March 5, 2009
Cablevision to Target Commercials by Household
Forget
the shotgun approach. Cable television operators may soon be able to offer
advertisers the ability to send messages targeted to homes that match
a specifically identified demographic.
According
to a New York Times report, Cablevision will soon be able to “route
ads” to selected homes based on a variety of predetermined criteria
including income, ethnicity, gender, children and pets. The cable system
will test the technology in half a million homes located
in Brooklyn, the Bronx and parts of New Jersey.
“We
have, as an industry, been talking about this since the beginning of time,” Matt
Seiler, the global chief executive of Universal McCann, told the Times. “Now
we’ve got it in 500,000 households. This is real.”
Cablevision
tested the concept with its own ads. The result after eight months was
that targeted messages enabled the system to sign up new subscribers for
its services at a significantly higher rate than untargeted spots.
Discussion Questions: Will the type of targeting
that will apparently be offered by Cablevision result in significantly
more advertising dollars flowing back to television? What will the potential
of this type of targeting capability mean for consumer brand marketers
and retailers?
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Every time I open my cable bill I get angry. I’ve done a lot of thinking about this whole thing. Part of the aggravation comes from the fact that I am single and paying the same fixed costs as a household of 10. The other factor is that the bill usually shows up with the shortest lead time. Now we’re learning of the plans to use their knowledge of my viewing habits to make even more money.
Since my background is with technology, there is a very interesting perspective of the planned switch to digital broadcast TV. Once the switch is complete, broadcast signals will be filterable by individually receivers. That means subscription fees can be sold directly to consumers, eliminating the terrestrial lines all together. This disintermediation of cable (and phone) companies would come just in time for me. The problem is, there is probably some kind of restriction a lobbyist added to the digital conversion that will make what is technically feasible illegal to implement.
There is no doubt that the better you can target advertising, the greater its effectiveness. The possible positive (for me) out of all this is that broadcasters will be able to charge more for fewer high quality impressions. Maybe that will reduce the number of commercials I have skip over….
This is great news–and in light of tech & web advances, seemingly overdue. We are seeing that families, indeed nearly everyone, are watching more hours of TV during the recession. In some sense, they are a captive audience, captive in their homes weathering the economic storm.
Targeting demographics with cable will attract enough dollars to bridge the gap between the the old world of mushy-measure TV advertising and the brave new world of digital convergence. Digital convergence metrics will be scary-detailed. Maybe not at first, but certainly down the road.
I’m not sure whether this will translate into significant gains in revenue until marketers see more sales results on more targeted ad dollars. But the concept makes a lot of sense: Digital technology has long been exploited by online marketers (Amazon may be the best example). Data warehousing of consumer shopping and “surfing” preferences allow e-commerce practitioners to target pop-up ads to their most likely audience.
I’m sure it’s a more complex process for cable operators to track channel-viewing data, but I’m also sure it can be done. This development might actually help combat the viewer’s ability to “TiVo” past intrusive ads, if the commercials actually speak to her needs and interests.
This is much less interesting than if they were targeting based on consumption. While there are some businesses that are tied to demographics, they are few and far between, at least in the CPG arena.
Whether this means an increase in ad revenue probably depends on the rate card.
There is one school of thought that would argue that although this presents a more focused advertising vehicle, that it will actually result in fewer advertising dollars being spent, since so many dollars are probably wasted on the wrong audience. Now that advertisers can better tailor their ads, they will only want to maximize their ad dollar’s effectiveness, and thus will not spend as much money to get the desired result.
Department store pioneer John Wanamaker is reported to have said that half his advertising was wasted, but complained that he didn’t know which half it was. With targeted advertising on cable, he would have not only been able to tell which half was being wasted, but would have also been able to reschedule it to reach the right audience.
We can expect the privacy tug-of-war to continue; this is too seductive a tool for advertisers to ignore, especially in a downturn.
The test of advertising effectiveness is Relevance, Reward and Relationship. I am not sure the advertising community will be able to meet these tests with the new Cablevision offering. In the end, advertisers will know the lifestyle, hobbies, and purchasing behavior of the households served by the cable company.
