Exclusive: Canoe To Shutter Interactive TV Ad Business, Lay Off 120
CEO Timko, Other Top Execs Out as Venture Refocuses on VOD Advertising
Todd Spangler -- Multichannel News, 2/22/2012 1:00:00 PM
Updated: 1:58 p.m. (ET)
Canoe Ventures is shutting down interactive TV advertising operations -- closing its New York office and laying off 120 employees, including CEO Kathy Timko -- leaving about 30 employees to focus on VOD ads as its sole product, the company confirmed.
The decision to abandon ITV ads and dramatically pare back Canoe's mission came after a review by its cable operator owners, according to a Canoe spokeswoman. "It's the result of what the marketplace told us," she said.
Canoe was formed in 2008 by the six largest U.S. cable operators: Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems and Bright House Networks. The venture's original mandate was to enhance the value of cable TV ad inventory and programming with interactive and targeted technologies.
After three years of testing and development, Canoe had enabled the delivery of interactive TV ads to more than 25 million cable homes nationwide across eight cable networks: AMC, Bravo, Discovery, E! History, G4, Style and USA Network.
Canoe's "request for information" interactive overlays on top of 30-second ads let viewers opt to receive more information, coupons or product samples through the mail -- with just a few clicks of the remote.
But despite Canoe's technical achievements, Madison Avenue did not buy the promise of nationally delivered ITV ads in a significant way. Among the reasons were that Canoe's reach across households and networks simply wasn't broad enough for the biggest marketers, and that the complexity of executing interactive campaigns didn't justify the additional time and expense.
Canoe commercially launched its ITV ad product in 2010, but never identified any advertisers that used the service.
In addition to Timko, other senior executives leaving Canoe include chief product officer Arthur Orduña, chief marketing officer Vicki Lins, senior vice president of sales and distribution Jim Turner and general manager for interactive television solutions Jonathan Bokor.
Canoe, in its radically slimmed-down form, will now attempt to create a national VOD advertising platform that encompasses both traditional on-demand and eventually TV Everywhere. The company will be based in Denver and headed by newly appointed CEO Joel Hassell, who previously was chief technology officer.
"To succeed, we must prioritize and focus our resources," Hassell said in a prepared statement. "Therefore, Canoe will conclude its national interactive TV initiatives." (Read Hassell's full remarks here.)
Hassell added, "Cable's ITV business will continue through the ad sales teams and video business units at the individual MSOs, as they pursue business opportunities with these capabilities within their own footprints."
Canoe's more narrow goal, at this point, will be to build a way for MSOs and national programmers to generate revenue from dynamically inserting ads into on-demand content across both VOD inside the home and TV Everywhere outside the home.
"To make on-demand ad inventory as valuable as traditional broadcast (linear) or online inventory, the industry needs a standard, ubiquitous way to steward and monetize on-demand advertising," Hassell said. "Canoe is committed to making this happen."
Chris Pizzurro, Canoe's general manager of VOD advertising solutions, is expected to remain with the company.
Canoe's failure to realize its interactive TV advertising ambitions is its second strikeout. The company's first product launch in 2009, dubbed "Community Addressable Messaging," was an attempt to overlay targeted national spots onto existing cable zones. That would have let an advertiser target a different second spot to specific zones (for example, to high-income areas).
But the company abandoned Community Addressable Messaging in mid-2009 before it was fully launched. David Verklin, the energetic former CEO of Aegis Media Americas who led Canoe in its first three years, cited business process challenges and technical issues in upgrading ad-splicing equipment across MSOs.
In July 2011, Canoe announced that Verklin, whose contract expired last year, would be replaced by Timko, who previously was chief operating officer.
Canoe's employees were notified Wednesday of the decision to pull the plug on the ITV ad business, which will eliminate 80% of the company's workforce. Staffers will receive severance packages and will be offered outplacement services as the ITV business winds down over the next several months, according to the Canoe spokeswoman.
"We thank all of our dedicated employees, programming partners, vendors and other supporters, as well as pioneering national advertisers and their agencies for their work with Canoe and the industry," Hassell said in the statement. "In particular, the members of the joint venture thank Kathy Timko for her outstanding leadership during her tenure as COO and, more recently, in the dual roles of COO and CEO."
Just days before Canoe's leadership team was informed of the board's decision to terminate the ITV business, the venture was touting the results of a year-long study conducted with the Association of National Advertisers to try to bolster the case for interactive TV ads.
