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DirecTV's Personalized Ads Guarantee Wall-to-Wall Cat Commercials (If You're a Cat Owner)

by Amar Toor on December 21, 2010 at 10:16 AM

directv logoTargeted advertising is all over the Internet. Soon, it might be all over our televisions, too.

As the Wall Street Journal reports, DirecTV is planning to launch, next year, a targeted TV ad service, which would feed personalized commercials to nearly 10 million homes. These so-called 'addressable ads' would be tailored to the demographics of each home. Dog owners, for example, would receive commercials for dog food, while cat owners would be targeted by kitty litter ads.

To operate the service, DirecTV struck a deal with Starcom MediaVest, a company that buys commercial air time for companies like Coca-Cola and Proctor & Gamble. And, while the concept of personalized TV ads may seem mildly invasive to some, preliminary studies produced encouraging results. A 2009 report from Starcom and Comcast, for example, found that viewers who received targeted ads changed the channel 32-percent less often than those who received non-targeted commercials. "We are finally at the tipping point," said Starcom chief executive Laura Desmond. "Advertisers' biggest complaint so far has been that many tests of this service haven't been big enough in terms of scale."

Under DirecTV's program, individual advertisers would have to specify which demographic they're targeting. DirecTV will then contact third-party data providers, and ask them to find subscribers who fit the bill. The data that these providers use could range from the generic (income and gender), to the specific (whether or not a couple recently had a baby, or whether or not a household purchased a specific item).

One piece of information that they won't use, however, is a household's viewing habits. The company also insists that all demographic information will be encrypted, meaning that DirecTV will never be able to match a household to a specific profile. The data, moreover, will be collected from "reputable third-parties," and customers will always have the choice to opt-out of the program if they're uncomfortable with it.

Other cable operators, including Comcast, Time Warner Cable and other companies under the Canoe Ventures consortium, have entertained thoughts of a targeted ad program, but have delayed the launch, due in large part to outdated infrastructure. And, although some individual operators have begun rolling out similar services in certain markets, DirecTV's initiative would be the first to encompass such a broad section of viewers.

But Bank of America analyst Jessica Reif Cohen thinks it's only a matter of time before cable providers catch on, and estimates that the addressable ad market will reach a value of $11.5 billion by 2015. "We believe the U.S. television industry is finally on the cusp of transforming advanced advertising into meaningful reality," Cohen wrote in a letter to investors. She admitted, though, that televised targeted advertising "is still a few years away from wide-scale deployment."

Tags: advertising, commercial, DirecTV, marketing, personalized, privacy, TargetedAdvertising, top, tv

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