Marketing

In Canoe’s Wake, Interactive TV Sails Onward

3/05/2012 2:02 PM Eastern

Interactive TV is not going
down with the Canoe Ventures
ship.

Canoe, the advanced-advertising
company backed by the nation’s six
biggest cable operators, has abruptly
halted its efforts to sell interactive TV
ads on national cable networks.

The demise of the industry’s highprofile,
multimillion-dollar effort
ended more than three years of development
— and led some observers to
wonder whether ITV itself was stuck
dead in the water.

But interactive TV, in concept and
implementation, is alive and kicking.
Indeed, Canoe spurred operators to
deploy standardized interactive settop
technology widely, which will
provide a foundation for new applications
for years to come. Meanwhile,
interactive advertising is
continuing to win millions of clicks
on a local level, and both “secondscreen”
companion apps for mobile
devices and connected-TV devices
are widening the concept of ITV.

CableLabs CEO Paul Liao said that
ITV technologies remain “as important
and relevant to the cable industry
as ever.”

Liao emphasized that CableLabs’
development of standard specifications,
including the Enhanced TV
Binary Interchange Format, will continue
to let MSOs deliver a wide range
of interactive-TV applications —
including advanced advertising.

“These technologies are the foundation
for the industry’s ability to
capitalize on interactive advertising
opportunities, and its commitment
to deployment of these technologies
remains unchanged,” he said.

Cable operators are also using EBIF and other technologies
for applications including caller ID on TV, home shopping, audience
measurement, upsell of premium subscriptions and
enabling “second-screen” experiences, Liao added.

ESPN, for one, remains a big believer that interactive TV
technologies not only boost ratings by actively engaging
viewers but can enhance advertising revenue opportunities,
as well.

“We’ve launched products both through connected TVs
and set-top boxes and feel ITV apps can be valuable brand extensions
to complement the viewing experience,” ESPN executive
vice president of sales and marketing Sean Bratches said.

That said, Bratches added, “there are many challenges to
achieving scale in the marketplace” — a critical obstacle to
promoting ITV as an advertising vehicle.

Canoe was supposed to solve that problem by delivering a
nationwide interactive-TV footprint spanning multiple operators.
The venture managed to bring EBIF to some 25 million
cable households, but that evidently wasn’t enough to tip the
scales for major marketers.

CANOE’S ITV LEGACY

According to some industry executives, Canoe’s interactive-
TV efforts actually were successful — not with its intended
business model, but in establishing an ITV baseline that will
continue to pay dividends.

“EBIF has become much
more than advertising,” Zodiac
Interactive CEO Brandon
Brown said. “The nice
byproduct is that you
have a lowest-commondenominator
capability
[for ITV] for the first time
in the industry. Companies
have a tool now that
can be leveraged for other
things.”

One example: EBIF
can let operators implement
an all-channel
alerting system
that delivers geographically
targeted
severe-weather
alerts, according to
Brown. MSOs also
are using EBIF for
caller ID pop-ups
on television and
to enable set-top
channel-change features
from apps for iPads and
other devices.

The fact that Canoe mothballed its
ITV efforts “doesn’t mean something
really good wasn’t accomplished,” he
said.

With a sizable EBIF footprint now
live thanks to Canoe, Showtime Networks
is seeing more traction for its
interactive apps based on the spec,
according to vice president of interactive
David Preisman. The premium
programmer has created
an EBIF version of the Showtime
Sports app that is being tested by
two major MSOs, and has worked
up an EBIF app for sampling
Showtime programming and letting
cable subscribers subscribe with a few clicks of the
remote.

“My concern when I heard the [Canoe] news was, I
don’t want that decision to taint the concept of ITV, which
I think is going forward in a big way,” Preisman said.

A question on EBIF
now is how actively tier
2 and 3 cable operators
will adopt the technology,
Zodiac’s Brown said.
“For [smaller operators]
EBIF might be cost-justified in the broader landscape
of how the tier 1s
are using it,” he said.

To be sure, the Canoe
pullback has been a
blow to specific vendors
that were banking on its
success.

Ensequence, a New
York-based developer of
interactive TV applications,
built key pieces of
the platform behind Canoe’s
request for information
interactive product.
“We’re disappointed that
[the] Canoe [interactive TV
advertising business] went
away,” Ensequence president
and CEO Peter Low
said.

“We’re disappointed
in large part because
they were a large customer.”

Low said the company
hopes to explore the possibility
of using the EBIF-based
software it developed for Canoe
to deliver national ITV ads in some
other way: “We are going to talk to
the relevant people in the industry
about how and when we might use that
in the future.”

But beyond the Canoe project, Ensequence
continues to see demand for interactive
TV in three categories: on traditional
TV, on second-screen mobile apps and on
connected smart TVs. For cable specifically,
the company is developing a way to make it
easier for programmers to create and deploy EBIF
content with multiple operators.

