Comcast CEO Brian Roberts revealed at the recent National Cable & Telecommunications Association show that the team plans to develop a system to insert relevant and targeted ads into programming that's being played back at another time.
The news marked the first public announcement of the sorts of ad alternatives the two bedfellows can foster as they develop the next-generation digital video recorder. The ad insertion system is only one piece of a larger effort to incorporate advertisers into the DVR world. TiVo and Comcast are also likely to develop more advertiser opportunities in the "showcase," the portion of the service devoted to long-form ads, as well as offer telescoping ads that link a 30-second spot to a long-form ad with more information, addressable ads and persistent ads that remain on the screen through a fast-forward.
Despite its ad-zapping reputation, TiVo has attempted to strike a balance by creating an environment open to advertiser messages. Comcast and TiVo need to build on that to avoid the ire of a content business that would like to put the genie back in the bottle but can't. Time Warner and Comcast offer DVRs to the majority of their customers. Operators view the service as a must-have to compete against satellite.
But operators also don't want to alienate advertisers and that's why they are developing new options for the box. The new Comcast/TiVo ad insertion would take into account viewership patterns to make the commercials more relevant and targeted, for starters.
"Comcast's partnership with TiVo will accelerate our time to market for DVR advertising solutions," says Warren Schlicting, VP-new business strategy at Comcast Spotlight, the advertising arm for Comcast. He says this deal gives Comcast Spotlight access to TiVo's ad Showcase technology, which includes the ability to distribute longer-form commercials and informational videos to DVR boxes across the Comcast footprint. Furthermore, he says, "We believe DVR advertising and our growing VOD advertising business will be complementary."
Providing advertising through TiVo was a part of the plan since it was first introduced six years ago, says Kimber Sterling, director-advertising and research sales at TiVo. The company also plans to allow TiVo boxes to retrieve content on the Internet via broadband and watch it on the TV. "Once that live, two-way connection is there, there are a whole host of other advertising capabilities, like interactive capability," Mr. Sterling says. Such interactivity could enable "American Idol" voting or ordering a pizza using the remote, he says.
Comcast and TiVo declined to offer more details on the pairing, but media executives offered their opinions about what the two are likely to do.
Another possibility the Comcast/TiVo marriage could allow is a local showcase in addition to national ones, says Jen Soch, VP-associate media director at Publicis Groupe's MediaVest, New York. "There are many brands out there that are looking to do things locally," she says.
Jeff Marshall, senior VP-managing director at Starcom IP, says he expects the duo to develop "persistent ads" that appear like a banner when a consumer fast-forwards a spot. That allows advertisers to still generate some awareness when their messages are being skipped, says Mr. Marshall.
While DVRs can skip over ads, they also can make advertising more powerful, says Ted Henderson, an analyst at Stifel Nicolaus. "When you look at DVRs and on-demand, the ability to measure what consumers are doing there could create something a lot more valuable. While it shifts the advertiser's focus, it could make more efficient the economics of the advertising model. You are reaching eyeballs that are opting in," he says. "[Comcast and TiVo] will ... make some good music together for advertisers."
TiVo's advertisers to date include Kraft Foods, BMW of North America, General Motors Corp., Walt Disney Co., Best Buy, PBS, NBC Universal's NBC and Target in its showcase. Mr. Sterling says it's common for a new TV program to add more than a full rating point (in terms of recordings scheduled) in the TiVo universe after one week's promotion.
EchoStar's Dish Network also offers interactive ads, most recently for Sony Corp.'s "XXX, State of the Union" and Mercedes-Benz. Meanwhile, DirecTV is rolling out a new DVR that will include multiple ways to experience ads and promotions, through telescoping and showcases, says Eric Shanks, senior VP-advanced services and content at DirecTV, citing DaimlerChrysler's Chrysler as its first advertiser. "We will be working and introducing ways and tactics that are definitely advertiser-friendly in the DVR world," he says.
The viewing model isn’t broken, but it is changing as blue-chip advertisers such as Kraft, Target and carmakers connect via TiVo showcases and in other DVR space