An advanced television advertising capability long pursued by the cable industry is starting to get some attention – and some traction.
It’s household addressability, or the ability to send to your neighbor who’s watching ESPN a different commercial message than the one you see at exactly the same time, on exactly the same channel, because you have different demographic or behavioral characteristics than the guy next door. Neat, huh?
Except there’s a rub: right now the attention is going mostly to satellite TV, not cable, because Dish Network and DirecTV are out in front with bigger rollout footprints and scale in the addressable advertising category.
Example: This Feb. 12 article from Politico talks up how the two U.S. satellite TV companies are making an impact in political campaign advertising by targeting specific messages to specific households. Here’s a quote the cable guys probably aren’t going to love:
“Dish and DirecTV’s new service is even more focused than regular targeted cable advertising because it can single out individuals rather than just demographics.”
Some background: Dish Network and DirecTV are using the 2 or 3 minutes of advertising time they get each hour from national cable networks to make the addressable magic happen. It’s their inventory to do with as they please, and the two companies have figured out one of the most promising uses is to allocate that time for addressable advertising across their national subscriber footprints. (Dish Network has 14 million video customers; DirecTV has 20 million.)
It’s exactly that sort of big-time scale that has advertisers interested – and DirecTV and Dish Network ahead in the addressable ad game. For decades the cable industry has labored to overcome the problems of its patchwork quilt geography – where cable providers are assigned to different territories thanks to a history of municipal government franchise awards. Advertisers, particularly national advertisers and their agencies, are pretty busy people, and figuring out how to stitch together “national” campaigns across multiple cable geographies is taxing.
Which brings us to the proposed acquisition of the nation’s No. 2 cable company, Time Warner Cable, by Comcast. The combination would create a company that serves almost 30 million U.S. video subscribers even after calculating for the discard of some non-aligned properties.
That’s just slightly less than the share of the U.S. pay-TV market served by the two satellite TV providers (which, coincidentally, are the subject of fresh speculation about a possible merger). And importantly for national advertisers, it would bring the key media markets of Los Angeles and New York City, where TWC operates now, into common ownership alignment.
That means there might just be enough “there” there to accelerate the development of addressability over cable, along with some other nifty advanced advertising platforms.
“Advertisers and agencies would benefit as a Comcast/TWC entity with 30 million-plus homes would represent the largest unified set of households in the marketplace for addressable TV,” says Nick Troiano, the president of advanced TV advertising technology provider BlackArrow. (Both Comcast and TWC are investors.)
Even so, the Comcast-TWC pairing won’t flip some sort of instant switch on advanced advertising. To a big extent, that’s already happened. The two companies already are aligned on technology platforms and capabilities for “dynamic” ad insertion over video on demand streams, for instance. That means a national advertiser already can insert commercials into VOD program streams that appear in the homes of customers for both.
Also, both Comcast and TWC have adopted the same platform to enable dynamic ad insertion of live/linear IP video streams. That makes it possible for advertisers to manage a “cross-operator, unified buy,” BlackArrow points out. So there are already the makings of a combined advertising platform regardless of whether the two merge.
But common ownership would likely accelerate the adoption pace while leading to further advanced ad synergies. “On-demand is a great platform for advertisers, but different operators have different practices when it comes to items such as what targeting to expose, what reporting is available, and what content ads can be run against. This merger provides the opportunity for these operating practices to be standardized,” Troiano says. That means more efficiency in targeting, for instance, younger and more affluent viewers, and to do it across more markets. “They’ll now be able to do it in the same manner not only in Philadelphia, Detroit, San Francisco Bay Area, Chicago and Seattle but also in New York City, Los Angeles, Dallas, and other markets,” says Troiano.
BlackArrow sees possibilities across two big categories:
On demand advertising insertion. Comcast has secured rights to a large library of on-demand content, points out Troiano. “By making this content available to TWC’s subscribers, Comcast could significantly grow the already booming trend of on demand viewing,” Troiano thinks.
Live, multiscreen advertising. TWC’s early work in adapting commercial insertion for live TV viewing over IP devices (smartphones and tablets, among others) could help advance that capability across the combined company. “Since Time Warner Cable has already extended their dynamic ad insertion capabilities over to IP linear TV, Comcast could transition this capability to their footprint as well,” Troiano says.
Others agree the merger could speed up and broaden cable’s advanced advertising presence. Television advertising veteran Tim Hanlon, CEO of The Vertere Group, told Mediapost writer Wayne Friedman the proposed merger “hastens tech innovation on the advertising front, as it eventually harmonizes the 30 million plus households on a common ad tech platform – addressable advertising, dynamic ad insertion in VOD – something the Canoe Ventures consortium could never do.”