Marketing

Targeting Ads, Drawing Looks

5/15/2005 8:00 PM Eastern

Comcast Corp., moving closer to individually targeted advertising over its cable platform, is starting to collect detailed information about the viewing habits of subscribers — and to draw scrutiny from privacy advocates.

The top U.S. MSO collects data from 1.2 million digital set-tops installed in subscriber homes in the Philadelphia market, Charlie Thurston, the president of the Comcast Spotlight advertising unit, told investors last week. He said Comcast has more devices capable of collecting viewing information in Philadelphia than Nielsen Media Research, which has 800 of its new Local People Meters distributed among Philadelphia's 2.5 million digital-television homes (about one meter for every 3,000 homes).

“What the digital set-tops are allowing us to do is go a lot deeper in granularity, and [conduct] much more comprehensive research,” Thurston said. “We have information from all 1.2 million of those [set-tops] — a 1-to-1 ratio, as opposed to [a] 1-to-3,000 ratio with Nielsen,” he added.

While local cable companies don't have the wide reach of broadcasters, Comcast and other MSOs are hoping to use the ability to target ads to neighborhoods, individual homes and even set-tops within those homes to raise the prices for their advertising units.

Thurston cited a Forrester Research report that 71% of advertisers said they'd be willing to spend $250 or more on a CPM [cost per thousand] basis for targeted ads, which blows away Comcast's current average CPM of about $25.

Comcast chief privacy officer Gerard Lewis said the company collects viewing-habit information in aggregate, and doesn't release personally identifiable information about subscribers.

The 1984 Cable Communications Policy Act forbids cable operators from sharing personally identifiable information with third parties, and requires operators to annually notify customers about the information they collect.

Lewis said Comcast currently only monitors video-on-demand viewing habits. Although digital set-tops would allow Comcast to monitor how subscribers view linear channels like ESPN or Showtime, he said the MSO currently doesn't collect information involving linear viewing.

“All of this information is used on a non-personally identifiable aggregate, anonymous basis,” Lewis said.

Although the data Comcast collects is anonymous, some privacy advocates said Comcast and other operators should give customers the option of not having data collected from their set-tops.

“We have major concerns about these collection activities,” said John Soma, professor of law at the University of Denver, and the executive director of the Privacy Foundation.

Citing principles established by the Paris-based multinational Organization for Economic Cooperation and Development, Soma said Comcast should give customers the ability to opt in or opt out of allowing viewing habit data to be collected from their homes.

RENTRAK KNOWS VOD

In March, Comcast said it was using a Rentrak Corp. system to monitor VOD viewing on systems nationwide. About 17 million Comcast subscribers have access to VOD content.

The announcement came more than one year after Comcast had begun collecting the data from subscriber homes.

Rentrak also supplies its VOD ratings system to Cablevision Systems Corp. and Insight Communications Co., and to other major MSOs that the company has declined to identify.

Although Comcast may not be releasing the names of subscribers from households that it collects data from, Jeff Chester, the head of the Center for Digital Democracy, called it “disingenuous” for Comcast to say that it is not using personally identifiable information to target customers with individualized ads.

“The fact is they know the set-top, they know the set-top ID number. You don't have to know the name of the subscriber to know they watch Deadwood and Home and Garden [Television] network, and then run sophisticated software to create a kind of profile,” Chester said.

Thurston disclosed at Comcast's “Analyst Day” meeting last Tuesday that the MSO used its ability to track VOD usage to gauge the effectiveness of a campaign it ran for General Motors Corp.

From February 2004 through February 2005, 125,000 subscribers in Philadelphia viewed long-form VOD ads for GM cars for an average of 3 minutes and 24 seconds per view, Thurston said. The Comcast subscribers viewed the GM ads for an aggregate 425,000 minutes, Thurston added.

Philadelphia was GM's best performing market in February, as it sold 6,400 cars in the city. Thurston said the only variable in GM's advertising strategy in February in the top 25 markets was the VOD advertising in Philadelphia.

Comcast's main focus on targeted advertising the last two years has been to roll out the Adtag and Adcopy segmentation tools to 28 markets. Los Angeles cable advertising interconnect Adlink, which is party owned by Comcast, first deployed Adtag and Adcopy in 1996.

The MSO has used Adtag to allow advertisers such as United Airlines to send individualized messages to subscribers based on which town they live in. Adcopy allows advertisers such as Ford to simultaneously run multiple versions of the same commercial in a single market, pitching subscribers in the suburbs on SUVs while touting the Mustang to city dwellers.

'ADVERTISER'S DREAM'

Thurston said Comcast plans to eventually use Adtag and Adcopy to target individual subscribers. “You'll see us targeting toward neighborhood and node, and ultimately targeting the household and targeting the set-top. This really is an advertiser's dream,” he said.

As required by the 1984 Cable Act, Lewis said Comcast sends subscribers a privacy notice annually, which details how Comcast uses and shares information that is collected from their homes. The 2,700-word privacy statement Philadelphia subscribers receive was updated after Comcast began offering interactive services, Lewis said.

While the collection of data from set-tops may raise the brows of privacy advocates, Lewis noted that subscribers can benefit from the practice, since it allows Comcast to deliver programming and advertising to those who are interested.

“I think the unreported or unacknowledged benefit of a lot of this technology is that it does permit focused delivery of programming or advertising or other content without having to know, by name, who you are sending it to,” Lewis said.

CHESTER: 'BE CAREFUL'

Chester warned that Comcast and other cable and satellite providers need to be “very careful” to avoid violating the privacy of individual subscribers in their efforts to build profiles of individual homes that would allow advertisers to buy targeted ads.

Chester's CDD, which released a report on privacy concerns in 2001 that ridiculed the former AT&T Broadband, Scientific Atlanta Inc., Liberty Media Corp., TiVo Inc., Time Warner Inc., and other companies, has stepped upped its monitoring of privacy issues involving multichannel-video distributors, and may release another report this summer, Chester said.

“Clearly Comcast has to be very careful,” Chester said. “There's no question that Comcast and other cable companies will have to undergo increased scrutiny to better understand the dimensions of the privacy and data-collection issues,” Chester said.

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