Trender Research™

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Addressable Advertising in Pay-TV at the Precipice: One Step Back and One Step Forward

As the pay-TV sector continues to try to match or best the online world where demographic, behavioral and geo-targeting of advertising is possible by using location and other data mined from ISPs and IP addresses, with set-top box data being mined primarily in the pay-TV sector’s case, the recent news from Canoe Ventures of discontinuing its first product test was at minimum a small set-back. The much hyped cable network operator consortium was organized to help the cable sector at large to move its advertising operations into the 21st century where advanced advertising concepts can be implemented nationally with locally-based addressable and targeted advertising. Canoe Ventures’ first product coined “Community Addressable Messaging” or “CAM” has been discontinued after only a few initial tests. Some stakeholders are giving Canoe credit for stopping the effort after acknowledging it is too complicated to undertake now for a number of reasons, not the least of which is a nationally scalable initiative that would work across all cable operator’s network franchise footprints and for national and local advertisers.

Canoe also was struggling to get broadcast and cable networks to sign up for CAM as their buy-in was critical to its success. Rainbow Media’s AMC channel was the lone network signed up for a national test, and the test was limited to advertising inventory used only in the early morning hours and on weekends that reached only 3 million homes and 70 cable “zones”. Starcom USA was the named advertising agency supporting the test, and was also complimentary of Canoe for stopping testing. Starcom has a history of working with the cable sector in advanced testing, and was use to working with one cable network operator at a time in stitching together a national inventory of more advanced advertising concepts. They still are very bullish on Canoe’s prospects and objective of scaling offerings nationally.

With all of the variables that come into play for both addressability and the ability to support targeted advertising, there are four TV mediums and network infrastructures that are more or less capable in relation to each. Without supporting the comparison with boring technical network details, a proposed hierarchy of most to least capable by medium and in descending order finds IP-centric networks (the public Internet and pure-IP private networks – IPTV) as the most capable followed by Satellite, Cable and Broadcast TV. Some may be surprised by the Satellite pay-TV platform’s mention before Cable, but the networks do have some advantages (DVRs penetration especially coincident with more upscale pay-TV and high-definition enthusiasts’ subscriber targets). Maybe that is why Canoe says its formation is intended to support all pay-TV platforms over time and not just Cable. The Satellite pay -TV household subscriber base is a very respectable 31 million customers, and IPTV subscriber growth is out-pacing all others.

DirecTV and Dish have both selected and announced their preferred advanced advertising vendor support of Invidi Technologies. Both will be utilizing advanced advertising insertion technology from Invidi that is a software solution integratable with their DVR devices. In DirecTV’s case they currently can only sell advertising nationally and not locally and more targeted. They and Invidi claim that they will now be able to serve individual TV commercials dynamically by region, zip code, designated market areas (DMAs), subdivisions, neighborhoods, political districts, streets and individual households. By the time they generally launch their local advertising capability, they estimate 50% of their subscribers will have DVRs representing somewhere around 20 million boxes. I guess the pay-TV numbers game is not just about adding and subtracting subscribers, but also dividing them now! Time will tell soon if Canoe will continue paddling and whether Invidi’s darts will hit the bull’s-eye.

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