This offers a tremendous opportunity for brands. They will be able to offer specific products to specific households.
This should attract the attention of advertisers, but it will not result in an immediate, large increase in advertising dollars to TV. The economy will have to turn around for that to happen. When the economy does turn around, and it will, Cablevision will be well positioned to garner those advertising dollars.
I’m sure this will lead to positive results, but the real “holy grail” will be when consumers can seek out information on the products and services for which they are in the market at the present moment. Hey, I think we already have that: it’s called the internet! Just another argument for the integrated retailing imperative.
Retailers have been focusing on specific cultural demographics for years, why not cable companies? Customers are always more apt to spend within their own cultural marketplace. If I offer a product or service to a specific group and my advertising vehicle can actually pinpoint and send my ad to that specific group, I would sign up in a heartbeat. Retailers know the opportunities in catering to the local marketplace. This could be an excellent tool for smaller retailers to get the message out.
This is, or should be, only the first step in cable companies increasing their ability to deliver ads in a more relevant way to their subscribers and in turn make advertisers’ schedules more effective.
The limitation is that it’s still only targeting based on demographics, like much of cable and broadcast advertising, aka “spray and pray.”
When cable companies really start figuring out who their customers are, getting them opted in and really using the capabilities of digital set-top-box addressability, they will see new marketing dollars.
Cablevision needs to worry about keeping their customers and keeping them happy first. Their customer service is absolutely the worst. They are the last to offer expanded channel selections (usually four or more years after everyone else), new cablebox features (again usually years after everyone else) and are very poor when it comes to crediting customers due to service blackouts.
I just received yet another increase notice from them. Needless to say, I will be switching to either Verizon Fios or satellite service prior to the rate increase scheduled to go into effect next month. I’ve had enough!
And, I am so sick of seeing all of the Cablevision commercials!!!
Cablevision follows in the footsteps of COX, which brought out the platform that allowed demographic targeting years ago. Our firm was one of the first to create an effective, quantifiable model, and we did it for retail. We used it for over four years and found it to be a sensational tool that allowed us to have instant information about the target on a continual basis, not only what the target was viewing but where they went on a daily basis for news, information and entertainment. LBC’s “Project Digital” through COX in Phoenix, not only was a source of information to the consumer but drove in traffic to the retailer’s website(s) and most important, into the retail store(s) at an increasing rate. This resulted in increased same store sales over that period.
While we applaud Cablevision for their initiative, COX must be singled out as the cable company which brought this to our industry first and supported it with continued enthusiasm, dedication and knowledgeable muscle.
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Every time I open my cable bill I get angry. I’ve done a lot of thinking about this whole thing. Part of the aggravation comes from the fact that I am single and paying the same fixed costs as a household of 10. The other factor is that the bill usually shows up with the shortest lead time. Now we’re learning of the plans to use their knowledge of my viewing habits to make even more money.
Since my background is with technology, there is a very interesting perspective of the planned switch to digital broadcast TV. Once the switch is complete, broadcast signals will be filterable by individually receivers. That means subscription fees can be sold directly to consumers, eliminating the terrestrial lines all together. This disintermediation of cable (and phone) companies would come just in time for me. The problem is, there is probably some kind of restriction a lobbyist added to the digital conversion that will make what is technically feasible illegal to implement.
There is no doubt that the better you can target advertising, the greater its effectiveness. The possible positive (for me) out of all this is that broadcasters will be able to charge more for fewer high quality impressions. Maybe that will reduce the number of commercials I have skip over….
This is great news–and in light of tech & web advances, seemingly overdue. We are seeing that families, indeed nearly everyone, are watching more hours of TV during the recession. In some sense, they are a captive audience, captive in their homes weathering the economic storm.
Targeting demographics with cable will attract enough dollars to bridge the gap between the the old world of mushy-measure TV advertising and the brave new world of digital convergence. Digital convergence metrics will be scary-detailed. Maybe not at first, but certainly down the road.
