NEW YORK TiVo CEO Tom Rogers said advertisers would flock to the digital video recorder service as it gains more subscribers.
"Over time, we think there will be a mass advertising business," he said.
TiVo introduced an ad-tagging feature that allows sponsors to embed an interactive tag into their commercials that allows viewers to interact with their spots. Ameriquest, E*Trade and General Motors are running commercials using the tags. It also offers branded entertainment through TiVo Showcases. In all, Rogers said TiVo now works with 35 advertisers.
"We have seen very significant advertiser momentum developing toward embracing TiVo as the key means toward addressing the TV industry's challenge," said Rogers.
Rogers spoke during the Alviso, Calif.-based company's second-quarter earnings conference call. TiVo said it generated $40.7 million in revenue in the quarter and $240,000 in net income, the company's first-ever profit.
TiVo said it finished the quarter with 3.6 million subscribers. Rogers said the company expected new deals with cable and satellite firms to expand TiVo's user base, which will make interactive tags more popular with advertisers. The company plans a major marketing push in the fall to build up its own subscribers in anticipation of DirectTV's plan to stop marketing TiVo in favor of its own DVR. Comcast will start selling TiVo to its subscribers in 2006.
"We are building toward a scale base that will allow advertising revenue to become a significant contributor," Rogers said.