Dynamic Ad Targeting: Cable TV’s Vision of the Future

By Graeme Newell 

Dynamic ad targeting is the great hope of the cable TV future. Just as Google delivers custom ads designed to the user’s personal tastes and desires, the cable industry is building a new generation of hardware and software solutions to deliver the perfect ad to the perfect prospect at the perfect time. The ultimate goal is elimination of ad waste. For example, a smart cable box will know that a viewer only buys healthy and natural foods. It will eliminate ads for Pizza Pockets, Burger King and fried cheese sticks. (Note: this editorial is part of a three-part series).

Major Advertisers are Angry
The precision of internet metrics has changed the game. Major companies such as Walmart, P&G and Ford have diverted major portions of their ad budgets to online because of its efficiency and message targeting precision. In speech after speech, CEOs from huge companies have given the ad business a tongue lashing. They have put the broadcast and cable business on notice – get more efficient or the blood letting will continue. They will not tolerate cable’s ever-increasing CPMs and clumsy, outdated, wasteful ad targeting.

Lack of Reach is Keeping the Current TV Ad Model Alive
As much as they hate the current TV ad model, advertisers know that TV is the only game in town if they want convenient and effective national penetration. These advertisers love the detailed metrics and focus of the internet, but a efficient national online buy is still impractical. They will begrudgingly continue to pay the ever-increasing fees as TV audiences dwindle because they have few other choices.

But make no mistake, they are angry, and will do everything possible to knock the cocky TV business down a few notches. As TV rates continue to go up, national advertisers will be more willing to go through the tedious process of placing numerous small internet buys. If the internet can ever build an efficient national platform, the exodus will be huge. The cable industry knows it must change and do it fast, or it will lose its best customers.

Lack of Standards is the Biggest Hurdle
Huge dollars and herculean effort are being put into developing this new lifestyle-targeted addressing technology, but each major cable company has its own flavor of hardware and software. One company may find a solution, but unless ALL the companies share a standard, efficient national buys will not be possible. A hardware solution will soon be found, but ego may delay implementation for years.

The cable companies know they must get along and work together, but it’s just not something that comes naturally. Technical standards committees have been formed, but there are still huge players who refuse to participate, preferring to go it alone. This has led some industry analysts to predict that this technology is still at least five years away.

This means that the limbo of ever-declining TV ad revenue will continue for the next few years. TV audiences will continue to leak away as gaming, DVRs, online video continue to chip away at the base. Until ad targeting shows up, there isn’t a better plan and TV advertisers must simply endure this walk through the desert, but there could be an oasis on the other side.

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Graeme Newell is a broadcast and web marketing specialist who serves as the president and founder of 602 communications. You can reach Graeme at gnewell@602communications.com.