By Kenneth LiMon
Time Warner Cable is in early discussions to create an auction place
for advertising spots on video-on-demand channels, modeled after
Google's AdSense system on the Internet, the company's top executive
said.
The cable services division of media conglomerate Time Warner Inc. is
considering a plan much like that of Google Inc., which allows
advertisers to bid to display ads in front of viewers with specific
viewing habits.
For instance, automobile manufacturers or car dealerships could bid to
put their ads on the television screens of viewers who spend a lot of
time watching the Speed Channel.
The move is another sign of how the television industry is borrowing
and improving upon some of the most lucrative practices of the
Internet.
Last year, Comcast Corp. told Reuters it was looking at how to create
a search engine-like on-screen guide to navigate the vast number of
channels and videos on demand that could some day be made available.
"We can start doing what Google does -- auctioning off spots," Time
Warner Cable Chief Executive Glenn Britt told Reuters in an interview
at the cable industry's annual convention in Atlanta.
"We have the ability, using our set tops and new software we're
putting in, to begin targeting advertising," Britt said at the show
sponsored by the National Cable and Telecommunications
Association. "We're actively looking at this."
The discussions are still in the early stages, but indicate how Time
Warner, which plans to spin off 16 percent of its cable division, will
compete amid the looming threat of competition from the telephone
industry.
The spinoff is expected to occur after Time Warner completes its
purchase of bankrupt cable operator Adelphia Communications Corp.,
which Britt said would happen at the end of the second quarter.
Britt said Time Warner Cable would be able to create such an
advertising system because it possessed highly detailed usage
information on some of its customers.
The company would not identify individual users to advertisers,
adhering to strict privacy laws, he said.
Craig Moffett, a senior analyst at Sanford C. Bernstein, said cable's
biggest asset is its storehouse of customer information.
"Google and Yahoo have made fortunes out of very good information
about what consumers do, but virtually no information about who is
doing it," he said. "Cable operators have the potential to do that
one better."
While Internet media companies track mouse clicks reliably, the users
themselves are largely anonymous, analysts said. But in homes with
cable set top boxes, cable operators can easily track the name, number
of children and other data, combined with a household's viewing
habits, Moffett said.
"You can pair that data with whether they watch home improvement
shows, and if they're interested (in an ad) from something like Home
Depot," he added.
BACK TO THE FUTURE
Time Warner, the second-largest U.S. cable operator, has deployed a
feature in limited markets that lets viewers start some shows from the
beginning if it is still airing.
The company said about 70 percent of its customers in its test market
in Columbia, South Carolina, used the "Start Over" service an average
of about seven times per month.
It plans to deploy the feature, available on networks including
General Electric Co.'s NBC Cable channels, Turner, News Corp.'s Fox
Cable channels and HBO, in seven to eight additional markets this
year.
By 2007, the company expects to offer a more ambitious extension of
the idea it has dubbed "Look Back," which will let viewers watch shows
on participating networks from a day or several days ago, Peter Stern,
executive vice president of product management at Time Warner Cable,
told Reuters.
"TV is more powerful than the Internet at the end of the day," Britt
said.
(Additional reporting by Yinka Adegoke)
Copyright 2006 Reuters Limited.
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Kenneth LiMon (reuters@telecom-digest.org)