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Web Ad Pioneer Dave Morgan Looks to Re-Wire TV Advertising

While World Awaits Targeted Spots, Deals Based on Viewing Data Are First Step on 'Road to Addressability'

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One ad targeted to one household. That's been the obsession of marketers and, more recently, TV networks and cable companies, since the dawn of the web. But achieving it is a technical hurdle that Tracey Scheppach at Publicis' innovations unit Vivaki has called media's "Sputnik moment," a challenge so difficult and expensive it would seem almost impossible to achieve.

Tacoda founder Dave Morgan
Tacoda founder Dave Morgan

That's part of the attraction to Dave Morgan, who has made a career of building businesses on things that seemed to be a bit ahead of their time. In the mid-90s he founded one of the first ad servers and ad networks at Real Media; later he founded Tacoda Systems and popularized the term "behavioral targeting," which was about using data to serve the right ad at the right time.

Now, he'd like to apply some of the same techniques to TV advertising. It's a bit of unfinished business for Mr. Morgan, who says it's been his dream since he bought into the concept of the "Information Superhighway" in the early '90s. Online ads were great, but limited in their impact for brands. "I went into online in 1992 because TV wasn't ready," he said. "I'm proud of that time but always felt I was at the kid's table as far as display." The kid's table serving online display is an $8 billion U.S. market. TV? $70 billion.

Nearly 20 years later, the dream of targeted ads to individual households is slowly coming to fruition, mostly in small-scale trials on individual cable systems. But Mr. Morgan has seen this movie before and believes it will be at least another five to 10 years before the infrastructure is built out and marketers figure out what to do with it. So, Mr. Morgan is doing the next-best thing, the most internet-like thing: gather up massive amounts of viewing data from providers such as TiVo, Rentrak, Kantar Media and TRA, as well as cable operators like Charter to build an ad network for TV.

Actually, it's an audience network if you're splitting hairs. Mr. Morgan takes this data, finds fans of specific shows, or types of shows or actors, like Westerns, animation, Julia Roberts or Will Ferrell, combines that with the age and gender information already available from sources like Nielsen, and packages TV spots that over-index a target audience to TV advertisers. Those could be low-cost spots on niche networks or in dayparts outside of prime time. You could also target segments like "out and abouters" who don't watch TV on Friday or Saturday nights.

It is not, as purists will say, anywhere close to the one-to-one targeting held out as the industry's holy grail, but it is some of the most sophisticated targeting that has been practiced at any time in the 60-year history of TV. "That is the first step on the road to addressability," said Ms. Scheppach. "It is an incredibly important step on the journey." Mr. Morgan has packaged more than 50 TV ad deals like this. He started out with the TV networks themselves, helping them better target their promo spots. That proved the concept and gave them a closed feedback loop: better-targeted ads yielded more tune-in or awareness of network shows. CBS's marketing chief, George Schweitzer, is on Simulmedia's advisory board.

It isn't the first time Mr. Morgan has tried TV. The first was, in fact, too early. Back in 2000, Real Media did some trials with some European TV networks (as did Microsoft) and found it a technical quagmire. "There are graveyards littered with companies that have tried to optimize TV in the past," he said.

The second opportunity came around in 2008, when cable operators started releasing their viewing data and networks started to feel the pressure to make their product more measurable. Mr. Morgan left Time Warner, which bought Tacoda Systems in 2007, and launched Simulmedia. Others saw the same opportunity: Microsoft bought Navic and started building its TV ad targeting platform Admira. Google launched Google TV. "For everybody, the set-top box data is what links it together," said Jen Soch, senior VP-advanced TV at Mediavest.

Meanwhile, cable and satellite operators are rolling out their own targeting systems with technologies from companies like Visible World and Invidi. Cablevision has 3.2 million addressable homes; DirecTV and Dish Network are rolling theirs out later this year. But Mr. Morgan believes the market can move faster than the pipes.

If Mr. Morgan's approach sounds familiar, that's because it is. It's the same formula that ad networks promised on the web -- take low-cost inventory, add data, and make it more valuable to marketers. Some people blame online ad networks for dragging down online advertising prices, but Mr. Morgan said ad networks unfairly took the fall: The real problem is that the sheer volume of pages and impressions exploded, thanks largely to Facebook and other social networks. That won't happen to TV, even if channels and delivery systems continue to evolve and expand.

Further, it's just a different product. "It is not an impression -- it is a 30-second, interruptive, attention-owning sight, sound and motion spot!" he said. "That is unique, and they are not putting more spots in the hour tomorrow than they have today."

But will it expand the market? When marketers know where the waste is, they'll stop buying it, but they also may pay more for the right target audience at the right time. "TV is measurable to the extent that it drives product sales," said David Cooperstein, VP-CMO, marketing leadership at Forrester. "But what you don't know is whether you spent the optimum amount to get that last box of cereal sold."

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