• by Jonathan Blum , April 17, 2006

Television technologies change, but the challenges for TV advertisers don't. You can lead consumers to new products and services with whiz-bang ads, but you can't force them to make a purchase.

Take the problem of addressable advertising -- that is, delivering different commercials with relevant messages to different homes.

Cable operators and satellite providers have spent billions upgrading their networks, in part to install new tools that can alter backdrops, text, music, and even actors in commercials on a per-household basis. "Really anything is fair game," says Tara Walpert, partner at Visible World, the New York-based targeted television advertising company.

Marketers, too, love the idea of showing dog food ads to dog owners and LensCrafter ads to people with blurred vision. The online analog for addressable TV spots, behavioral targeting, is all the rage.

"Of all the things I see, and I look at new TV technologies all day long, addressable advertising is the biggest opportunity, bar none," says Tracey Scheppach, vice president video innovation at Starcom MediaVest Group, the Chicago-based advertising and media buying firm. Yet for all the money invested and all the interest generated, the number of by-the-home addressable commercials delivered in 2005 was exactly zero. And 2006 looks to duplicate this grim score.

So what's holding the industry back? Television itself.

Business deals are elusive. Addressable advertising creates a hybrid product -- the local ad sold in a national buy. New deals must be cut between local cable operators, the national multiple service operators, the advertising agency, and the advertiser. This isn't a simple proposition.

Pricing is also tough. The incremental value of the targeted customer is not a fixed number like today's blunt cost-per-thousand metric. The per-customer value changes by product and even by company.

The automotive industry, for example, has always worked on a by-lead basis; the industry has the infrastructure to track every single customer. A targeted spot represents a good value to Ford or General Motors. But mass-market businesses -- say, a sneaker marketer like Nike -- have neither the tools nor the inclination to track every buyer. Targeted ads offer little value to them.

And then there's measurement. Quantifying who saw and acted on what is still being hammered out. Crucial return on investment figures are not rigorous enough for most clients. And then there are the issues of access to the set-top and all its attendant operational and technical complexities. It's tricky to get all these components to work together.

Finally, no matter how cool the tool is, it still has to cut through the raucous din that is advertising. "What really holds us back is we are not used to doing it," says Connie Pettit, senior vice president at OpenTV, a targeted marketing company. "The operational issues take everybody time to work out. It's that simple."