Canoe Abandons Interactive TV Ship

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The cable industry’s big idea of making
national TV spots interactive just wasn’t big enough — or
simple enough — to click with Madison Avenue.

Canoe Ventures last week shut down its interactive-TV
advertising operations, closing its New York office and
throwing 120 employees out of work, including CEO Kathy
Timko. The company will be left with about 30 employees to
focus on video-on-demand ads as its sole product.

The decision to dramatically pare back Canoe’s mission
by sinking ITV advertising efforts 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 national cable TV ad inventory and
programming with interactive and targeted technologies,
to capture a bigger piece of the $70 billion spent each year
on TV advertising.

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 Channel, 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.

ADVERTISERS RETICENT

But despite Canoe’s technical achievements, advertisers did
not buy the promise of nationally delivered ITV ads in a significant way. Among the key reasons: Canoe’s reach across households
and networks simply wasn’t broad enough for the biggest
marketers, and the complexity of executing interactive campaigns
didn’t justify the additional time and expense.

Canoe launched its ITV ad product commercially 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.”

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 had served just 35.3 million interactive overlays
through September 2011, which included ads as well as trivia
and polling apps. By contrast, Comcast Spotlight delivered
more than 2.7 billion impressions to viewers to date through
September.

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 highincome
areas).

But the company scrapped Community Addressable Messaging
in mid-2009 before it was fully launched. David Verklin,
the gung-ho 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.

BIG PLANS

Canoe ramped up hiring in 2010 — roughly doubling its head
count that year, in anticipation
of the launch of the interactive-
TV products. To
accommodate the larger
staff , the company signed a
lease for 40,000 square feet
of New York office space
at 1251 Ave. of the Americas.
The office, previously
occupied by Lloyds TSB
Bank, occupied the entire
39th fl oor.

Canoe’s technical facility
in Denver is located in
space leased from the Comcast
Media Center in Centennial,
Colo.

Canoe’s employees were
notified last Wednesday
(Feb. 22) of the decision to
pull the plug on the ITV ad
business, a move that 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.”

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 yearlong
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).

Hassell asserted that Canoe’s founding MSOs are committed
to the focus on dynamic VOD advertising. Before joining
Canoe in August 2010 as senior vice president of engineering
and technical operations, he was founder and CTO of cable
technology consulting firm DigiForge, which was acquired by
Rovi last year.

“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 dynamic
ad insertion, and support dynamic ad insertion across a wide
array of devices both inside and outside the home,” he said.

SMALLER BOAT

A summary of Canoe’s actions:

Interactive TV business to be shut
down

120 employees to be laid off, leaving
about 30 for VOD ad initiatives

New York office will close; Canoe to be
based in Denver

Former CTO Joel Hassell named CEO

Senior executives departing include
(clockwise) CEO Kathy Timko, senior
VP of sales and distribution Jim Turner,
chief product officer Arthur Orduña, chief
marketing officer Vicki Lins, and GM for
interactive television solutions Jonathan
Bokor (not pictured).

SOURCE:Multichannel News research

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