Behind the Numbers: A Bigger Boat

Canoe may have failed, but advanced ads are ready to move forward

Despite the very public failing of the first addressable ad efforts from the cable industry's Canoe consortium last year, advanced advertising is poised to become a $4 billion business by 2014. Fueled by tech advancements from video providers such as Verizon, Comcast and Cablevision, coupled with the increased need from brands to target their messaging, the market is ready to take off, according to research firm Parks Associates,
which tracks ad spending across a range of mediums, including mobile, online and television.

As a benchmark, advanced advertising options like interactive television spots that let users click their remotes to receive more coupons and addressable ads that are targeted to specific neighborhoods will account for $133 million out of a total $28.5 billion spent this year on TV ads across cable operators, telcos and DBS providers.

That's just the start though.

The advanced market should expand to $681 million in 2011 (out of a total $29.6 billion multichannel-provider ad spend that year) and then hit $4 billion in 2014, representing almost 12 percent of the projected multichannel haul for that year, says Heather Way, an analyst with Parks Associates, which surveyed media buyers on their advanced ad spending plans. Parks tracks multichannel video providers because their infrastructure enables advanced ads.

Estimates may change and shift over the coming year though, because Canoe remains a wild card. Its long-term impact is still unknown, but Canoe has said it plans to roll out an interactive TV product this quarter and has several TV networks on board. Even if Canoe is a non-starter, many service providers are already offering advanced ad options through interactive channels, video-on-demand and interactive overlays.

Media agencies are keen on the opportunities from advanced ad formats. "When I look at the future of TV, the single biggest opportunity for marketers, programmers, operators and consumers is addressable advertising," says Tracey Scheppach, senior vice president and innovations director at Starcom. "The ability to deliver relevant messaging to the true audience with less waste is the only way the TV business can grow."

The money projected to flow into advanced ad formats is not new money, Way adds. Advertisers will move some of their traditional TV ad spend to the newer formats. "We are predicting there will be a major shift in advanced TV ads in the next few years, as advertisers want to shift to more targeted TV formats that are relevant and easily targeted," Way says.

Interactive formats include interactive banner ads, tags and overlays, as well as options that let viewers request more information when watching an ad by using their remote controls. More than half of the media buyers surveyed by Parks said they planned to up their budgets this year in those advanced ad formats.

The increase in online video viewing is also driving the appetite. As viewers become accustomed to interactive and customized video spots on the Web - from sites like Hulu and delivered by ad networks like YuMe, Tremor Media and ScanScout - viewers will also be more receptive to such ads on TV, Way says. 

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