Addressable advertising a matter of time

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Tv is the most powerful medium for advertising, many experts agree. Add the ability to target spots to individual households and TV's power and influence grow exponentially.

That's exactly what ACTV is promising with its individual advertising product, which this week is being unveiled at the National Association of Broadcasters meeting as a new brand dubbed Spot On.

This digital technology allows advertisers to target different commercials to different homes at the same time during the same cable program. "We provide tools to make advertising extremely effective," says Richard N. Yelen, senior VP-marketing for ACTV.


Because Spot On software will be embedded on digital cable set-tops, deployment is limited to the pace of development of the overall digital cable industry.

While digital cable penetration today is estimated at only about 5 million U.S. households, that number is expected to grow to 10.6 million by the end of 2000 and 33.6 million at the end of 2004, according to Paul Kagan & Associates.

"The speed with which this happens depends on how soon you can prove its economics are sound," says David Adelman, convergence media director at Media Edge, New York, which is negotiating a research partnership with ACTV's Spot On.

"Once the cable industry believes [it] can double [its costs per thousand] and increase national ad dollars, the deployment speed will increase very rapidly."

In the meantime, cable companies are upgrading their systems to deliver digital cable as well as manufacturing very sophisticated set-top boxes.


Spot On already has secured agreements with Motorola's General Instrument Corp., Pioneer Digital Technologies and Scientific Atlanta to have its software embedded into the TV set-tops each manufactures.

ACTV also recently named Austin, Tex.-based GSD&M its agency of record. The agency helped develop the new Spot On brand and is expected to create new brands and positioning for ACTV products. Two of those products are HyperTV, which lets viewers receive Web content in sync with the program they are watching on TV, and Individualized Television, which lets TV viewers choose different camera angles, instant replays or call up additional video content related to the specific program.


GSD&M will launch a business advertising campaign by early summer for Spot On. "Our interest in working with ACTV was not because of the size or billings, but really from an overall learning factor," says Steve Dalbey, senior VP-group account director at GSD&M. "ACTV is playing in the arena that is the future of advertising, so we, as an agency, want to have a leg up on other agencies and introduce the leading edge in advertising to our clients," such as Southwest Airlines.

In addition to targeted advertising, Spot On will allow advertisers to account for their commercial delivery and report back, ACTV executives say, plus allow the consumer to interact with the spot, if the marketer so chooses. Other benefits for marketers include the ability to test TV commercials, generate leads and increase overall recall.

A study conducted by ASI Entertainment Research for ACTV showed that commercial recall increased close to 150% with Spot On technology and in-depth recall increased by 109%.

"We know this enhances advertising, but we need the agencies to come in as research partners to help understand how all the aspects will operationally fit together," says Kevin Liga, ACTV's chief technology officer.


"Our interest in ACTV is to help mature the service from an advertiser point of view; what are the deliverables and how do they need to be designed and defined," explains Mr. Adelman. "Addressable advertising is a win-win for the advertiser and the provider because the [multiple systems operators] can increase inventory and revenue and the advertiser will pay a higher CPM to reach a true target than they will to reach their target mixed in with a bunch of non-prospects. But the advertisers doing this now have a desire to be in early and a real stomach for experimentation."

Next Century Media is developing a similar addressable advertising system, called Opti*Mark. However, Next Century is focusing primarily on audience measurement and optimization via digital cable set-top boxes.


With the support of MediaOne and Grey Advertising's MediaCom, New York, Next Century is planning a trial of its system this summer in Atlanta.

"We're excited about this because it can be sold at the national, regional and local levels," says Pete Moran, director of ad sales development at MediaOne.

For addressable advertising to work, it needs a lot of collaboration, "including advertisers, MSOs, content providers, networks and agencies," says Frank D'Angelo, interactive group director at Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, who has worked with both ACTV and Next Century.

"We view this stage as a wonderful laboratory for us to understand industry convergence in terms of what it means," he adds. "We're still quite a ways off in terms of critical mass."

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