“The business of interactivity in content and on
advertising is wide open, and there will be more rather
than less opportunity going forward than there is today,”
Low said.

THINK LOCAL

Despite Canoe’s failure to deliver ITV ads on national cable
networks, there’s a solid — and growing — business for
cable operators to exploit interactivity in local and regional
markets, according to executives.

Cablevision Systems, for example, delivered more than
900 interactive TV ad campaigns for 600 advertisers in
2011 across its metro New York service area, ranging from
mom-and-pop outfits to major national brands like Royal
Caribbean International.

“We are firmly committed to ITV. It’s been an integral
part of our sales process for four years,” David Kline,
president and chief operating officer of Cablevision Media
Sales, said. “It’s going to continue to get bigger and become
part of our offering.”

Kline wouldn’t disclose what kinds of premiums Cablevision
asks for the Optimum Select interactive advertising
products, but he noted that the MSO has achieved
double-digit quarterover-quarter increases
in total advertising
revenue. “I don’t think
that’s an accident,” he
said.

Other operators, including
Comcast Spotl
ight, Time Warner
Cable and AT&T Ad-
Works, also tout the
power of interactive
TV to enhance local TV
ads.

“The fact is, coupling
interactive technology
with the ability
to deliver messaging
to specific zones at the
sub-DMA [designated
market area] level offers the type of efficiency and engagement advertisers are
asking for,” Comcast Spotlight spokesman Chris Ellis said.

By comparison, Canoe suffered from a more complex
sales model, in which it relied on programming partners
to sell the RFI features, on top of the relatively heterogeneous
technical infrastructure among its MSO members.

“Canoe’s first product, national interactive advertising
commercials, required the highest
degree of difficulty both from
a technological and a business
point of view,” said Dan Levinson,
FourthWall Media’s senior vice
president of marketing and corporate
communications. “While
we are saddened for all our
friends at Canoe, we are heartened
that on a local basis interactive
advertising will succeed.”

Moreover, Canoe’s ITV product
forced advertisers to fulfill
RFI interactions through postal
mailings. It was unable to automatically
deliver an immediate
response to a viewer’s email address,
because of privacy regulations.

“There are certain advertisers
who want the more immediate
response rather than waiting
for something in the mail — they
want something greener and faster,”
Kline said.

And even on a national level,
marketers have been able to
execute ITV ads by working on
their own with individual cable,
satellite and telco TV providers.
BrightLine, a boutique advanced-
advertising firm, said it
has created and implemented more than 300 “fully immersive”
interactive experiences to date for 65 advertisers
including Kellogg’s, Unilever and Johnson & Johnson.

JUST SHAZAM IT

Another interactive trend has been the rise of “second
screen” apps. Those let TV viewers follow along with a
broadcast or respond
to ads using
their smart phones
or tablets — no Canoe
or EBIF required,
with instant
gratification.

During last
month’s NBC telecast
of Super Bowl
XLVI, advertisers
including Toyota,
Best Buy, Pepsi,
Bud Light and FedEx
made their ads
“Shazamable,” using
the company’s
mobile app that automatically
recognizes
audio content
to launch into the
advertiser’s site.

The Shazam-enabled
ads arguably
represented the biggest
interact ive-
TV execution ever,
reaching an audience
of more than
100 million viewers.
London-based
Shazam, which has
60 million North American users, would not disclose figures
on results citing client confidentiality agreements.
But execs called the Super Bowl a watershed moment for
interactive TV via second-screen devices.

“We had millions of people raising their hands in living
rooms and at parties looking to interact with the game, the
halftime and the advertisers,” executive vice president of
advertising Evan Krauss said.

But there’s no single road to interactive nirvana. Programmers
and advertisers believe they’ll expand their
reach through multiple channels.

ESPN has deployed set-top-based ITV apps with
DirecTV, Dish Network and Verizon Communications’
FiOS TV. At the same time, the sports powerhouse used
Shazam for the 2012 Winter X Games last month, providing
supplemental video, photos and info to viewers’ mobile
devices. ESPN also offers apps for Samsung and Sony
connected TVs.

Consumer expectations have “skyrocketed with the
advent of the ‘there’s an app for that’ mentality,” Bratches
said. “We will continue to pursue unique and robust
ITV executions, but also see potential in the companionscreen
experience.”

Today, ITV interactions can occur through set-top boxes,
as well as advanced consumer electronics such as
the iPad, Xbox 360 and connected televisions — each of
which “carries a working business model,” said Jeremy
Legg, Turner Broadcasting System’s senior vice president
of business development and multiplatform distribution.

“The new industry ITV challenge surrounds measurement,
evolving advertising models, and not becoming
so enamored of what the technology allows and instead
building meaningfully better consumer experiences,”
Legg said.

To Cablevision’s Kline, developments like the secondscreen
approach of Shazam or connected-television apps
are positive — a rising tide that will lift all boats.

“The more we can get people interact with TV, the better,”
he said.

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