Cable Seeks Ways To Bring Online Ad Dollars To TV
April 03 2009 - 2:18PM
Dow Jones News
The cable industry's longstanding efforts to bring new ad
technologies pioneered by Internet companies to television took on
a new sense of urgency at this year's Cable Show conference
here.
Ad dollars have fled traditional media outlets, like cable
television, as marketers have found more targeted and accountable
ways to advertise on the Internet. But cable companies have long
dreamed of a day when they could use data collected in TV set-top
boxes and interactive technologies to beat Web companies at their
own game.
With online video now gaining momentum, that dream is turning
into a strategic imperative for TV programmers and cable operators,
and the collapse of ad markets amid the recession has left an
opening for an industry flush with cash flows from subscriptions to
make its push.
"Interactivity is of crucial importance to cable," said David
Joyce, analyst with Miller Tabak & Co. "A lot of advertising
market share has gone over to Internet media properties because of
this, and the entire TV ecosystem needs to try to get that share
back. Advertisers have shown they want this, and they will pay more
for it."
The industry has been talking for years about building cable TV
viewing into a more interactive experience for audiences, with the
ultimate goal of using data gathered from viewers for advertising
that uses behavioral targeting techniques.
So far, such efforts have brought about the advent of features
such as digital video recorders and on-demand offerings, but
so-called addressable advertising methods are still largely out of
reach for the industry.
That's not so for the Internet, a medium fundamentally based on
interactivity. Companies such as Google Inc. (GOOG), Yahoo Inc.
(YHOO) and Microsoft Corp. (MSFT) have won market share from
traditional media outlets by offering marketers detailed
measurability with search and display ads targeted at niche
audiences and a more tangible return on investment.
"Interactivity has been available on the Internet for 15 years,
and it has leap-frogged television," said Mike Eason, chief data
officer with Canoe Ventures, a unit formed in 2007 by Comcast, Time
Warner Cable Inc. (TWC), Cox Communications Inc., Cablevision
Systems Corp. (CVC), Charter Communications Inc. (CHTR) and Bright
House Networks to set standards for the technology across the
industry. "We need to make up that ground now."
Cable companies don't have a great track record of working
together, but Canoe marks the industry's most collaborative effort
on a national scale. A variety of technologies and strategies are
being pursued. Currently, Canoe is collecting data from set-top
boxes, and evaluating ways it can be used for advertising.
Meanwhile, companies are experimenting with new set-top box
technologies and on-screen interfaces to give viewers a more
Internet-like experience on TV, allowing them to purchase products,
vote on preferences and control their viewing experience.
"Consumers want to experience Internet content on their
television," said Bill Leszinske, general manager of networked
media with Intel Corp. (INTC).
Canoe's chief executive, David Verklin, said his group expects
to launch a community addressable messaging initiative within six
weeks that will be the industry's first national ad campaign
segmented to audiences based on geography and demographics. For
instance, an American Express Co. (AXP) ad will be launched, with
one version going to cable subscribers in affluent communities and
another going to lower-income areas.
"You'll see interactivity deployed on a large scale 18 months
from today," Verklin said.
Behavioral targeting on cable could combine the broad reach of
television with the targeting capability of the Internet, and if
the industry waits much longer for a major push in that direction,
it could soon be too late.
"I think the economy will push us to make progress on this now,"
said David Zasloff, chief executive with Discovery Communications
Inc. (DISCA).
Privacy issues remain a concern when it comes to collecting data
about individual viewing habits, but Internet companies have
skirted the issue with technology that keeps people's personal
identity under wraps and analysts say cable companies could employ
a similar strategy.
Sanford C. Bernstein analyst Craig Moffett, however, says that
for investors, the notion of addressable advertising on TV has
largely receded back into obscurity, encumbered by the real-world
politics of competing priorities, constrained capacity on cable
systems, and a bewilderingly complex ecosystem of agencies and
advertisers.
"That so little progress has been made on this is a tragedy of
lost opportunity [for cable companies]," Moffett said at the
conference hosted by the National Cable & Telecommunications
Association. "After a decade of waiting for addressable
advertising, investors are impatient."
Jeff Gaspin, president and chief operating officer with
Universal Television Group, said that may not change.
"I suspect we're going to be having the same discussion 12
months from now," he said.
-By Nat Worden, Dow Jones Newswires; 201-938-5216;
nat.worden@dowjones.com