Targeted TV ads coming to US

21 December 2010

NEW YORK: DirecTV and Starcom MediaVest Group have forged a new partnership that brings targeted television advertising to the national level.

Under the terms of the agreement, Starcom can offer clients like Coca-Cola, GM and Procter & Gamble the chance to deliver what it termed in a statement as "scaled, household-addressable advertising".

Technology from Invidi, primarily leveraging Nielsen data, is set to support this system in the first instance.

Further third-party information, such as that provided by Experian, more detailed customer segmentations and marketers' in-house databases could also be employed when seeking to identify specific audiences.

Among the factors potentially forming a basis for running certain executions are gender, income, recent purchases, and whether a residence contains children or pets.

SMG conducted a localised test with Comcast covering 60,000 households in 2009, and found participating viewers switched stations 32% less often than the norm.

Elsewhere, SMG has previously advised DirecTV in small-scale trials, and plans to assume a similar role during a pilot burst of the new service next year.

Upon completion of the initial introductory stage, the targeted system will be rolled out to the almost 10m DirecTV customers owning a DVR, and incorporate 25 cable networks.

"This is a glimpse into our industry's future. Up until now, we've only been able to test the power of addressability in local markets," said Laura Desmond, ceo, Starcom MediaVest Group.

"We proved its value beyond a shadow of doubt, but hadn't yet conquered scale until now."

Starcom could allocate between $10m (€7.6m; £6.4m) and $20m of expenditure to this venture in 2011, and predicts an effective tailored TV advertising platform should ultimately add $10bn in TV revenues.

"It's taken years of hard work to get this far, but we've got light at the end of the tunnel and we're ready to put our money on the table," said Tracey Scheppach, innovations director at SMGx, the company's trading arm.

Jessica Reif Cohen, an analyst at Bank of America Merrill Lynch, forecast that demand for targeted and interactive TV ads may reach $11.5bn by 2015.

However, she also stated the medium is a "few years away" from going mainstream.

"We believe the US television industry is finally on the cusp of transforming advanced advertising into meaningful reality," Cohen told the Wall Street Journal.

Best Buy is one organisation which has already bought some of these ads on DirecTV, in a bid to show more "relevant messages", said Drew Panayiotou, its svp, marketing.
Panayiotou revealed the firm may allot "significant" funds to this approach if early moves are successful, especially as it remains "difficult to emotionally engage consumers" via the web and direct mail

DirecTV will set aside 25% of its total inventory to addressable ads, and might even be able to charge higher rates for this airtime.

Data sourced from Business Wire/Wall Street Journal; additional content by Warc staff