The digital set-top boxes that have made addressable TV advertising possible have also posed a few issues including privacy rights, technology adaptations, and new business models.

Privacy Issues and Addressable Advertising

The Challenges of Addressable AdvertisingPrivacy concerns have been raised by consumer advocacy groups and the television industry has responded accordingly. Cable operators trust third-party data providers to use a ”blind-match” method which attaches no personal or identifiable information to a viewer. The technology companies that gather subscriber data are also sensitive to such issues and ensure no personal information is sent to advertisers.

New Technologies Improve Advertising

Many advertisers have been hesitant to use addressable advertising until the technologies it requires have been more widely deployed. Fortunately, new standards may make this possible. In the past the industry was filled with different set-top boxes from varying manufacturers and operating systems. Now the industry uses one interface: the Enhanced TV Binary Interchange Format (EBIF).

Cablevision was the first MSO to use homogeneous set-top boxes but other companies such as Time Warner Comcast are also increasing their use of EBIF and its applications. The growing use of EBIF should put more advertisers at ease and increase the use of addressable advertising.

The Business Model for Advertising May Need to Change

The addressable ad model not only offers excellent benefits for advertisers selling ads, but it also creates real challenges for cable operators that have to manage inventory. In the past a cable operator could buy a set of ads and show them to the whole nation.

Now, if one ad can only be marketed to one-fourth of the population – other ads must be bought to fill the slots shown to the other three-fourths. This means cable operators need to juggle a larger inventory of ads, figure out how to fully monetize their inventory, and invest in the new technologies required for addressable advertising. All this means cable operators may need to adjust their business models.

Visible World and INVIDI Are Moving the Industry Forward

Despite the challenges addressable advertising faces, there are solutions coming from outside the cable industry. Technology companies such as Visible World and INVIDI are offering methods that will make addressable advertising easier and more viable. For example Visible World supports the Adtag Adcopy service that allows advertisers to take one commercial and customize it.

Once commercial can be targeted by region or demographic. Meanwhile, INVIDI offers a suite of tools that allow advertisers to target viewers without infringing on privacy. Cable providers can show several distinct commercials within one break using INVIDI’s special set-top box software. This has made INVIDI popular to the point that their boxes are used by roughly 40 million households subscribed to DISH Network, DirecTV, and Verizon.

Cablevision and Comcast Show Signs of Success

The success experienced by Cablevision and Comcast could offer a model for other cable companies to follow. Cablevision was the first to use addressable advertising and tested the idea rigorously to see its results. Cablevision examined test and control groups to note the difference in sales and audience engagement. So far they believe addressable TV advertising to be a success.

Comcast too has been conducting tests within its sales unit and so far believes addressable advertising is more effective at keeping audiences from switching the channel. Comcast is now able to identify its customers by zones and use Experian data to judge demographics. In one test, Comcast targeted a credit card ad by zone and household income, resulting in greater subscriptions to the card. Ultimately, it seems addressable advertising is not only possible but also effective.

Could Addressable Advertising Be Done Nationally?

Canoe Ventures brings together the top six cable companies to discuss a common goal: bringing addressable advertising to the people. The companies include Comcast Corporation, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems Corporation and Brighthouse Networks. Together they realize that bringing addressable advertising to the national level will be difficult. Due to the various obstacles addressable advertising faces Canoe Ventures has chosen to focus on other ad innovations such as interactive ads and dynamic ad insertion.