TORONTO – It was easy on Tuesday afternoon to get everyone to agree that targeted advertising is a better way to spend ad dollars on television.
At the Velma Rogers Graham Theatre in Toronto, CTAM Canada hosted a high-level panel session that afternoon featuring Corus Television president Paul Robertson, Zenith Optimedia CEO Sunni Boot, Association of Canadian Advertisers senior vice-president Bob Reaume, Rogers Communications chief strategy officer Mike Lee, and Invidi CEO David Downey.
The session was entitled “Delivering Hyper-Targeted TV Advertising” and the executives, very ably moderated by ROBTv’s Michael Vaughan, went back and forth on what, exactly, has to be tackled in order to be able to send targeted TV ads to the right viewers.
All agreed targeted advertising is a really good idea which is certainly coming in some way, shape or form. But in getting there, to say that there are issues is an understatement. Technically, this can be done now, so the top few questions which remain, are, in no particular order:
1. Privacy. Even though the technology shown by Invidi ensures individual privacy, the perception that the TV industry is spying on customers would be a killer, especially for distributors.
2. Revenue. Media buyer Boot (whose client list includes Proctor & Gamble, for example) said her company would, in fact, pay more for the ability to target ads. But how much more? She couldn’t say.
3. The revenue-split. Since the targeting device is the digital cable or satellite (or telco TV) set top box, what kind of cut do the distributors get from this?
4. This is Canada, so regulation must play a part. Will the CRTC allow the cable/satellite/telco industry to take a cut of the ad action from specialty and broadcast channels?
“Privacy is the central feature of Advatar,” Invidi CEO Downey told the group of about 90 right at the start. Advatar, as reported earlier this week on cartt.ca, is a sophisticated bit of software developed by Invidi over a few years (the idea of which was actually conceived and developed by Canadian entrepreneur Sandro Torrieri of Edmonton) which sits inside any set top box and deduces, through viewing and surfing patterns, the type of viewer watching television.
The data, however, is collected in aggregate so that no one in the chain can actually tell what any specific individual is watching. Essentially, the system makes it so that individual viewers can’t be spied on.
Maybe so, said Rogers’ Lee, but that’s almost beside the point. Under such a system, if something was spun out into the public that Rogers had software in its set top boxes that watched what customers were watching and when and for how long, well, one could imagine the public relations disaster that could ensue.
Lee said under any such deployment Rogers would have to be up front and transparent with its customers about it.
As for the business of it, Boot said that targeting by geography, age, gender, income and so forth are all great tools, but her clients want to know “the composition of those households.” So P&G, for example, would be able to send the Pampers ad to the homes with babies and the Head and Shoulders ad elsewhere.
Downey added that the Advatar system can tell those things right now. The software can tell, within just 27 to 40 clicks of a remote, who is in charge of it (male/female, adult/teenager, etc) and within 2.5 days what the composition of the household is like. “It’s proved incredibly accurate,” he said.
“If someone watches Dog Whisperer on Animal Planet for five straight days, you can bet they’ll get an Alpo commercial,” he added.
“This sounds like a really good idea and we should take extraordinary steps to see if we can make this work because… advertisers will probably pay more for something that can be guaranteed that more of their target group is watching,” added the ACA’s Reaume.
Downey also pointed out that because our regulations don’t allow cable operators in Canada to compete for spot ad dollars with Canadian broadcasters like they do in the States, he hoped that would mean negotiations on implementing targeted advertising might go a little more smoothly here.
But, to flip that assumption on its head a little, the fact that cable operators can’t sell ads on local avails of American cable channels means there’s little financial incentive for Canadian MSOs to want to get on board, said Lee. U.S. cablecos will actively test and likely deploy the targeting technology because it will help them sell more ads and bring in more revenue. Not so, here.
“There’s zero incentive… to basically create these opportunities,” said Lee.
“So let’s incentivize,” responded Boot.
But, when it comes to demanding a fee, or a piece of the ad action if Rogers ever decided to try and facilitate such targeting, current regulations don’t allow Canadian cable companies to claim any of the advertising dollars from Canadian broadcasters or specialty services, said Lee.
“Cable companies are precluded from participating in the local ad market,” he explained.
So what to do? Reaume seemed willing to pick up the torch on this one.
“The way you have to sell it is to tell the Commission that the current funding system is broken and if they want to enforce the Broadcasting Act, which says that we have to be predominantly Canadian… and have a healthy broadcasting system, we’ve got to ensure that the model remains a good marketing tool for advertisers – and that’s the bottom line,” Reaume explained.
“The tough job is going to be with the CRTC in convincing them they should allow cable to manipulate the signal in this fashion. But I think that we can get them to see that this is a new funding model.”
Boot said it looked like what Invidi offers would provide great value to her clients, but if she sold five spots within the same 30 seconds (to sell five different GM brands to the wide demo watching Desperate Housewives, for example), would the advertiser pay $$ x 5? “Uh-uh,” she said. “The advertiser is not going to pay five-times.”
What more will they pay? She didn’t say. But, she added: “I want that spot in Desperate Housewives and I want to carve it up.”
Robertson cautioned that the Commission is always looking to protect local programming as its default position and it could take a dim view of national brands filling up even more ad space on TV.
While that’s possible under the targeting scenario, what Boot and Reaume saw was the ability for smaller advertisers to suddenly find space, like the local plumber who only wants to advertise on the east side of Kingston, for example.
“I can see smaller brands now getting access where they haven’t been able to get on television before,” said Boot.
In the end, one just has to look at Google, which is now an enormous, rapidly-growing US$6 billion business based on targeted ads. And, the TV industry has to look beyond its traditional boundaries and see the competitive forces in the broadband world and respond before its too late, added Lee.
By the end of the session, Robertson, whose company is best-known for specialty services such as YTV, CMT and Discovery Kids, but also owns broadcast stations CHEX in Peterborough and CHWX in Kingston, said he would be willing to test the system with one of his broadcast stations.
Lee, too, signaled a willingness to test it out in a Rogers cable system.
“What this is about is finding out whether there is a bigger, healthier pie,” added Robertson.
