Customer Service

TiVo Service Helps Customers Find Ads

6/02/2006 8:00 PM Eastern

There have been mutterings among programmers and advertisers that ad-skipping digital video recorders will sink the TV commercial, but TiVo Inc. is positioning a new technology and service as a sort of life preserver to keep revenue afloat.

With its ability to track each click of a viewer’s remote, TiVo argues its new on-demand Product Watch may actually help make DVRs add up for advertisers. The service lets advertisers target willing customers and gather more detailed information about overall viewing habits.

300 ADS IN STORE

Launched in May, Product Watch has so far built up a library of about 300 on-demand ads from 70 advertisers representing 100 brand-name products, all sorted into product categories for automotive, entertainment, financial, lifestyles and travel and leisure.

Initial advertisers include General Motors Corp., Sony Pictures, Lending Tree and Kraft Foods.

Much of TiVo’s sales come from television viewers who want to skip ads, so offering up on-demand advertising might seem counterintuitive.

But Davina Kent, TiVo’s vice president of national ad sales, argues it is more a case of offering viewers more of the content they want: ads that appeal to them.

TiVo’s customer research indicates that about 10% of viewers will tap an ad if they can decide when they want to watch it. So if TiVo can come up with a system that lets them pre-select what products they want to see, “we could deliver them the advertising, based on whatever product they were in the market for,” Kent said.

At the core of Product Watch is a search-engine function that lets customers hunt for ads just as they would TV video content. Using search-engine software built into the TiVo main menu, viewers can flag products of interest ahead of time. For example, a user looking for a car can set up the search to hunt for specific makes and models. The TiVo servers can then pull up ads that fit that criteria and download them into the “Now Playing” section of their TiVo user guide.

INTERACTIVE TAGS

Viewers also can find the commercial content via interactive tags embedded on linear TV spots. Links in the tags lead to the Product Watch showcase page, where viewers can see the product list and set up automatic ad downloads.

The idea of a search engine-based ad service does fit with consumer trends, according to David Savage, executive vice president of Cmedia. A media-buying firm for direct marketers, with clients mostly in the health-and-fitness and entertainment sectors, Cmedia has been involved in on-demand advertising trials with TiVo Inc.

“There is no question that we are becoming a search-engine society,” Savage noted. “Obviously, for most consumers, it is on the Internet, but as people come to know they can control their own destiny, in terms of what they want to view or watch, I think it is important that our clients be in the mix in terms of being available to consumers on the TV platform, and video on demand. We want our clients to be there.”

TiVo also offers more detailed, second-by-second information on how users are watching ads. Because it tracks every click of a user’s remote control — while stripping out actual names and addresses to protect customer privacy — the TiVo service can give advertisers information on what ads they watched, whether they fast-forwarded through certain items or rewound them, and how long they spent viewing the spots.

“It’s a lot of data that can really help the advertiser to break down the campaign, which is very unique to TiVo,” Kent said.

That is in fact a major selling point for Cmedia’s clients, Savage said.

“It’s totally trackable, which is what is encouraging to us and what we care about most,” Savage said. “For us there is more accountability there, there is more measurability there, and that’s what our clients expect in direct response.”

Adi Kishore, director of analyst firm Yankee Group’s media and entertainment strategies decision service, noted that TiVo is no stranger to the advertising space. It provided its subscribers with movie trailers for Austin Powers in Goldmember, as well as promotions with retail juggernaut Best Buy and luxury sedan maker Lexus. TiVo’s ad-measurement technology was a key reason Comcast Corp. struck a pact to create a TiVo cable set-top box.

“There has been a lot of rumbling about the limitations of ratings-based ad measurement and they want something that is a little more specific,” Kishore said. “And TiVo can give it to them. They can tell you not an estimate of who was watching a show at the time your commercial played, but can actually tell you if anyone actually clicked and chose to watch your commercial.”

TiVo’s 4.4 million subscribers base might fall short of a mass-market case study, but many advertisers will see Product Watch as a useful education on viewer response to on-demand ads, Kishore said.

“If you are looking at innovating television advertising approaches either on VOD or even on broadband — if you are looking at broadband video downloads — this is kind of interesting from that point of view. You are going to get data that is closer to that environment than anything else.”

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