According to the Canoe and ANA research, ITV ads improve effectiveness even if viewers don't ultimately opt to receive the offer, with 86% higher unaided brand recall for interactive-enabled spots versus non-interactive ones. And in aggregated survey results on behalf of Honda, Fidelity, GlaxoSmithKline, Kimberly-Clark and State Farm, 19% of adults 18 to 49 on average opted to receive the interactive TV offers, the study found.
The venture also had been promoting ExpandTV as the consumer-facing brand name for cable's interactive TV capabilities, which for Canoe's purposes relied on CableLabs' Enhanced TV Binary Interchange Format (EBIF).
Canoe ramped up hiring in 2010 -- roughly doubling its head count that year in anticipation of the full launch of its interactive TV products. To accommodate the larger staff, the company signed a lease for 40,000 square feet of Manhattan office space in 1251 Avenue of the Americas, a building owned by Japanese real-estate company Mitsui Fudosan. The office, previously occupied by Lloyds TSB Bank, occupied the entire 39th floor.
Canoe's technical facility in Denver is located in space leased from the Comcast Media Center in Centennial, Colo.
Hassell asserted that Canoe's founding MSOs are committed to the focus on dynamic VOD advertising.
"Once we establish the market for dynamic ad insertion within cable's VOD platform, our vision is to offer more robust reporting and data insights, introduce addressable VOD dynamic ad insertion, and support VOD ad insertion across a wide array of devices both inside and outside the home," he said.
Hassell joined Canoe in August 2010 as senior vice president, engineering and technical operations. He was formerly founder and CTO of cable technology consulting firm DigiForge, which was acquired by Rovi last year.
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Behavioral Based Social Media System for the Cable TV Market
posted May 19, 2011 8:09 AM by Herb Lair
Cable has long history of failing to develop 1-1 target marketing. Canoe Ventures (latest MSO venture) was touted as the Holy Grail of targeted advertising and is reportedly less than a success at this stage.
Excerpt from above link on January, 2011 Fortune.com –
“Advertisers will spend $56 billion putting ads on TV this year,...The cable industry thought it would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, has launched just one notable product…”
Excerpt from above link on February, 2011 Business Insider
Identifies advertising market being missed by Cable TV operators
“Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”
The obvious alternative, with the least cost to implement is an independent Cloud CRM solution designed to cross index cable subscriber households with their corresponding social network interests. The current regulatory and privacy issues experienced by cable TV operators gathering unauthorized data from set-top boxes could be minimized, by validating subscriber and even eliminated by essentially having an opt-in plan (provided conveniently by the social media). Access along with profile and interests of households would be controlled by the subscriber’s social media platform of choice. Facebook has high consumer acceptance and could be used for household profiles, product interests, social interests, and viewing entertainment interests. There would be incentives to the subscribers to opt-in including notification and reminder of viewing favorites, Groupon type ads, and specific ads matching interests with infomercial type group discounts and urgency to buy.
The current design of target marketing advertising ventures is fundamentally flawed. They focus on demographics, and fail to identify the individual behavioral current and future household interests.
Project would involve developing a bidirectional Cloud interface program using a CRM application between the social media and MSO subscriber records and communicating behavioral marketing - business advertising, discounts, specific videos/groups, family albums – providing subscriber awareness of TV programming -- movies, products, etc. similar to Amazon and Groupon. This would make subscriber stickier and substantially reduce turnover.
To paraphrase a comment I made in the CED 1999 publication about the Internet, cable TV operators need to become the new best friends with the 600 million members of social media.
Herb Lair - 2/23/2012 10:02:50 PM EST -
We ahould have known this venture would have failed from the beginning. After all, Canoe's do tip easily.
The Canoe Ventures plan was flawed from the begininng. It took them way too long to develop very old technology. They then made the drastic mistake to let each of their 8 network partners sell the space. The networks reps did not care about Canoe, they did not know how to sell it and presrent it to clients.
The majority of Canoe homes were from the Comcast foootprint. Why not buy Comcast directly? The networks were asking for a premium on the entire network buy when they reached only 22% coverage of "lit up' homes. Shame on Canoe for letting it go this long.
iTV is alive and well. There are companies out there like the Band Inc. and Brightline that can deliver the results and educate clients in this very dynamic space.
Kevin Jukler - 2/23/2012 4:45:19 PM EST
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