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NBC Universal Invests in Addressable-Ad Concern Invidi

NBCU Wants to "Test" Future Models as Ad Business Grows Complex

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NEW YORK (AdAge.com) -- NBC Universal has made a strategic investment in Invidi Technologies Corp., a company that has developed software that enables marketers to send different commercials to different households via use of a set-top box. The alliance is a signal that TV broadcasters are growing more interested in the technology behind so-called addressable advertising, that could change the way in which media outlets conduct business.

"This is just one in a long record of things we've done with partners and advertisers and third-party technology providers," said Ed Swindler, exec VP-chief operating officer of NBC Universal ad sales, "with the goal of testing the future models for advertising as the environment becomes a lot more complicated, and to learn how the business model is going to change over time."

NBC Universal is the first TV broadcaster to join Invidi's ranks of investors, which also include Google, Experian, WPP and Motorola. NBC Universal and Invidi declined to elaborate on the amount NBC Universal invested or the size of the stake, but indicated the transaction did not make NBC Universal a majority stakeholder in Invidi.

Addressable advertising, in which a single piece of ad inventory can be "split" into multiple spots, each sent simultaneously to a group of households more likely to be interested in the particular message or product being conveyed, has long interested the ad industry. Yet even as the words crop up on executives' salivating lips, actual implementation of the technology seems to bob continually in the distance.

Invidi, which holds several patents for a system that distributes addressable ads and measures response to them, has begun rolling out in different systems, said Michael Kubin, an exec-VP at the company. Mr. Kubin said Invidi has installed software with Verizon's Fios system since March and expects to do the same with DirecTV and Echostar Communications' Dish Network in the first quarter of 2011.

"This is not an easy thing to figure out," said Mr. Kubin. "The technology is hard. There are a lot of barriers to implementation. Putting software into set-top boxes is not easy. There are a lot of barriers, but we have narrowed them down one at a time, and we are getting there."

NBC Universal has demonstrated in the past its interest in testing out new systems of advertising. In September of 2008, the company unveiled a partnership with Google that would allow the search-engine giant to sell pieces of advertising inventory on some of NBCU's cable channels. The theory at the time is that the pact would allow some advertisers to customize their ad plans to reach particular audience segments and also that the agreement might bring new categories of smaller advertisers to TV who might not normally by the medium.

TV broadcasters have reason to investigate the technology. One idea being floated around some ad-buying agencies is to have them buy up addressable inventory from sellers and then allocate it to their clients -- a notion that might upset TV programmers accustomed to controlling the advertising inventory that accompanies their well-known shows.

"Content owners need to make sure that the business model is respected so that we can continue to invest all the money -- the billions of dollars -- we invest in programming," said Mr. Swindler.

The pact with Invidi comes just weeks ahead of when Comcast Corp. is expected to complete its acquisition of a majority stake in NBCU. Comcast has in the past expressed an interest in using NBC Universal's programming to reach broader audiences and get them to test out emerging technologies such as video-on-demand and more. Invidi said its technology was recently tested in Comcast's Baltimore systems, where the addressable ads "proved to be 65% more efficient and 32% more effective."

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