NEW YORK (AdAge.com) -- Targeted, web-like TV advertising has been long-promised, but will Verizon's FiOS, a relative latecomer to the party, be the first to deliver it?
Verizon will start targeting advertising on a household level by the end of the year, allowing advertisers to target homes, rather than shows, or to buy specific demographics and behaviors via the set-top box. "This is not something on the drawing board; it's what we're doing right now," said Verizon CMO John Stratton at Advertising Age's Digital Conference in New York.
Mr. Stratton, under whose tenure the world was introduced to Verizon's "Can you hear me now?" slogan, used his keynote to discuss the future of TV and what Verizon is doing to change it, which is pushing the merger of TV and the web. He said that Verizon brings a unique perspective to the problem. "We are a huge advertiser on TV and we've had a chance to think about the ad market," he said.
|Full Coverage of the 2009 Ad Age Digital Conference|
The biggest danger to TV in the coming years is that networks will attempt to preserve their offline business models and not adapt to changing consumption patterns. He said 80% of U.S. consumers with broadband connections are watching web video, and cited a Forrester Research study that 45% of all TV viewing would be on demand by 2013.
New consumer habits
"Customers are developing new habits for consumer video; the trick for this industry is to move in concert with them and not try and hold them back," he said. "The degree to which content owners keep an iron fist around their content, they will lose value very rapidly."
As TV moves into an internet-like environment, cable networks have been somewhat left on the sidelines to keep from threatening the subscription revenue they receive from cable operators. Time Warner and Comcast have proposed separate systems that would transfer cable TV's subscription model online, and Mr. Stratton didn't rule out participating in such a scheme.
But he cautioned that if cable networks don't move quickly to offer content where their audiences are headed, "their business is going to slip out the back door and they will never catch up."
|2009 Ad Age Digital Conference|
The conversion to digital has certainly eroded traditional sources of revenue for TV, but it has also lowered the cost of distribution. The idea that cable networks keep raising rates year after year is a function that they are not connected to the consumer, and don't feel enough pushback from distributors. "The content providers need to get their costs under control; that is a huge problem today," Mr. Stratton said.
The coming separation of advertising from content, which has already happened to the print business online, is going to happen to TV as well and could have serious implications for the TV networks if they're not ready. "My worry is that people have fallen asleep and become married to inertia, even with the undeniable evidence that there is a need for change," he said. "It's important we move rapidly here; time is not on our side."