Notes from Digital Hollywood: Will Behaviorally Targeted Advertising Come to TV?
Santa Monica, California: Panelists at this Fall's Digital Hollywood agreed that a massive sea-change is about to occur in advertising. There are now "three platforms" -- TV, Internet and mobile -- that are delivering audio-visual content. According to some estimates, Internet media are getting up to 40% of the total share of the eyeball time devoted to media -- and an increasingly greater share of the younger users coveted by advertisers. However, traditional TV still gets 90% of the advertising dollars. This kind of imbalance obviously cannot go on forever.
To compete for a greater share of ad dollars, one strategy used by digital media is to offer advertising that is targeted to the characteristics of individual users. Internet sites are able to provide identification, demographic, browsing, shopping, downloading, and other information about each user and then enable advertisers to deliver ads that are directly targeted to the user's specific interests and needs. Internet sites are now also able to listen in to users' email, Facebook or Twitter conversations, and offer advertising on a real-time basis that is relevant to these discussions -- as well as to each participant's profile.
While these efforts have yet to open up the floodgates of ad money to Internet ads, most people in TV and digital media believe that the flood will come. Since the gross quantity of dollars available for ads is static, these dollars will come from TV ad budgets. This means that TV will have to respond by providing data-enriched content to viewers, and the opportunity for TV advertisers to do more refined ad targeting.
The Jacked solution to targeted content and advertising
A technology that is already here is offered by Jacked. According to its CEO, Bryan Biniak, a Digital Hollywood panelist, Jacked creates web sites that deliver parallel "enriched" content to TV viewers. This content tracks along with a TV broadcast and offers information and advertising that relate in real time to the events on the screen. For example, if a TV viewer is watching a sports program, the Jacked program can present detailed statistical information about the particular team member who has just made a play. It can also provide the viewer with the local (biased) play-by-play radio or TV broadcast, instead of the neutral national play-by-play -- just what the true fan wants!
Jacked can also offer targeted advertising in a variety of forms. It can target ads to the individual scenes in a TV program. So if the actors in a romantic comedy start talking about buying a house, it can deliver real estate sales ads. (Jacked does this by pulling information from the closed captioning for the broadcast). Jacked can also target ads to the geographic region in which the user resides.
To create its enriched "second screen" experience and targeted ads, Jacked draws on available information from multiple platforms, including relevant websites, news sites, closed captioning data, etc. Because Jacked advertising is keyed to the content being delivered on the parallel TV screen, it offers a true form of targeted advertising -- but a form that avoids many of the privacy concerns caused by behavioral targeting, per se.
Behaviorally targeted advertising for TV
User browsing data is currently available for both Internet and cable TV usage. Digital media companies regularly use browsing data for individually targeted advertising. A company (like Jacked) could employ Internet user browsing data to behaviorally target ads delivered over the Internet during a parallel TV broadcast. However, according to another Digital Hollywood panelist, John Hoctor, Director of Microsoft's Navic division, cable TV is currently unable to use its TV browsing data to deliver individually targeted ads delivered over cable TV.
According to Hoctor, individual targeting of TV ads runs into difficulties with the "laws of physics", i.e., problems with bandwidth. The cable industry is currently working on standards that will permit individualized ads, as well as video on demand. However, a recent press release from Cable Labs indicates that this work is still incomplete. Hoctor suggested that individual targeting could also be achieved by using pre-downloads of ads to hard drives in user set-top boxes, although this solution presents its own difficulties.
One reason that technologies that could deliver individually targeted or "fractionalized" ads are moving slowly is that cable TV companies believe that they will cause more problems than they are worth. If individualized advertising were available, the result could be that advertisers would insist on only buying the specific audience they desire -- thus reducing overall ad buys. Cable TV operators would be crazy to create a technology that would reduce their current revenue streams. Of course, this could all change quickly if the tide of ad dollars begins to shift to the Internet, as predicted.
This does not mean that no use is being made of the TV browsing history currently available. According to John Hoctor, instead of being used for individual targeting, it is being used for sophisticated analyses of overall viewer habits -- as a sort of "demographics plus" to give advertisers a greater understanding of the audience that is tuning in for a particular show.
David D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.
