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Apr 4, 2008

NEWS: TV Learning Importance of Targeting

TV Learning Importance of Targeting

April 4, 2008; Page B7

The advertising industry has long had a hunch that consumers are more apt to watch a television commercial if they actually are in the market for the product or service being pitched. Now, they have some evidence.

[An ad for Saab, a GM brand, was tested in a recent targeted-advertising study.]
An ad for Saab, a GM brand, was tested in a recent targeted-advertising study.

A 16-month study by cable company Comcast and Starcom MediaVest, a media firm owned by Publicis Groupe, found that households that had ads targeted to them were about a third less likely to change the channel than those that were shown traditional ads.

The idea of trying to reach people with ads that are more relevant isn't new to direct-mail and Web marketers. But TV advertising, at least in this respect, is behind the curve. The TV business is only slowly starting to roll out technology that allows advertisers to target narrow slices of the audience. With marketers clamoring for more sophistication and accountability in the $70 billion U.S. television-ad market, ad executives say such technology is key to preventing more of an exodus of advertising money from television to the Web.

The outcry from marketers is prompting companies such as Comcast and Starcom to experiment more with ways to deliver specific TV ads to consumers. The backers of the study, which was conducted from December 2006 to March 2008, used thousands of targeted ads on eight cable networks in 8,000 Comcast households in Huntsville, Ala. The test included ads from Starcom clients such as General MotorsDiscover Financial Services's Discover Card, Kraft FoodsSABMiller's Miller Brewing, Procter & Gamble, Mars and Hallmark.

"Clients are demanding accountability," says Laura Desmond, chief executive officer of Starcom MediaVest the Americas, adding, "We will reward those that deliver a higher level of measurement and accountability to us and our clients."

Here is how the study worked. A pet-food maker in the study decided to target only pet owners with its ads. Experian, a data company that tracks households by everything from age and gender to income level, can pinpoint households in the region with pet owners. Comcast, using digital technology from OpenTV, can deliver the ad to the appropriate set of households. The idea is that the pet-food ads are seen by pet owners and not by those who aren't in the market for such products.

Targeted ads in the study were anonymous, meaning the media agency, advertiser and cable operator weren't able to see personal information about the households being targeted. Comcast and Starcom MediaVest have agreed to launch a second phase of testing later this year; it will include 100,000 households in Baltimore and about 10 marketers, including General Motors.

For participants in the first trial, such as GM, the study was an opportunity to use successful strategies from the direct-mail world in television. GM is taking a closer look at so-called addressability in television because it speaks to a very narrow group of consumers, says Betsy Lazar, executive director of advertising and media operations at GM. Since most consumers shop for a car once every few years, GM is looking to speak to only about 1.5% of people in the U.S. each month, she says.

In the study, GM used mostly demographic characteristics, such as age and income level, to target ads for foreign-branded cars, mainstream cars and luxury cars from the company.

"It's logical that because we know so much more about them that [the company is] going to get a lift," says Ms. Lazar. Because of the encouraging results, she added, GM has signed on to the next phase of the study.

National advertisers often have been reluctant to buy ads with cable operators, in part because of a fragmented cable landscape in which no one operator covers the entire country. Targeted advertising may help change that.

Creating ads that audiences have a greater impetus to view is increasingly important as the spread of video-on-demand and DVR technologies makes it easier for viewers to skip commercials. And advertisers continue to demand greater targeting and accountability as the growth in Internet advertising heats up competition for budgets, says Andrew Ward, Comcast's vice president of strategic alliances.

Ed: Comcast is motivated to take advertising from broadcasters. Otherwise, would GM pay 50 times more per impression to reach targeted viewers?

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