Consumer Research Seems to Bear Out TiVo Ad Strategy

A few years ago when my colleague Steve White and I were both working at Tailwind.com in Stamford, Conn., one of our co-workers asked him what was the first thing he would save if his house was on fire. "My TiVo," Steve promptly answered.

People love their digital video recorders (DVRs) for many reasons, but one of the most-loved features is the ability to buzz through loud irrelevant commercials. Naturally, television advertisers and networks hate and fear this capability of the technology. But experience shows that many technologies that have initially raised concerns for commercial interests have in the end fostered new business opportunities. Consider the impact of the VCR, the growing possibilities for online music sales and the increasing (legal) applications for P2P and file-sharing technologies.

A report on a study by Parks Associates indicates that users of DVRs are willing to accept targeted advertising in exchange for the ability to fast-forward through regular commercials. This trend promises to allow the world of television advertising to migrate from a mass-marketing to a target-marketing paradigm. Parks Associates' press release from yesterday outlines the results of their survey of 2,084 U.S. consumers.

Parks's release says that 46 percent of survey respondents "are comfortable with viewer tracking and targeted advertising services if offered in conjunction with ad-skipping capabilities." Kurt Scherf, vice president and principal analyst says that their finding "bodes well for TiVo and other PVR/DVR developers, who are hoping to balance viewers' desire to have fewer commercials with the needs of broadcasters and advertisers to better measure their audience and drive more value from advertising."

Parks's announcement caught my eye in view of TiVo's own announcement on July 18, 2005, of a new interactive advertising technology it is launching with General Motors and The WB Network. The new technology will involve the presentation of customized advertising tags giving users access to special promotional footage and allowing them to directly respond and request information from the advertiser.

Following is a list of features of the new technology quoted from TiVo Inc.'s release:

• Enabling advertisers to insert a customized call to action or branded "tag" in their commercial, replacing the generic ad tags previously used by TiVo's advertising clients;
• Ensuring advertisers' traditional TV spots will be more visible in TiVo homes, whether viewed in normal play or fast forward mode;
• Enhancing the TiVo customer's experience by allowing them to select the tag and "telescope" from the traditional 30-second ad while pausing their program to view long-form content, requests for information, or recording opportunities which will enhance the viewing experience;
• Providing advertisers with the ability to receive leads directly from their TV spots, with the viewer's consent, so advertisers can track leads to conversion and ensure a qualified return on investment;
• Additional data for advertisers to gain a better understanding of the effectiveness of TiVo's proprietary tagging feature, the strength of their creative executions, and the efficacy of their television media buying strategy.

My friend Steve once said that TiVo has 'changed the way he watches television.' Sounds as if it might also change the way he interacts with advertising.

AB -- 7/29/05