them] to handle Interactive TV advertising on their own."

Canoe was formed in 2008 by six cable giants — Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems and Bright House Networks. The company launched its first Interactive TV ad product in 2010.

The change in strategy had perhaps been foretold. Because Canoe’s backers are all industry rivals, individual companies such as Cablevision and Time Warner Cable have all continued to sell interactive-ad opportunities on their own, even as Canoe worked to develop itself as a seller of interactive advertising that would be distributed nationally — no matter what cable entities were involved.

It has also been difficult for Canoe to figure out technology that works well for each service provider.

Ms. Timko was appointed CEO a little over six months ago, replacing former ad and media-buying executive David Verkin, whose contract was not renewed.

The cable industry will continue to try its hand at selling ITV ads, said Mr. Hassell, but through sales teams at the individual companies.

"As we establish our on-demand business, we’ll make it easy for national programmers to work with us and easy for our MSO partners to deliver relevant and timely ads," Mr. Hassell said. "Once we establish the market for dynamic ad insertion within cable’s VOD platform, our vision is to offer more robust reporting and data insights, introduce addressable VOD dynamic ad insertion, and support VOD ad insertion across a wide array of devices, both inside and outside the home."