The economy is heading into sub-zero territory. But to hear Canoe Ventures CEO David Verklin tell it, it’s an opportunistic time for the cable industry to launch its national advanced-advertising flotilla.
Verklin — the former head of ad agency Aegis Media Americas, who officially started at the venture formed by the six biggest MSOs on Aug. 4 — said an economic downturn could make cable more attractive by increasing the effectiveness of TV ads.
“In my mind, we can use this very challenging economic time to bring change to linear television advertising,” he said, speaking on the CEO panel last Tuesday at the CTAM Summit ’08 here, claiming that advertiser interest in Canoe has grown to a “ridiculous level” in his three months on the job.
Canoe’s three main product areas will be addressability, interactivity and data. The New York company wants to be a service bureau for cable networks and their advertisers to place and track targeted and interactive-TV spots across multiple cable systems — but will not sell ads itself, Canoe executives stressed.
First out will be viewership data, derived from cable set tops in 32 million households, Verklin said. “One of the first things we must do is bring set-top data into the marketplace and make that the currency,” he said.
Interactive products will be next, and Verklin said Canoe believes it can deliver a “large-scale deployment” within 12 months of a service that allows viewers to request more information from a TV advertiser.
Also on Canoe’s road map is “t-commerce,” or selling goods via a TV portal. “We’ve been approached by L.L. Bean and other direct marketers who can’t wait to see television turn into a transactional medium,” he said.
Canoe has real potential to boost the value of cable advertising, Discovery Communications CEO David Zaslav said on the same panel. “Cable has the benefit of being in the sweet spot for advertising,” he said. “Well, we could be an even better value if we had interactive ads … If we can get another 10%, that’s more money for all of us and we just have to figure out how to share that.”
The idea is to bring the kind of ad-targeting and measurability found in the Web universe to cable television. But “we don’t want it to be 'just like the Internet.’ We want it to be better and different,” Canoe chief marketing officer Vicki Lins said in a separate presentation before a standing-room-only audience at the CTAM Summit.
For Canoe to hit critical mass, it needs the ability to deliver addressable ads to at least 10 million set-top boxes, said John Collins, Canoe’s vice president of product development, who estimated reaching that goal could take 18 to 24 months.
Before Canoe hits the “holy grail” of fully addressable advertising, it plans to introduce smaller product launches.
One of the first “baby steps” is creative versioning, which will be tested in the next 60 to 90 days, said Collins. Creative versioning allows programmers to extend MSOs’ ad zones to their own advertisers, all off a national spot.
Another Canoe-related project was Elections ’08, which placed political video-on-demand spots across nine MSOs. The service was characterized as a disappointment in some press coverage, but Lins said it met MSOs’ expectations.
“What we accomplished was control, ubiquity and management across the cable footprint,” Lins said. “We got our act together from a technology perspective.”
The company was formed by Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems and Bright House Networks, which collectively serve more than 53 million cable-television subscribers.
The venture hopes to work with satellite and telco TV operators eventually as well. “Canoe starts with six MSOs, but the reach can be beyond that,” said Collins, who previously was group vice president of advanced advertising technologies for Time Warner Cable. “The cable operators had to become comfortable with reaching out into other distribution platforms.”
While the big pieces of the strategy are in place, some specific services and technologies from Canoe have yet to be determined. “We can’t be all things to all people,” Lins said. “In the next seven months, we’ll define what we are and what we’ll be to the industry.”
Canoe’s technology platform — called the Common Advanced Advertising System (CAAS) — will be based on best-of-breed components from multiple vendors. Collins noted that the MSOs behind Canoe issued a request for information last September to 60 companies and got a response from 55.
The CAAS platform will be based on standardized interfaces, and will not specify proprietary vendor equipment. “You don’t tell an MSO what to buy,” he said. “Canoe won’t do that.”
Canoe will use standards developed by CableLabs, such as the Enhanced TV Binary Interchange Format (EBIF), and it will have to create some standards on its own, according to Collins. “The only way we can achieve scale and reach is with those standards. We have to see that the cable operators adhere to those standards.”
The venture is looking at a variety of pricing models. And yes, it’s a for-profit venture, Collins said: “We’re in this to make money.”
According to Lins, Verklin has forbidden anyone at Canoe from talking about making cable advertising more efficient (i.e., implying a net decrease in ad spending). The correct phrasing: “We’re making cable advertising more effective.”