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Comcast Preps Ad Targeting Trial

It's not quite the golden age of addressable advertising just yet. But after numerous false starts, the cable industry is finally making progress in television ad targeting.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) told Fierce Cable that the company plans to test delivery of targeted ads during linear television programming in a technical trial before year's end. Using technology from Invidi Technologies Corp. , Comcast will serve up 30-second ads based on customer household demographic information. Once the trial is completed, Comcast intends to go live with the new ad system, starting in the new year. The MSO also plans to extend the ad system beyond cable set-tops to tablets and other IP-enabled video devices in customers' homes. Reports from earlier this year suggest that the company would like to roll out the technology to all its markets by the end of 2014. (See Netflix Sets Sights on 4K/UltraHD Streaming)

Invidi's technology works at the set-top level, relying on audience classifiers determined by demographic data to decide which commercials any given household should see. The company emphasizes the privacy advantages of this approach, noting that no personal user information ever leaves the client device. Invidi holds multiple patents related to the technology, including ones that govern the ad serving process, and the way that commercial delivery is reported back to operators and advertisers. (See Invidi Lands Targeted Ad Patent and Invidi Scores Targeted Ad Patent)

Comcast, meanwhile, is already doing targeted advertising during video-on-demand (VoD) sessions with the help of BlackArrow Inc. The MSO has said it is also starting to serve up targeted ads in Xfinity TV apps and on the Xfinity web portal.

— Mari Silbey, special to Light Reading Cable

albreznick 11/14/2013 | 5:51:14 PM
Re: Who else? Good question, Karl. One would certainly hope so. I think some knowledge was gained from Canoe's escapades. But I'd be interested to learn just how much too.   
brookseven 11/11/2013 | 6:14:18 PM
Re: Targeted Advertising = Epic Fail Carol,

Its only of greater value to them if the viewers are more disposed to buy than any other targeting method.

For example, if I sell cruises I will put ads on "The Golden Girls" not on "SpongeBob Squarpants".  How much better is the use rate of the ad by the targeting that you have?

Again, it is all about conversion rates and spending.  Let me use some fake numbers:

- Ad 1 not so well targeted, hits 1000 people and 3% follow it (or 30 people)

- Ad 2 very well targeted, hits 100 people and 20% follow it (or 20 people).

So, Ad 2 is worth 2/3rds of what Ad 1 is worth.  Theoretically, one can sell the other 900 spots for similar value, which would be awesome.

So, yes the Ads are more valuable relatively. Each Ad is probably less value absolutely, but more Ad space is created.  Second problem is that most everyone actually wants to Advertize to rich folks and not to poor folks (sorry if that is not PC - but go where the money is).  So the challenge is to get enough targeting at a low enough incremental network cost so that there is money to be made and that enough new Ad space is created to make this all a good idea.

And by the way, you better be able to demonstrate the better conversion rates.  People with HUGE ad budgets might try out a new scheme (like car or beer companies).  Think the local skate shop is going to do the proof of concept?

So, to summarize:  

How much better is the conversion rate with the form of targeting that is being chosen than not choosing it?

What are the incremental costs or cost savings to advertisers?

What are the incremental costs to video providers?

What are the incremental revenue gains?

For a cable company, you probably have to do the incremental ad insertion at the head end (unless you are planning to swap out all your STBs).  So how many ads are you likely to be inserting in say San Francisco?  10,000?  100,000?

seven

 

 
Carol Wilson 11/11/2013 | 5:14:13 PM
Re: Targeted Advertising = Epic Fail Seven,

Yes, this agreement thing is a disturbing trend but I'm sure it's temporary.

You have raised an excellent point, however, that advertisers expect to actually pay LESS for targeted ads, based I assume, on CPM. Would they ever pay more to target the right people with their ads?

I'm thinking of a demo I saw years ago at Verizon's lab -- and by years ago, I mean 07-08, that time frame -- in which they could link ads you saw on TV to your browsing activity. For example, if I start looking at sites for cruises, I start seeing cruise ads on TV. If I start checking out sports cars, I see sports car ads. What I don't see are diaper ads because I don't have a baby.

Everyone admitted at the time that this was totally doable but objectionable because it violated the customer's privacy. So now if I shop for cruises or insurance, I am inundated with those ads on line - often for weeks, and usually AFTER I've made my purchase -- but no targeting happens on TV. 

If an advertiser knows they are reaching an audience pre-disposed to buy, isn't that of greater value to them?

 
brookseven 11/11/2013 | 4:52:56 PM
Re: Targeted Advertising = Epic Fail Carol,

We agree yet again (THE HORROR!) and I think I have a theory.

Targeted advertising is better the "nichier" your product is.  Let us use Coke for example.  Would it matter to them?  Probably not so much.  Now let's move to Lexus.  The question is this:  "How much LESS will Lexus pay for targeted advertising over general advertising?"

So, since I am now a business and do advertising myself I know what a TV ad costs. There are 3 variables:  Production Cost, Ad Cost and Response Rate.  Now if Lexus is going to advertise during a TV show that has a demographic with high income, does targeting help it reach those people over a 30 second commercial?  If not, then the only thing it can do is lower the cost of running the ad.

Which is why I think this has (to date) failed.  The targeted ad can not be more targeted than the content.  Now they could do ads that run independent of the content, but I am not sure that is any more productive.  What an advertiser wants is the ad to be viewed at a higher rate because it is being sent to the right people.  The reason to send it to the right people in most advertising channels is that it lowers the cost.

Think of a Valpak ad (you know the direct mail marketing folks).  They send out a batch of ads to a zip code.  So, geographically it is reasonably targeted.  But not for anything else.  If you were a roofer, why have apartment complexes in your distribution.  If you could do a Valpak that was JUST homeowners in a zip code, you could pay less and get the same result.

I think the idea that more people will use the ad is false.  What I think it is supposed to be is a higher percentage and therefore higher percentage per dollar spent.  Given that a targeted ad has more value than an untargeted ad by lowering absolute cost.

seven

 
DOShea 11/11/2013 | 4:29:45 PM
Re: Targeted Advertising = Epic Fail Seems like Invidi might have that right approach, or at least is rightly emphasizing user security and control. I know when I talked to vendors some years back about this, many of them would just insist that the benefits of targeted ads would sooth any privacy concerns.
Carol Wilson 11/11/2013 | 4:00:52 PM
Targeted Advertising = Epic Fail I guess it's not surprising that targetted advertising hasn't taken off given how potentially contentious a process it can be. But seeing as how everything we shop for online triggers ads there, the baby steps of targetting homes based on demographics seem almost rustic. This is one area for monetizing broadband that I thought would have much greater potential than it has actually shown. 
KBode 11/11/2013 | 4:00:09 PM
Re: Who else? I remember back to 2009 when stories talked about Comcast wanting to build massive data warehouses that would store user identity data; multiple years and millions later and Canoe was scuttled. I'm curious how much from the discarded Canoe venture will be integrated in this new offering? Surely some of that money Comcast spent is being recouped here?
albreznick 11/11/2013 | 1:58:53 PM
Who else? Sounds like Comcast will be the first major cable operator to try targeted ads in linear TV programming, Mari. Or are there other MSOs doing it or preparing to do it as well? Why is it finally happening now? 
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