Verizon Communications plans to launch a television ad-sales operation in the first half of 2007 and has hired a former MTV Networks sales executive to run it.
The telephone company, which launched its first television service, FiOS TV, in September 2005, hired former MTVN vice president of affiliate advertising sales and marketing Jason Malamud. His task: To help Verizon grab a piece of the $60 billion spent each year on television advertising.
Of that $60 billion, $15.7 billion went to cable networks and spot TV in the first six months of this year, according to TNS Media Intelligence. Verizon will most directly compete with cable-television system operators for local ad dollars.
But Verizon's ambitions extend to regional and national advertising, as well.
The phone company's effort is a try at turning television advertising into a “direct marketer's dream,” according to Malamud. The initiative will take advantage of the data collected in TV set-top boxes on when viewers join and leave programs, in order to give clients a precise understanding of viewership in its systems.
“If we become a full-fledged member of the Direct Marketing Association,” he said, then the effort can be considered “a viable success.''
That's a ways off. Verizon only had 118,000 TV customers at the end of September, but expects to be past 6 million potential customers with a high-capacity fiber network by the end of this year; and 18 million by the end of 2010.
Turning TV into a direct marketer's medium is only one piece of Malamud's plan. He also intends to experiment with advanced, interactive technologies to find new ways of delivering advertising on television networks; and to take advantage of Verizon's technically advanced network, which takes fiber right to the side of customers' homes. That means Verizon is attaching more bandwidth to those homes than cable operators.
“We have a platform that lends itself to taking advantage of applications, that people in the industry have been talking about for a long time,” Malamud said.
Done right, he believes Verizon will be able to tie advertising on conventional TV programs with libraries of commercial material available on demand; and deliver more data on viewing habits and TV transactions to advertisers than has been possible, to date.
Malamud began working at Verizon after the July 4 weekend; the company will announce his appointment as vice president and general manager of Verizon FiOS Media this week. He will be responsible for selling advertising into television, on-demand videos and broadband series.
The Verizon ad-sales team will be small. Currently, Malamud is looking to hire two corporate ad-sales managers, one of which will be assigned to analyze business opportunities.
Later, towards spring, he is likely to hire two more managers to work with advertising-representation firms that will actually handle local and regional sales efforts for Verizon. It will rely on these third parties to sell the ads, track them and bill advertisers.
The company is installing local ad-insertion equipment at video hubs in each market it serves.
National ads will also be trafficked and billed by third parties. However, Verizon will be trying to find partners among national advertisers who are interested in experimenting with new forms of promoting their brands and products on digital television systems.
At MTVN, for instance, Malamud used Intellispot technology from a software firm called Visible World, which allowed different sponsors in different parts of the country to be identified on spots promoting the MTV Video Music Awards. The technology allows openings, offers, taglines and other features of TV ads to be altered for different viewers.
“I would like to be the platform of choice for progressive national advertisers who want to test tomorrow's television today,” said Malamud, who was responsible for working with affiliates on ad sales involving VH1, Nickelodeon, Comedy Central, BET, Logo and other MTV networks.
Malamud said he didn't necessarily have to take a disproportional amount of advertising from cable in order for Verizon to succeed.
He contends that Verizon could lead a change in how television advertising itself is executed, making the overall take — the pie — much bigger.
“If it becomes more engaging and accountable, then I would expect more money to flow into TV advertising,” he said. “And I would get a disproportional share of that.”
In the first half of this year, the two advertising vehicles growing the fastest were Spanish-language media, up 20.5% to $2.4 billion worth of ads purchased; and the Internet, up 18.9%, to $4.7 billion, according to TNS.
Making TV a “direct marketer's dream” would mean Verizon would be trying to take dollars from the Internet, where an advertiser may only be charged when a viewer directly clicks on an ad.