With Web measurement firm comScore Inc. reporting that U.S. Internet video viewing increased 13 percent in December 2008 alone, advertisers are becoming increasingly interested in the medium. In fact, many argue that broadband and mobile platforms are essential to reach younger demographics, since TV is no longer an effective ad channel for them.

Recent research refutes this assumption. A new study found that TV remains the dominant medium despite growth in digital media, even for reaching younger demographics, as reported by Ad Age. The study was sponsored by the Council for Research Excellence and conducted by Sequent and the Center for Media Design at Ball State University. In fact, marketing-mix analyses conducted since the early 1990s by Marketing Management Analytics (MMA), a body that evaluates TV ad effectiveness, have found that TV advertising has become more effective in recent years, though only slightly. In addition, one in three digital brand searches were driven by offline advertising (particularly TV), rather than online ads.

The sustained relevance of TV advertising is certainly driving investment from cable operators, despite the impact of the global economic downturn on the local advertising business. For example, U.S. cable giant Comcast Corp. (Nasdaq: CMCSA, CMCSK) saw a 5 percent drop in ad revenue over 2007, and excluding non-repeating political spending, it actually fell 20 percent. But the MSO has no plans to slow investment in Canoe Ventures LLC , the joint venture among the big U.S. cable operators to create a nationwide platform for targeted, interactive advertising.

In the second quarter, Comcast expects to launch the Canoe-enabled "Creative Versioning," which will allow operators to use demographic data to target ads to more relevant household groups. Canoe has already tested an interactive polling application inserted into a national feed on multiple operators' systems, and will shortly be offering TV networks interactive ad insertion templates for interactive polling, as well as a "request for information" application.

Service providers around the world, but particularly in North America, could well benefit from a new revenue stream as their IPTV services ramp up. Given the dominant position that cable enjoys in the North American pay TV market, it's important to follow and support Canoe. Telcos will not be able to interest advertisers in their own standard. However, telcos do own significant wireless assets, and being able to layer mobile capabilities onto TV advertising would be an attractive proposition for advertisers.

The telcos' multiplatform reach, particularly at a local level, could be a significant advantage. The key, however, is to enable advertisers to purchase nationally or via a single point of purchase and reach a nationwide aggregated audience, but still target locally or by demographic segment and return specific ad exposure metrics.

The technology, interface, standard, or service provider that can enable that will offer advertisers a truly compelling value proposition.

— Aditya Kishore, Senior Analyst, Heavy Reading