WASHINGTON, D.C. – Maybe cable companies won’t rob broadcasters of any revenue after all with the addressable advertising they are about to launch.
Maybe they will actually grow the ad pie coming to TV from another avenue: direct mail.
Direct mail has long been seen as a viable addressable marketing option as local or national retailers target certain demos, based on postal codes (zip codes down here) and drop colourful, ugly flyers on the doorsteps – even if you have a “no flyers please” sign on your house.
Most of this ends up in the blue bin, of course, noted Canoe Ventures CEO David Verklin in a session called Economics of a New Advertising Era at The Cable Show in Washington.
Verklin leads a company in Canoe Ventures that is a partnership among the major American MSOs that will co-ordinate national sales for the cable companies’ local avail slots – but will use the set top box data from each carrier in order to more specifically target advertising to the right households.
It also plans to offer the addressable, interactive platform to broadcasters and cable channels, too, and both MSOs and broadcasters in Canada are watching this closely. (At least one high-ranking Canoe representative has been invited to speak to Canadian companies on addressable ads.)
In fact, Canoe is six weeks away from launching its first campaign with American Express where most of the 18 million digital cable homes its partnership encompasses right now will get a regular green Amex card ad, but about 18% of that base in “370 zones” will instead see a gold card ad – because their household income is over $100K, noted Verklin.
But, what about ad agencies, are they ready to shell out for such targeting? “We’re so ready,” said Matt Seiler, CEO of Universal McCann.
But, how much extra would the agencies and their clients pay remains the primary unanswered question. “It will depend on what the results are,” he added, since agencies are wanting to pay more based on results, rather than “on what we think it might be” which is how TV ad buying based on past ratings is purchased now.
Turner Broadcast Sales and Turner Sports president David Levy was less than impressed with Canoe’s initial targeting and said advertisers won’t, in fact, pay for such broad targeting. “That’s way too generic for advertisers to really put a value on it,” he said about Canoe’s Amex campaign.
Verklin responded saying it’s Canoe’s first foray and that the company’s core goals are “addressability, interactivity and data & knowledge… We want to put dog food ads only in houses with a dog.”
“This is a boon for direct marketers,” he insisted, adding most chuck out the unwanted ads in their mailboxes. “Maybe there’s even an ecological play here.”
Plus, the data that can be gleaned from set tops not only means proper ad addressing and spending, but also more accurate ratings. All commercials can have a rating now, rather than just the one-third based on a sample of millions, not just the 17,000 people Nielsen relies upon to provide ratings data in the States.
“With cable we have got to increase our data and provide some more accountability,” said Verklin. “We want to give the Internet a run for our money.”
Cable – with the right privacy protection in place – has access to vast troves of data, from the individual set tops (gathered in aggregate of course) to the switched digital video data to VOD purchase patterns, but it’s all raw data that needs crunching to wring out the value.
“We need to find out what kinds of data sets do we need and what do people want,” added Landell Hobbs, Time Warner Cable’s COO. “We’re giving that data to Canoe to figure out.”
“We’re moving towards more intelligent television,” added Verklin.
– Greg O’Brien