I’m not sure whether this will translate into significant gains in revenue until marketers see more sales results on more targeted ad dollars. But the concept makes a lot of sense: Digital technology has long been exploited by online marketers (Amazon may be the best example). Data warehousing of consumer shopping and “surfing” preferences allow e-commerce practitioners to target pop-up ads to their most likely audience.
I’m sure it’s a more complex process for cable operators to track channel-viewing data, but I’m also sure it can be done. This development might actually help combat the viewer’s ability to “TiVo” past intrusive ads, if the commercials actually speak to her needs and interests.
This is much less interesting than if they were targeting based on consumption. While there are some businesses that are tied to demographics, they are few and far between, at least in the CPG arena.
Whether this means an increase in ad revenue probably depends on the rate card.
There is one school of thought that would argue that although this presents a more focused advertising vehicle, that it will actually result in fewer advertising dollars being spent, since so many dollars are probably wasted on the wrong audience. Now that advertisers can better tailor their ads, they will only want to maximize their ad dollar’s effectiveness, and thus will not spend as much money to get the desired result.
Department store pioneer John Wanamaker is reported to have said that half his advertising was wasted, but complained that he didn’t know which half it was. With targeted advertising on cable, he would have not only been able to tell which half was being wasted, but would have also been able to reschedule it to reach the right audience.
We can expect the privacy tug-of-war to continue; this is too seductive a tool for advertisers to ignore, especially in a downturn.
The test of advertising effectiveness is Relevance, Reward and Relationship. I am not sure the advertising community will be able to meet these tests with the new Cablevision offering. In the end, advertisers will know the lifestyle, hobbies, and purchasing behavior of the households served by the cable company.
This offers a tremendous opportunity for brands. They will be able to offer specific products to specific households.
This should attract the attention of advertisers, but it will not result in an immediate, large increase in advertising dollars to TV. The economy will have to turn around for that to happen. When the economy does turn around, and it will, Cablevision will be well positioned to garner those advertising dollars.
I’m sure this will lead to positive results, but the real “holy grail” will be when consumers can seek out information on the products and services for which they are in the market at the present moment. Hey, I think we already have that: it’s called the internet! Just another argument for the integrated retailing imperative.
Retailers have been focusing on specific cultural demographics for years, why not cable companies? Customers are always more apt to spend within their own cultural marketplace. If I offer a product or service to a specific group and my advertising vehicle can actually pinpoint and send my ad to that specific group, I would sign up in a heartbeat. Retailers know the opportunities in catering to the local marketplace. This could be an excellent tool for smaller retailers to get the message out.
This is, or should be, only the first step in cable companies increasing their ability to deliver ads in a more relevant way to their subscribers and in turn make advertisers’ schedules more effective.
The limitation is that it’s still only targeting based on demographics, like much of cable and broadcast advertising, aka “spray and pray.”
When cable companies really start figuring out who their customers are, getting them opted in and really using the capabilities of digital set-top-box addressability, they will see new marketing dollars.
Cablevision needs to worry about keeping their customers and keeping them happy first. Their customer service is absolutely the worst. They are the last to offer expanded channel selections (usually four or more years after everyone else), new cablebox features (again usually years after everyone else) and are very poor when it comes to crediting customers due to service blackouts.
I just received yet another increase notice from them. Needless to say, I will be switching to either Verizon Fios or satellite service prior to the rate increase scheduled to go into effect next month. I’ve had enough!
And, I am so sick of seeing all of the Cablevision commercials!!!
Cablevision follows in the footsteps of COX, which brought out the platform that allowed demographic targeting years ago. Our firm was one of the first to create an effective, quantifiable model, and we did it for retail. We used it for over four years and found it to be a sensational tool that allowed us to have instant information about the target on a continual basis, not only what the target was viewing but where they went on a daily basis for news, information and entertainment. LBC’s “Project Digital” through COX in Phoenix, not only was a source of information to the consumer but drove in traffic to the retailer’s website(s) and most important, into the retail store(s) at an increasing rate. This resulted in increased same store sales over that period.
While we applaud Cablevision for their initiative, COX must be singled out as the cable company which brought this to our industry first and supported it with continued enthusiasm, dedication and knowledgeable muscle.