NEW YORK Targeted advertising has been a hot-button topic for several years now, as companies like Invidi, Visible World and Canoe attempt to devise systems deployable to the majority of U.S. households.
Those systems have focused most of their efforts on techniques that interface with cable and satellite systems and their set-top boxes. Advances have come in fits and starts, a major obstacle being the inability of any single targeted ad system to get the cable industry on board beyond limited tests.
Now, however, a new player, Spokane, Wash.-based EmbracingMedia, is trying a different tack. It's offering both targeted ad capability and advanced viewing data to local broadcasters around the country.
With the EM system, ads will be fed directly to TV receivers (as opposed to set-top boxes) equipped with remotes that passively identify and track the viewing of specific users to each set in the household. Dad might watch a football game in the living room and see beer ads, while the kids might be in another room watching the same game, but seeing ads for fruit juice.
EM has signed its first local broadcaster, Cowles Communications, which will launch the service next year on KHQ-TV in Spokane, Wash.
Local TV has been hard hit by the recession. In the first quarter, local TV ad expenditures were down 16 percent in the top 100 markets, according to Nielsen.
Patricia McRae, gm of KHQ, says the ability to target ads in households will be "critical" to the success of local stations going forward. "Targeted ads are a part of our future, absolutely," said McRae.
For markets like Spokane, she added, the enhanced, near-real-time viewing data from the EM system will help stations and advertisers draw more accurate audience profiles of who's watching what programs when. Spokane, with a population of close to 500,000, is still a diary market that relies on viewers to recall what they watched after the fact -- an outdated technique not as reliable as electronic data-gathering methods, said McRae.
EM is talking to other broadcasters and hopes to have deals in place for 20 markets by the end of the summer, according to company CEO Jim Birch.
"We didn't want to be at the mercy of distributors" like the cable companies that have resisted signing on with other ad-targeting services, Birch added.
The service is unique in some ways. First, viewers will "opt in" and fill out questionnaires detailing demographic profiles, interests, buying preferences and other traits. Birch said company research indicates that approximately 70 percent of consumers nationwide would be willing to participate.
The ability to steer adult-themed ads, such as those for alcohol or Viagra, away from sets primarily viewed by kids will be a selling point to families, said Birch. He added that the company may also provide financial incentives for opting in and providing information about households.
The catch: The system will rely on TV set manufacturers to incorporate small players able to store the hundreds of targeted ads. Birch said they have one deal signed with a manufacturer and others are in the works. Consumers will get discounts on the sets -- and some will even get them for free. EM also has the same challenge as its competitors to scale its service. Birch acknowledged it could take four years to get to 1 million homes.
Publicis unit VivaKi Ventures has made an investment in the service. "It's interesting conceptually," said Tim Hanlon, evp and managing director at VivaKi. And by focusing on broadcast, he added, EM can potentially blanket the country. By contrast, systems that focus on cable will at best cover about 65 percent of the U.S.
Hanlon, noting the venture was in its early stages, said, "We'll see what happens." Meanwhile, ViviKi also has an investment in Visible World and a strategic partnership with Microsoft's Navic.