Targeted Ads Coming to TV Finally
Talk of a future with addressable and measurable advertising on television is nothing new. Visionaries were talking about it in the early 1980s. It was all the rage in the "information superhighway" discussions of the early '90s. And, it was certainly foreshadowed in many of the early online ad businesses of the middle and late '90s. Still, delivering the right ad to the right person at the right time in the right place and solving the John Wanamaker "problem" of wasted advertising have hung over our industry ever since.
But the day of targeted ads on television — addressable, measurable ads targeted at the household level — may have finally arrived. While there have been many trials and experiments with targeted ads on TV, and selective advertising in limited deployments has been with us for quite some time, a confluence of events now have convinced me that targeted ads on television at a significant scale are finally coming. Here, 10 key indicators:
1. TV infrastructure folks are moving to addressable TV. The people that pipe TV into homes, from the multiple system operators (MSOs) of the cable world to the satellite providers to the telephone companies now bringing fiber-optic services to the home, are building household addressability into the foundation of TV delivery in the U.S. with IP-enabled set-top boxes.
Plus, several MSOs are working together on the ad component under the banner of Project Canoe and have hired one of the true visionaries of the ad business, David Verklin, former CEO of Aegis Media Americas, as its CEO. Finally, the hardware companies, from Sony to LG to Philips, are incorporating IP-addressability in their consumer electronics.
2. IP-driven TV peripherals are exploding. U.S. households quickly are filling up with computer-based peripherals connected to the Internet and the television. They will provide the infrastructure folks with a lot of competition in not only delivering programming and content, but in delivering targeted ads as well.
3. Pure computer to TV is here. Forget the intermediating devices. We're starting to see lots of different connectors in the market to take what's on your computer directly to the television. Given that the largest manufacturer of Internet routers (Cisco) also owns the largest manufacturer of home Wi-Fi devices (Linksys), you can see this happening in a wireless way very quickly. In addition, Cisco also owns Scientific Atlanta — one of the largest manufacturers of set-top boxes.
4. Content companies are moving to addressable TV. Media and content companies, from Time Warner and Disney to Viacom and Scripps, are investing in interactive video programming as they prepare for an addressable TV future. While they may not know whose pipes they'll use — all of them if they can — they certainly know the content is needed first.
5. Better ad skipping and blocking are taking place. As the media world moves more toward digital and on-demand services, the ability to skip or block unwanted ads is increasing. We've seen it on the Web. We've seen it on TV already. And it'll increase dramatically over the next few years. The only way to combat this is by providing viewers with fewer, more relevant ads — that means targeting ads to the right people and filtering them away from the wrong people.
6. E-commerce companies are turning to addressable TV. Amazon and eBay have built extraordinary businesses online, relying on PC-based relationships with their customers. Much of what works well on PCs may work even better on TVs. E-commerce companies are turning to addressable TV advertising and will help fund it.
7. Marketers want better measurements. TV advertisers in the U.S. have only had Nielsen and its panel for audience measurement, but that's changing. Marketers already have seen what comScore and others have done on the Internet with massive panels and census-based measurements. They want the same for TV, and with companies like TRA — which provides census-based viewing and purchase data — they'll demand this even sooner.
8. Google is coming. Yes, Google intends to get into TV. Considering Google's growing impact on all of us, enough said right there.
9. Microsoft is already here. Microsoft has been working on a set-top box operating system for the better part of two decades and TV gaming for the last decade. It wants targeted ads to fund its software here.
10. Entrepreneurs are coming. This is more relevant than Google and Microsoft. Those companies and most of the others mentioned here are focusing on interactive and targeted television advertising as a way to either extend or defend an existing business.
Entrepreneurs, on the other hand, want to create new, native ad services delivered right on TV sets to dramatically enhance the experiences or businesses of key TV stakeholders — advertisers, agencies, content owners, platform companies or, most importantly, viewers. In that kind of world, I always bet on the focused entrepreneurs to change the market the most.
What do you think?
Dave Morgan is chairman of The Tennis Co., a Santa Monica, Calif.-based media company serving the tennis industry and publisher of Tennis magazine and Tennis.com. Dave also founded and served as CEO and chairman of TACODA, an online advertising company that pioneered behavioral online marketing and which AOL acquired in 2007. Reach Dave at email@example.com.