• by Joe Mandese  @mp_joemandese, December 13, 2007

A long simmering battle between TV and the Internet for dominance of the interactive advertising marketplace is coming to a head, and an important player on the TV side just got an important vote of confidence - not to mention a nice cash infusion - from Madison Avenue's biggest buyer of media. GroupM, the unit of WPP Group that oversees media shops like MindShare, Mediaedge:cia, MediaCom, Maxus, has taken a significant equity stake in Invidi Technologies Corp., one of the leading firms trying to develop an addressable advertising infrastructure for the television business. Precise terms of GroupM's investment were not disclosed, but the Madison Avenue firm was described as the lead investor in the $25 million round of funding, and GroupM CEO Irwin Gotlieb was named a member of Invidi's board of directors.

The move comes as an important, but top secret cable industry initiative dubbed "Project Canoe" is poised to announce a technology partner that would create a national infrastructure for buying and selling addressable cable TV advertising on local cable systems that taps the rich consumer return path data stream available in legions of digital set-top devices. Canoe, which has been led by the top executives at the nation's two largest multiple system operators - Comcast Corp. and Time Warner - has been reviewing proposals from technology providers, and is expected to make an announcement next week, according one knowledgeable cable insider.

Both moves are efforts by the TV industry to get out ahead of rapidly shifting market dynamics that have given big Internet players the momentum in the interactive advertising space, and come as some of them are beginning to extend their reach into traditional media like television. Leveraging their trading and database management systems, both Google and eBay have begun trading national TV advertising time, and while their rollouts have been slow going, they are generating great interest from media buyers who have been frustrated by years of fits and false starts by the television industry, which has over-promised and under-delivered on interactive advertising going back to Warner Amex's (now Time Warner) so-called Qube system in the 1970s, to Time Warner's Full Service Network in the 1980s, and a series of failed interactive TV developers throughout the 1990s.

The eBay Media Marketplace, which was created by a task force of agencies and advertisers that grew out of an Association of National Advertisers initiative sparked by former Daimler Chrysler and Wal-Mart marketing diva Julie Roehm, has been slow going, but has recently begun to make some headway with some national cable TV networks, despite a de facto boycott organized by the Cabletelevision Advertising Bureau. Recently, eBay utilized the system to purchase its own fourth quarter network TV scatter buys in a deal managed by Omnicom's OMD unit.

The Google TV Ads system, meanwhile, has been generating even more attention among some of Madison Avenue's leading advanced TV specialists, because it has amassed a significant base of interactive TV households, and has created an easy, one-stop buying system similar to its successful AdWords online search buying system. Instead of gleaning data from Internet servers, Google's TV Ads system captures it directly from cable and satellite TV digital set-tops. To date, Google TV ads has struck deals with some smaller, entrepreneurial cable operators and satellite TV giant EchoStar, and agency executives familiar with the system say it currently can place addressable advertising on about 4 million digital TV households.

"We think it's a decent size," says Jen Soch, vice president-group director of advanced TV at MediaVest. "Four million households is nothing to sneeze at when you're looking at national inventory."

Unlike the piecemeal interactive TV developers that have been fielded to date that rely on working with local cable operators, Soch says the Google TV Ads program is appealing because it is rolling up national coverage by cobbling together cable and satellite TV systems.

"I applaud anything that is going to help us get more accountability in traditional media - that is going to get us away form sample-based measurement into more of a census based measurement," she added. "Right now we are participating in this and we will see where it will lead us."

Given the cable TV industry's own Canoe initiative, it remains unclear how much more coverage Google will muster in the digital TV universe. Some have described Canoe as a Google TV Ads "killer," and the cable industry already has demonstrated antipathy to Internet players muscling in on their turf. But Google still has a shot at attracting DirecTV, which if coupled with EchoStar and some smaller cable operators, could reach more than 25% of U.S. TV households. Meanwhile, Cablevision Systems, the third largest cable TV operator, is believed to be sitting out project Canoe, and could be a wildcard in the rapidly shifting marketplace.

Even so, MediaVest seemed to recognize the limitations of Google's TV market potential in a recent white paper circulated to clients.

"The long-term impact is more murky. From this point forward the number of cable operators who sign on with Google to offer local cable inventory to the marketplace through Google TV Ads will be watched closely," the paper read. "Also, the number of cable networks who offer national inventory will be important for growth. It's unlikely, at this point, broadcast networks will participate. Local broadcast stations are another story. Independent stations or small station groups may now begin to see Google TV Ads with some interest. Larger station groups, especially those owned by broadcast networks, will likely continue to stay out. At the end of the day, Google will have to partner with multiple national vendors, most likely on the cable side, to have a serious impact on the industry."

GroupM's investment in Invidi, meanwhile, seems to throw some momentum back to the TV industry side of the equation, though it also remains to be seen how much support the technology player will get from the industry. Invidi has developed a suite of sophisticated addressable ad targeting systems based on patented cable switching technology that has been blessed by the cable industry's top MSOs and sanctioning bodies, and has been working closely with the industry's Motorola and Scientific Atlanta, the leading developers of TV digital set-top devices. But it has yet to announce a major deployment deal with any of the top cable operators.

That could change with GroupM's involvement, and Gotlieb's role on the Invidi board. Gotlieb, and his army of media buyers, command great sway in TV buying circles, and Gotlieb himself is known as something of genius when it comes to media buying technology, having personally developed some of Madison Avenue's first computerized buying systems early in his career.

Invidi also has some other powerful allies on Madison Avenue. Both Carat chief David Verklin and former GM Mediaworks chief Rick Servaitis have been long time members of Invidi's board of advisors.