A company that delivers targeted ads to television sets has scored another endorsement.
NBC Universal plans to announce Tuesday an investment in Invidi Technologies Corp., according to the companies. Terms of the deal aren’t being disclosed. A NBC Universal spokeswoman called the investment “small.”
Google, Motorola and WPP’s GroupM are already investors in Invidi, which targets ads to set-top boxes based on the geographic location of the box and other data.
Ed Swindler, executive vice president and chief operating officer for ad sales at NBC Universal, said the company made the investment to be able to test future advertising models. “We would anticipate doing some testing as soon as it becomes possible,” he says, adding NBC hadn’t worked out any details.
The promise of the technology is big: allowing advertisers to show multiple ads during the same commercial slot. It is the kind of targeting that Internet companies continue to brag they can pull off online but hasn’t been possible in the TV world.
Invidi, along with other technologies companies like Visible World, are trying to change that. But progress has been slow. Invidi was founded ten years ago and has raised around $90 million in financing to date.
Its system works like this: Advertisers specify which audiences they want to reach, like women in the market for a car; then Invidi serves their ad to the set-top boxes of people it believes are likely female car buyers. Invidi can target ads according to gender and age inferred from data about the types of viewers who generally watch a show, without knowing what the show is.
Advertisers can also target users – say customers who have purchased their products recently — based on household purchase behavior from third-party databases. In those instances, television operators permit the data provider to program the set-top box with data specific to each household, like whether there’s a pet in the household or the family frequently travels. When it’s time to run ads, the box “votes” for the most appropriate ad based on how it has been programmed as well as factors such as the time left in the advertisers’ campaign. Invidi doesn’t see the data.
If a commercial slot is a pizza, Invidi can “take that pizza and slice it up in very very small slices,” says Michael Kubin, Invidi’s executive vice president.
The company has landed a few partnerships. Verizon’s FiOS TV service began targeting ads to specific geographic zones through Invidi in March and Dish and DirecTV are planning to start selling Invidi-targeted ads in the first quarter of 2010, Kubin says.
NBC’s investment comes as Comcast is close to closing a deal to acquire control of the company from General Electric– a partnership that could provide some interesting ad-targeting possibilities.
“Comcast has a large set-top box infrastructure that would be helpful to all these technologies,” says Swindler, referring to TV ad-targeting tools in general. But “we have to wait for the merger and see what comes of it.” He says NBC’s decision to invest was made independent of Comcast’s bid to acquire control of NBC Universal, and that NBC hadn’t discussed the company with Comcast.
For its part, Comcast last year tested Invidi’s technology in its Baltimore market through a partnership with Starcom MediaVest Group. The viewers who saw targeted ads were less likely to change channels by about a third when compared to viewers who saw non-targeted ads.++++
NBCU Wants to "Test" Future Models as Ad Business Grows Complex
NEW YORK (AdAge.com) -- NBC Universal has made a strategic investment in Invidi Technologies Corp., a company that has developed software that enables marketers to send different commercials to different households via use of a set-top box. The alliance is a signal that TV broadcasters are growing more interested in the technology behind so-called addressable advertising, that could change the way in which media outlets conduct business.
"This is just one in a long record of things we've done with partners and advertisers and third-party technology providers," said Ed Swindler, exec VP-chief operating officer of NBC Universal ad sales, "with the goal of testing the future models for advertising as the environment becomes a lot more complicated, and to learn how the business model is going to change over time."
NBC Universal is the first TV broadcaster to join Invidi's ranks of investors, which also include Google, Experian, WPP and Motorola. NBC Universal and Invidi declined to elaborate on the amount NBC Universal invested or the size of the stake, but indicated the transaction did not make NBC Universal a majority stakeholder in Invidi.
Addressable advertising, in which a single piece of ad inventory can be "split" into multiple spots, each sent simultaneously to a group of households more likely to be interested in the particular message or product being conveyed, has long interested the ad industry. Yet even as the words crop up on executives' salivating lips, actual implementation of the technology seems to bob continually in the distance.
Invidi, which holds several patents for a system that distributes addressable ads and measures response to them, has begun rolling out in different systems, said Michael Kubin, an exec-VP at the company. Mr. Kubin said Invidi has installed software with Verizon's Fios system since March and expects to do the same with DirecTV and Echostar Communications' Dish Network in the first quarter of 2011.
"This is not an easy thing to figure out," said Mr. Kubin. "The technology is hard. There are a lot of barriers to implementation. Putting software into set-top boxes is not easy. There are a lot of barriers, but we have narrowed them down one at a time, and we are getting there."
NBC Universal has demonstrated in the past its interest in testing out new systems of advertising. In September of 2008, the company unveiled a partnership with Google that would allow the search-engine giant to sell pieces of advertising inventory on some of NBCU's cable channels. The theory at the time is that the pact would allow some advertisers to customize their ad plans to reach particular audience segments and also that the agreement might bring new categories of smaller advertisers to TV who might not normally by the medium.
TV broadcasters have reason to investigate the technology. One idea being floated around some ad-buying agencies is to have them buy up addressable inventory from sellers and then allocate it to their clients -- a notion that might upset TV programmers accustomed to controlling the advertising inventory that accompanies their well-known shows.
"Content owners need to make sure that the business model is respected so that we can continue to invest all the money -- the billions of dollars -- we invest in programming," said Mr. Swindler.
The pact with Invidi comes just weeks ahead of when Comcast Corp. is expected to complete its acquisition of a majority stake in NBCU. Comcast has in the past expressed an interest in using NBC Universal's programming to reach broader audiences and get them to test out emerging technologies such as video-on-demand and more. Invidi said its technology was recently tested in Comcast's Baltimore systems, where the addressable ads "proved to be 65% more efficient and 32% more effective."