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Will new IPTV and TiVo ad formats challenge digital sign advertising?

Author: Bill Gerba on 2005-07-20 18:01:13

No sooner had I finished writing "Ad Execs Excited by Digital Media Networks" and "Narrowcast network owners await live feeds from CBS" than I came across two more articles, this time suggesting that all of that digital goodness that's supposed to help us with our digital retailing projects will also be helping advertisers with their spots on traditional TV.

The first article, from Sign On San Diego, is about a trial that Time Warner Cable is running in two small California towns to deliver its cable TV service via the Internet.  While so-called IPTV isn't new, this is the first time that a major provider has jumped in with a pure broadband-only service that rivals or exceeds regular cable TV quality.  While Time Warner bills this as a way of delivering TV to your home computer, IPTV offers the company a lot of other potential benefits, not the least of which are accurate viewership reporting, interactive TV services and instant-feedback advertising.  Accurate viewership means that suddenly advertisers and content producers alike know how many people are watching their programs.  This enables them to better tailor ads towards certain demographics, and the networks can now charge higher premiums for choice advertising spots.  Interactive TV programs will make new forms of advertising possible (perhaps clickable video regions for interactive product placement).  And of course, the ads themselves will be able to offer interactivity, with links to additional information, websites, and the like, all of which will be able to collect information about the viewer's behavior, preferences and habits.

And "regular" TV isn't done yet either, as personal video recorder company TiVo is demonstrating with the latest upgrade to its platform.  According to this article from Yahoo! News, "TiVo will now give advertisers direct access to viewers who are interested in their wares. The digital video recorder (DVR) maker said the upgrade lets some 1 million of its Series 2 stand-alone subscribers instantly respond to specially encoded advertising."  While viewers can still use the device to skip or fast-forward through ads, they now also have the option to release their personal information to the advertiser when an interesting commercial comes on.  Currently, the main draw of the system is the ability to show long-form advertisements that last anywhere from 1-5 minutes.  TiVo reports that between 5-15% of their viewers watch the longer "infotainment" commercials, which comes out to a few hundred thousand viewers.  And of course, this is only the beginning.  I'm sure that advertisers will start offering incentives like free product offers, sweepstakes entries, etc. to lure viewers into responding to their commercials.

In both cases, of course, the marketing tactics are new and unproven.  So while it may seem like a sure thing to you and me (and the executive teams at Time Warner Cable and TiVo), the market will prove out the model one way or the other during the next several months.  What I'm most curious about is how the sales uplift produced by these systems will compare to in-store digital signage networks.  Generally speaking, the principal benefit of a retail-oriented signage network is the ability to bring promotional content to the sales floor, where the product is located and where the sale will be made.  Thus, while there is little doubt that interactive in-home offerings will have benefits over traditional TV advertising, my guess is that they will fall short of the direct gains produced by their in-store TV counterparts.

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