In a move that could inch the television business closer to being able to provide the sorts of tailored advertising opportunities that Internet companies offer, Cablevision is slated to try out targeted advertising on a household level later this year.
The New York operator’s test, for which it has joined with TV technology firm Visible World, would mark the first widespread trial by a multiple system operator.
Visible World will match commercials in Cablevision’s local ad inventory to set-top boxes associated with viewers who might find the ads most relevant by using third-party consumer data. A handful of advertisers including Chase Card Services are expected to participate in the experiment, which will involve more than 100,000 homes in Cablevision’s New York state footprint.
If successful, Cablevision will roll out the capability across its 3 million homes next year.
Other operators are expected to follow suit. In fact, the Cablevision endeavor could be the first of an avalanche of similar deals that radically change the TV advertising business, much like Disney’s iTunes deal last fall was the first in a wave of new age content distribution deals.
This activity is occurring at a time when traditional TV advertising models are under siege. With the Internet heralded as a more precise form of advertising, the TV industry is fighting back with the latest technology tools that could bring TV buys closer to Web models in terms of precision.
Industry experts claim that targeted TV ads give advertisers a bigger bang for the buck by ensuring, theoretically, that only dog owners, for instance, see ads for dog food.
As another example, an automotive advertiser might target ads to customers whose leases are coming due soon in an addressable advertising world.
“The whole gist is to give your advertisers a much more powerful 30-second unit,” said David Kline, president and chief operating officer for Rainbow Advertising Sales, the ad sales arm for Cablevision. “If you knew this would send your message to who you are selling to, you would get a better return.”
Cablevision can charge a premium for such ads, he said.
Most cable operators already are preparing to unfurl their own ad-targeting trials in the next several months. Visible World is in talks with other cable operators and video distributors, according to Tara Walpert, executive VP and general manager of Visible World.
Comcast said it’s talking to vendors now and expects to strike deals in the coming weeks to test addressable, or household, targeting.
Players new to the video distribution game, such as the telephone companies, are exploring the opportunity too. AT&T said it plans to roll out market trials of addressable ads next year.
To date, cablers have offered the tools to target ads to a neighborhood, but not to specific homes within a market.
In the Cablevision trial, the operator will marry set-top box data with consumer data from third-party providers such as Experian or Acxiom to deliver messages to specific homes that fit certain profiles, such as households with an income of more than $100,000 and two children. However, addressable advertising is still an unproven technology.
Interactive TV technology firm OpenTV conducted a technical trial two years ago of addressable ads in Colorado, and Cox’s effort in Phoenix to offer some degree of targeting has met with little interest from local advertisers.
What’s more, advertisers will have to invest in several pieces of creative in order to serve up the targeted messages.
Still, advertisers are getting on board because of the potential to eliminate some of the guesswork in advertising.
“We will have the ability to put, theoretically, the right commercial in front of the right people at the right time,” said David Verklin, CEO of Carat Americas.
Carat organized an industry think tank in late June to discuss the pending trials with programmers, operators, researchers, technology firms and other media agencies. Carat’s executive VP, Mitch Oscar, spearheaded the meeting.
“This is the future of advertising. It’s almost like bringing search models to TV,” Mr. Oscar said.
Targeted ads means advertisers ultimately may no longer need to develop creative and messages that cater to the lowest common denominator, said Manning Field, senior VP of branding and advertising for Chase Card Services.
Household targeting supercharges the existing neighborhood targeting capability that Visible World has deployed in the last few years with most major MSOs, Visible World’s Ms. Walpert said.
The household-level technology lets advertisers tailor messages by actual characteristics of a home rather than expected traits, based broadly on where a customer lives. While advertisers won’t develop a different ad for each home, they can send various ads based on more precise data.
“If you think about the precision advertisers get with direct mail, you can get to that level,” she said. “This is a giant leap forward. It combines the power and pinpointed targeting of what exists with direct mail and the Web with the reach and power of video.”
That’s because data providers like Experian and Acxiom, who will participate to varying degrees in the Cablevision trial, can provide information such as age, gender, marital status, income, education level, occupation, number of children and shopping habits.
To protect privacy, that data is matched “blindly” by the data provider with the set-top box information and then sent to Visible World so that consumers remain anonymous, Ms. Walpert said. Visible World also layers in customer data from each advertiser.
Addressable ads sound good in theory, but the industry needs the data from the trials to understand how prevalent they will become, said Tim Brooks, Lifetime’s head of research, who attended the Carat workshop.
“You need to find out more about what the usage is, not what it might be,” Mr. Brooks said.
AT&T has high hopes for addressability.
“This is the next step towards greater relevance for advertisers and that’s good for the advertiser and consumers,” said Karl Spangenberg, VP of IP advertising and entertainment services at AT&T.
He said AT&T, which recently rolled out its video product in San Antonio, will test household level targeting in the second half of 2007.
Some operators have cooled off to household targeting.
Cox, for instance, deployed interactive TV software from Navic Networks in Phoenix three years ago that enables some degree of household targeting. Cox can send ads targeted by Cox data, such as whether or not consumers have high-speed services, by information consumers share by interacting with ads using a remote, and also by demographic information that can be inferred based on where a consumer lives, said David Porter, VP of marketing and new media for Cox Media.
Though the interactive ads have garnered high usage by advertisers, only a few local advertisers have even tested the targeting tools.
“The ad community constantly wants more and wants to push the envelope, but may not be able to take advantage of it right away,” Mr. Porter said.