Marketers who've tried to dabble in interactive TV advertising have faced plenty of hurdles up to now. "The main challenge for us is that you're dealing with so many (different cable and satellite operators) and technologies," says Jon Stimmel, Unilever's director of media investment and partnerships.
Prior to the joint venture, "Each of the cable operators has … worked to develop their own advertising applications," says David Porter, head of marketing and new media at Cox. "We each used different technologies and different standards."
With Canoe Ventures, cable operators hope to be part of a solution, instead of the problem.
"We decided to come together as an industry coalition of cable operations and agree on some common protocol," Porter says.
Canoe Ventures will not sell ads, says spokeswoman Vicki Lins. Rather it will sell the interactive technology through its members to programmers such as ESPN and CBS and to ad agencies. They then can use it with buyers interested in interactive ads.
Cable operators may also use it for buyers of their ad time. They typically get two to three minutes to sell in each hour of programming on networks they carry.
Digital cable boxes drive trend
Helping fuel interest in interactive ads is the fact that about 60% of cable customers — some 38 million homes — now have digital cable boxes that provide the two-way cable communication needed for interactive TV, according to National Cable & Telecommunications Association.
"Interactive television was the wave of the future," says Barry Frey, senior vice president of Cablevision's advanced platform sales, but it's become "the wave of now."
Early results indicate interactive TV can sometimes even best the Web in responses to ads. Average rates of clicking on interactive TV ads can range from 3% to 6%, says Jacqueline Corbelli, CEO of BrightLine iTV Marketing Specialists, which designs interactive TV campaigns. Internet click rates often average less than 1%.
With numbers like that, pay TV operators and networks could grab a slice of the double-digit ad spending increases that the Web is reaping. Spending in 2007 on Internet display ads alone rose 15.9% over 2006 to $11.3 billion, according to TNS Media Intelligence. And that does not include lucrative paid search or Internet video advertising. Meanwhile, cable ad spending rose 6.5% to $17.8 billion.
What about viewers' privacy?
Trying to gain sales by mimicking Web ad attributes also, however, comes with pitfalls for TV providers. Ad targeting via interactive TV has raised privacy questions, because it involves use of personal data kept on subscribers — such as street address, phone number, e-mail address or payment record. TV providers also can track exactly what people watch and when.
Industry executives stress that they will give advertisers only aggregate and anonymous data. "We don't want anyone to think that Big Brother is going to be monitoring what (consumers) do through their set-top box," says Canoe Ventures' Lins. "Consumers and subscribers shouldn't feel threatened."
Lots of campaigns in the works
More details of some campaigns: