When MTV Networks CEO Judy McGrath was asked last week about the future at the National Cable & Telecommunications Association’s annual conference in New Orleans, she gave one of the week’s least technical answers.
“I’d like to come to an NCTA and not see a half-naked woman in a giant martini glass,” she said. “Maybe a naked man…”
The martini glass was at the Rainbow Media booth, where clips played from “Mad Men,” the award-winning show about the ad industry back in the days of the three-martini lunch.
But while Ms. McGrath noticed a programmer promoting a brilliant piece of content, most of the talk at the convention didn’t focus on shows. It centered on digital technology, reclaiming analog bandwidth, high definition and addressable advertising.
With the trade show returning to New Orleans for the first time since 2005’s Hurricane Katrina, attendance fell about 6% to just under 14,000 from last year, when it was held in Las Vegas. While jaded programmers mostly thought the convention floors looked empty, hopeful vendors of interactive technology said they were seeing good traffic.
Early in the week, Brian Roberts, CEO of the biggest cable operator, Comcast, called addressable advertising “the next big opportunity we’re pretty focused on.”
Others agreed that the technology, which shuttles relevant ads to appropriate audiences, should surge in importance.
“Shame on us if [revenue from addressable advertising] isn’t material in 2010,” said Pat Esser, president of Cox Communications.
Mr. Roberts said a CEO was about to be named for Project Canoe, the cable industry’s addressable advertising initiative, but he backed off when questioned.
“Maybe I’m a little ahead of myself,” Mr. Roberts said at a subsequent press conference. But he said the first step for Project Canoe was to hire a leader.
Former media agency executive David Verklin reportedly has been tabbed for the job. Mr. Verklin was supposed to appear at the show but didn’t; nor did he return calls.
An announcement about the leadership of Project Canoe is expected this week.
Interactivity is one of those cable projects that have been just around the corner for years. But now, cable executives sound serious as they watch advertising dollars flow to another interactive media, the Internet.
John Collins, VP of advanced advertising technologies at Time Warner Cable, joked, “Advanced advertising is anything that’s not hitting its budget.” But seriously, he added, it’s an area where cable has a big advantage over satellite TV services because of its much wider distribution and ability to beam information from subscribers’ cable boxes back to cable operators.
“It’s our game to win or lose,” Mr. Collins said.
Cable operators don’t just want to make ads addressable, but need to enhance their subscribers’ entire television experience.
From a consumer standpoint, it’s about “a new TV landscape, not a new advertising landscape,” he said.
New cable technology also raises privacy concerns when it takes customer viewing information and uses it to target ads. The industry is trying to make sure customers don’t feel like they’re being manipulated by the technology.
As Mr. Collins put it: “How can we make it not creepy?”
Charles Thurston, president of Comcast advertising division Comcast Spotlight, said addressable advertising is a money maker for cable, if only because it improves the marketing efforts of the parent company.
“It’s been a home run in the tests we’ve done,” Mr. Thurston said.
Other marketers are likely to flock to the service because of its targeting and the instant feedback it provides.
“We’re cutting our marketing budget,” said Deborah Wahl Meyer, VP and chief marketing officer at Chrysler. “But not if you can show cause and effect” between buying advertising and creating sales, the way a marketer can on the Web. “That’s why dollars are going there.”
She said addressable advertising is something marketers are waiting for.
“It’s not just about buying and selling airtime,” Ms. Wahl Meyer said. “It’s all about content meets technology meets the customer.”
Other technological advances awaiting the cable industry depend on reclaiming analog spectrum on cable systems, Mr. Roberts said.
Mr. Roberts said that in the next year or so, converting the 80 analog channels now on many Comcast systems to digital would free up more than 250 megabits of bandwidth. The cable industry spent about $100 billion over the past few years to upgrade its equipment to increase its bandwidth from 500 megabits to 750 megabits.
By spending $5 billion on an analog conversion, the cable business will have another 250 megabits to play with, he said.
Technology for serving viewers what they want to watch, when they want to watch it, is another issue the industry is struggling with.
Cable operators are providing digital video recorders to their subscribers, but the companies may have a better business with video-on-demand.
“We spend too much time on DVRs,” said Cox’s Mr. Esser. Subscribers “love the content the networks produce, but they want to do it on their terms.”
Cox has been working with Walt Disney Co. to test My Prime Time, which provides prime-time shows via VOD. The system disables the fast-forward function during commercials, preserving the traditional TV-advertising economic model, he said.
The system also is boosting the ratings of shows. According to research done by Cox, 25% of the people who tried My Prime Time viewed shows they never would have watched, raising ratings, Mr. Esser said.
Still, the technology is a double-edged sword.
“More fragmentation is coming. More competition is coming,” said News Corp. Chief Operating Officer Peter Chernin.
Amid all the talk about technology, one programmer who works for the entertainment division of a cable operator spoke up for the importance of programming to the industry.
Josh Sapan, president and CEO of Cablevision Systems’ Rainbow Media unit, said that while service and technology are important, cable can form an “emotional relationship” with programming.
“You don’t get off a phone call and say, ‘Wow, that was a great connection,’” he said. “Video and applications of video, if they’re done well, will play a significant role in who will win” the competition among cable, satellite and telco providers.