• by David Goetzl  @dgoetzl, May 21, 2008

The cable industry's long-held promise to use its set-top boxes to usher in a new era in advertising and derive meaningful revenues may be imminent, according to a top executive at a leading cable operator.

The president of Cox Communications, the number-three MSO with some 5.4 million subscribers, said Tuesday that "material" revenue from targeted advertising--where a marketer can reach only a desired slice of homes with particular demographics--is possible within the next two years, according to Multichannel News. "Shame on us if it's not material by 2010," Pat Esser said, according to the report.

Esser made the prediction at the national cable convention in New Orleans. He added that Cox "is on the verge" of launching some type of capabilities in the arena.

Esser's comments that Cox may be launching some initiative alone might cloud the prospects for the much-discussed Project Canoe, where the leading MSOs are planning to link perhaps a combined 50-plus million homes to present advertisers with a one-stop buying opportunity with coast-to-coast reach. The opportunity would allow for targeted home-by-home delivery, as well as interactive options for the ads themselves.

Project Canoe--which faces multiple infrastructure and organizational hurdles--has advertisers exuberant at the opportunity to, for instance, reach millions of homes with males 18 to 34 for a campaign for a video game marketer without the "waste" that would come from a wide-reach, network-style buy. And the spots could carry the opportunity for the audience to click through to receive more information, and perhaps engage in e-commerce.

The cable industry's set-top boxes by which it delivers its programming into homes would not only seem to facilitate the targeting and interactivity, but provide marketers with precise data on engagement after a campaign is executed. This could be a way to capture some dollars flowing to the Internet, where marketers are attracted by the opportunity to receive more precise performance metrics.

Cable operators own two minutes an hour of inventory to sell for highly rated networks such as USA and ESPN, which would be highly marketable to advertisers if targeting came with it.

Still, at the same Cable Show event, according to Multichannel News, Cablevision COO Tom Rutledge was less bullish than Esser, suggesting big-time revenues from a Canoe-like initiative may be a longer-term prospect. As adoption of video services may be approaching a saturation point, cable operators have looked to advertising innovation as a new revenue stream (along with pursuing further penetration of their broadband and telephony services), but Rutledge still said "technology" development remains a challenge en route to rolling out a national, interlinked addressable advertising platform. "Our current model of selling subscriptions... is going to drive our growth for the near future," he said.