Targeted Advertising - CarTV as a Proof Point

Filed in archive IPTV on May 17, 2005

Targeted advertising is a phrase mentioned in Online advertising a lot. Targeted advertising is a phrase that occasionally comes up in television advertising -- almost always in connection with local cable companies like Comcast and Time Warner. I say 'occasionally' because while the cable companies can deliver this functionality for advertisers, they have not implemented any efforts in delivering this to advertisers.

Enter the future and video-on-demand. For the sake of expediency, let's just say that that VOD is real. Let's also stipulate that advertising will find its way into the medium somewhere along the line. One question is this: will advertisers pay a premium if it is possible to target their message on television?

My intuition has always been to say yes and there are intellectual reasons to believe this. However, I am a show-me kind of guy and I prefer seeing market validation that it is true.

One concrete data point might be this: CarTV. I read an interesting article from last week in ClickZ about them.

Autobytel has integrated its Flash-based CarTV video player throughout its car-buying Web sites, which the company touts as a way to give marketers video advertising opportunities to reach in-market car buyers.

Several auto manufacturers have already signed on to show :30 video ads -- mostly repurposed TV ads at this point -- before, during, or after the CarTV video clips. The company expects to add :15 ads as an option in coming weeks. Ads are sold by segment, such as luxury or sports car segments.

Rates for ads on "automatic on" videos, which start playing without user interaction, typically run between $50 and $70 CPM, said Michael Rosenberg, Autobytel's SVP of marketing and media services. User-initiated video ads cost considerably more, between $175 and $225 CPM, he said.

Whoa, there. CPM's in excess of $50?!? Just as a point of reference, broadcast television averaged $19.85 CPM in 2004.

So, the a 30-second commercial appearing on the visually high-quality medium called television might get $20 CPM's. That same commercial targeted with lesser video quality on a PC shown to a potential car buyer gets between $50 and $225! Sign me up for targeted advertising.

All I can conclude with is this: when VOD through IPTV becomes advertiser supported, it would behoove the telcoms supplying that inventory to target and sell more like the Internet.