Targeted advertising could offer new value

The traditional model of advertising is slowly beginning to give way to addressable ads that viewers want to see — at least this is the logic behind service providers' targeted ad platforms.

“Thanks to IP and IPTV, the ads that are going to be presented to you watching shows hopefully won't be intrusions to be avoided but relevant to you because we know your fragment, your niche; we know something about you,” said Ralph de la Vega, CEO of AT&T Mobility, to NewTeeVee Live conference attendees.

The latest service provider to get on board is SES Americom's IP-Prime, which recently selected Packet Vision's addressable advertising solution for its small, rural carrier customers to generate revenue through the insertion of targeted local ads.

Packet Vision is still in the first stage of what Richard George, general manager of North America for Packet Vision, calls a three-stage strategy. The company is focusing initially on getting local ads into both local and national programming. Stage two will bring in the targeted component, and stage three — which is still awhile out, he said — will add interactivity and targeting on a national level.

“Generally, to get into the basic local ad insertion game, it requires significant capex,” George said. “We expect that as we contemplate offering the local operator the opportunity to segment and slice and dice the audience, there is a premium to that.”

The process starts at the headend for local ad inserts, but can be moved to each individual set-top box (STB) when addressability and interactivity come into play, said Ray Bontempi, product management director for Motorola's home and networks mobility group. Motorola offers technology to splice ads in at the STB or stream them back into the headend.

Packet Vision, whose technology is designed for deployment in the headend, isn't the only company taking it one phase at a time. The feeling among analysts and companies in the industry is that the market is not yet ready for a full-blown targeted advertising movement. Mike Kirstein, co-founder of Multimedia Intelligence, said that targeted ads show significant promise, noting that 80% of ad revenue would be funneled back to the operator, but that the market is still very theoretical.

“It is [a market] with all the potential to be very significant and one that is still probably a year to three years before it really starts to see some big impact,” Kirstein said.