The future of television advertising

Fred Wilson and John Battelle have some interesting posts on the future of television and advertising. Fred and John both seem to believe that the concept of paid search will eventually work its way into television advertising. I suggest reading their posts if you have an interest in this space and learning how it will change as PVRs, VOD, and HDTV further penetrate the market. While one can look at how the success of Internet advertising will work its way into the television especially as the two markets converge, I like to look at the $60 billion spent on cable and television advertising another way. Rather than assume it will all go away in the future, why not do something to make it more effective today? What if you could change and personalize the actual commercials to turn television and cable advertising from a mass market media to a one-to-one relationship? Recently, Businss 2.0 (sorry registration required-hey Business 2, when are you going to open yourself up for bloggers to generate traffic for you?) had a nice article about one of my portfolio companies, Visible World, which has the technology that allows advertisers to do just that. As per the article,

Instead of making a single ad, the agency can now create its 30 second stories as a sequence of swappable components using Visible World software. The file is then sent to servers, already installed at Comcast's cable centers, which instantly assembles hundreds or even thousands of different versions of the ad and send them to particular groups of viewers. The ads can be updated or modified automatically, just like a website. "In the winter, an airline ad could say, "It's 52 degrees warmer in Miami today, " Haberman tells the group, "Or an ad for a limited-editiion Volkswagen Beetle could say there are only 392 cars left, creating a sense of urgency.

I encourage you to try the demo to customize a few ads on your own. Username is Business2 and password is visibleworld. The bet is that a more effective and more personalized advertisement will stop some viewers from hitting the fast forward button on their PVR remote. The good news is that Visible World has already worked with some blue-chip companies like Bank of America, Ford, and United Airliness. In addition, via deals with cable companies like Comcast, Visible World will be able to reach 30 million households by the end of 2004.

Comcast says it can direct ads to narrow zones of 1,000 to 20,000 homes in a growing number of cities, including Boston, Chicago, Dallas, Detroit, Miami, and Phildelphia. But to Haberman, that's just the beginning. Within the next 2 years, he hopes to offer advertisers the ultimate prize: targeting ads to individual households based on criteria such as age, marital status, favorite leisure activities, preferred airlines, and credit cards--though understandably, this very notion raises delicate privacy issues that have yet to be negotiated.

The cool part of this comes when the Internet and television actually do merge to create true interactive television and direct response fulfillment. Imagine its winter and you see the same customized airline ad about Miami, it's 52 degrees warmer there, and you can take advantage of a special vacation package by clicking a URL and purchasing the plan through your television? We are clearly not there yet, but the potential exists. And before the $60 billion of television and cable advertising moves somewhere else, I hope advertisers give Visible World a shot to make the medium more effective.

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This post was written by who has written 358 posts on BeyondVC.

6 Responses to “The future of television advertising”

  1. Kunal Anand Nov 3, 2004 at 3:52 pm #

    I love HTTP is stateless, yet we are coming to a point where that doesn’t impede development on these new technologies.

    I’m currently in the process of aiding a firm bring it’s unlicensed television content online, and the key issue that we are having is sustaining bandwidth. We decided it would be best to invoke advertisements before and after (yet still before showing next episode’s preview) the content.

    At first, advertisers were concerned that they were not targetting the right group of people. However this was also tough because we wanted to get as many advertisers. What we ended up doing was going to advertisers and informed them that they could pay for a genre (with specific demographics), a series or a slot in each episode. We built an easy to use ad-reservation tool…and they loved it.

    Point being that in a controlled system it is already possible to keep the customer happy (relevant ads) as well as the advertiser (better spending). In uncontrolled systems it would be hard to develop – yet not difficult to forsee.

    The first big realization of this technology by the general public is a situation where a user is watching a commercial on their “TV” and without having to remember the link, just being able to click on a button/source to go directly to the web site.

  2. John Campbell Nov 6, 2004 at 7:22 am #

    Sure, this is coming: the interactivity possible with digital media is bringing many changes. There are, though, other and sometimes better ways of segmenting the consumer market than by location: type of employment and socio-economic status for example.

  3. Martino Mingione Dec 11, 2004 at 11:48 pm #

    I am well acquainted with the two topics raised in your fascinating post — Visible World (topic 1) and how VOD, DVR’s, and ipTV will erode the value of linear television (topic 2). I think these two topics must be broken out into two seperate discussions in order to (hopefully) make insightful observations about each.

    First, Visible World has some great technology that allows for personalized messages that are much more effective than today’s television advertising paradigm. I highly recommend the direction because it as a smart course for cable companies to follow. However, Visible World’s strategy is one that makes linear television advertising more effective (at least that is what they are concentrating on presently). Since that market segment will remain at least at $60B annually and growing, it is a good one to persue in its own right.

    Second, the technologies of VOD and DVR’s and ipTV are eroding linear television but not destroying it. I have run a projection to determine when it will become a viable advertising category in its own right (I think early 2006). The logical follow on question is what magnitude that media could be if it were transacted well (theoretically $15B in 2010). Since I don’t like to give wild projections without methotical substantiation, you can read my analysis at: link to vodscape.com.

    The two dynamics (personalization of ad message and non-linear advertising) will eventually be connected to each other. However, my practical take is that the two dynamics will largely remain seperate though to the end of the decade. I say this becaue I know the cable MSO’s well as well as Visible World and their competitors.

  4. Martino Mingione Dec 15, 2004 at 12:09 am #

    Ooops. I see an inadvertant broken link from above. Try link to vodscape.com to view the analysis.

  5. Ben Buckley Mar 19, 2005 at 10:34 am #

    My name is Benjamin Thomas Buckley and i’m a 3rd year Television Production student at the University of Teesside.

    I writing to you because for my Dissertation piece i have to look into current issues to do with television, and i have decided to look at Advertising with in Television. I want to look at the issues concerning advertisement, does it take away the audiences focus on the program they were watching, does it hinder viewing, does it help viewing, is it worth while having advertisement? etc.

    Therefore i was wondering if you would be able to speak to me on this subject and answer any questions i have, because this piece has to include proof that i have spoken to professionals within the field, like yourself. Would you or anyone you could direct me to be willing to answer some questions on advertising etc?

    Thank you in advance for any help you can give me.

    Yours Sincerely

    Benjamin Buckley

  6. Paul Ashby Jun 12, 2005 at 3:54 pm #

    Am preparing a “Future of Advertising” document as a result I have spent hours online, nowhere have I read that interactivity is communication and that game playing with programmed instruction is fundamentally more effective that conventional advertising. In this form it can become a print game, online game or on & in any medium. The fault of advertising agencies in the past is that they have never understood the process of communication!

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