DirecTV has signed a deal to use ad-insertion technology from Invidi Technologies that will let the satellite TV operator for the first time deliver different local ad spots to individual subscriber households.
Currently, DirecTV is working to integrate the Invidi software with its digital video recorder receivers and is aiming to launch the local ad capability in January 2011, said Bob Riordan, DirecTV senior vice president of national advertising and sales.
"It's a tremendous engineering challenge and we have every confidence that this will happen. But there's no short solution to this," he said. "You can't be half-pregnant with this technology."
Dish Network announced a similar agreement with Invidi last fall. The two satellite companies together represent some 31 million set-top boxes, according to Invidi executive vice president Michael Kubin. "We hope there will be a standard everybody works off of, which will make it easier for one advertiser to work across all distributors," he said.
Invidi also has been working in an addressable-ad trial with Comcast, in the MSO's Baltimore market. "Our technology is intended to be platform-agnostic," Kubin said. "We've been speaking with everyone -- satellite, telcos and cable MSOs -- since the beginning."
Today DirecTV can only sell advertising across its national footprint. Using Invidi's technology, the satellite company would be able to serve individual TV commercials dynamically by region, ZIP code, designated market area (DMA) - or even by subdivision, neighborhood, political district, street or individual household.
"At this point we're a national advertising play," Riordan said. "This lets us for the first time deliver a local advertising solution."
The various TV spots, sold in the local inventory available to DirecTV, will be delivered via satellite to subscribers' DVRs. The Invidi software then determines based on various factors which ad to serve in a given time slot.
Riordan said that by the time DirecTV launches local advertising, more than half of the operator's subscribers will have DVRs in their home, representing somewhere around 20 million boxes.
As for privacy concerns, DirecTV is "highly sensitive to the privacy of our subscribers," Riordan said, noting that targeted ads would be delivered based on anonymized data. "This is a noninvasive platform," he said.
DirecTV plans to overlay geographic information from subscriber set-top boxes with "reputable" third-party demographic data, according to Riordan, to allow marketers to target ads to specific demographic profiles. "It will take such waste out of advertising," he said. "I'll be getting a Ford commercial, but a household with a 21-year-old may be getting a Jetta commercial."
Initially, the satellite TV operator expects to offer 25% or less of its available inventory for local, targeted ads, Riordan said. Other details of the business model are "also under discussion," he said, such as whether different advertisers would be able to buy the same avail in different markets.
Invidi, founded in 2000, has received funding from ad agency GroupM, which is a subsidiary of WPP, as well as Motorola, Menlo Ventures, InterWest Partners and EnerTech Capital.
"Individual household advertising solutions have for decades been the holy grail of marketers and media professionals," GroupM CEO Irwin Gotlieb said in a statement. "We hope this is an early step in the establishment of a common ecosystem for the television industry's delivery of advanced advertising products."
On the cable front, Canoe Ventures - a consortium of the U.S.'s six biggest MSOs - is working toward delivering Community Addressable Messaging, a service that initially would allow advertisers to show a different version of an ad to viewers in high-income areas. Rainbow Media's AMC is currently testing that service with Canoe.
Separately, Cablevision Systems this summer is expanding its addressable-advertising capabilities to deliver TV spots based on an individual subscriber's demographic data to some 500,000 households across the New York metro area, using technology from Visible World.