Advanced cable boxes to yield customizable ads

Called the holy grail by some TV advertising executives, the age of so-called addressable TV marketing — which would allow dog food ads to be sent only to dog owners — has arrived.

This new paradigm will feature advanced set-top boxes — courtesy of the cable industry’s hush-hush Project Canoe initiative — that will, the cable biz hopes, deliver on its long-touted promise of precisely targeting ads to individuals based on taste and lifestyle just like Internet advertising does.

Movie marketers could benefit from addressable advertising — especially boutique film divisions that seek niche auds.

“For a Fox Searchlight film, say — where the audience is going to be smaller and more sophisticated — it should be very easy to cherry-pick a small subset to market to,” says Tim Hanlon, exec VP of Denuo, the media futures division of media agency holding company Publicis Group.

For bigger tentpole movies, analysts say, film marketers could send out different creative executions, targeting different audiences through one media buy.

Pushing the envelope is Google, which, based largely on its extraordinary ability to tie Internet search to targeted text-based ads, generated an astounding $16.6 billion in revenue last year (putting this in perspective, that’s about a quarter of the overall online advertising market).

Seeking to adapt its targeted, automated approach to television, Google partnered with Dish Network operator EchoStar last year on a program built around the online auctioning of 15-, 30- and 60-second TV ads.

Able to work around their media agency, advertisers upload their own spots, then purchase inventory on the Dish Network feed of cable channels such as Nickelodeon, The Game Show Network and Current TV.

The automated, revolutionary approach seems a long way away from mainstream adoption, with only a handful of advertisers, direct-response-oriented brands in particular, signing on.

However, the Google program has achieved plenty of buzz in the ad-buying biz for the copious data it delivers about each impression.

“It’s pretty amazing, notes Geoff Robison, senior VP, national television, Palisades Media, a media agency specializing in movie-studio accounts. “It’s an interesting way to test your creative. You can run one ad one day and run another the next and see how each did. (Google) has all these different metrics — you can see the length of each tune-in, and you can kind of gauge whether your creative works.”

“We think there’s lots of inventory that benefit from an accountable system like ours,” says Mike Steib, director of Google’s TV sales efforts. “We report more granular data based on the behavior of viewers from the set-top box to make ads more important to their audiences.”

Most of the addressability is still to come, since the Dish Network boxes that Google is deploying its system on aren’t quite technologically up to speed.

“Right now they are (merely operating) a trading platform,” notes Tracey Scheppach, senior VP and video innovations director for Starcom USA. “They are not (true) addressable advertising.”

But that’s not far down the road. With the powerful Google on their turf and on the move, the big cable MSOs have gotten busier on their own long-simmering addressable advertising platform, codenamed Project Canoe.

The joint venture includes a recently announced $50 million-$70 million contribution from Comcast as well as participation from Time Warner Cable, Cablevision, Cox Communications, Charter Communications and the Bright House Networks.

For the last decade, the cable industry’s research and development consortium, CableLabs, has been quietly developing technology standards for interactive set-tops that would enable the “telescoping” of content to specific homes, as well as the gathering of data.

Precise details regarding the shrouded Canoe standard — which is built on the same Java-based programming code found in homevid’s new Blu-ray disc format — should be announced shortly.

Cable companies believe having a standardized platform unified across all major MSOs could ignite the their lackluster local advertising business, which they hope to triple from $5 billion a year to $15 billion.

While cable companies have so far pitched the local-advertising functionality, buyers see the Canoe’s real potential in national campaigns spread over the entire network of standardized boxes. “National advertisers will pay a higher rate to reach those granular audiences,” Hanlon explains.

For marketers, such campaigns would be far more price-efficient.

“The problem in the $70 billion television advertising world is viewers that you don’t want to buy subsidize the one’s that you do,” says Tara Walpert, president of Visible World, a company that provides addressable technology.

Perhaps most important to TV companies and the media agencies that work with them, addressability will help them compete for advertising with an online platform that already has it in droves.

“We need to improve relevancy,” Scheppach explains. “At issue is, how do we create an additional currency?”

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