John Reister

As IPTV allows for more targeted forms of advertising, it could potentially illuminate differences among demographic groups in varying levels of demand by advertisers. Could that effect create a digital divide similar to the one created in broadband infrastructure? John Reister, chief IPTV architect for BigBand Networks, explains.

On the status quo: Today operators get around $5 to $7 a month for placing zoned ads. In places like Chicago, there are 12 to 15 zones. Atlanta’s got around 11. If you look at Comcast’s total ad revenue and divide it by subscribers, it’s around $6 and change a month. The total expenditure on advertising is $180 a month per household. People are paying that much to put messages in front of you. Quite a bit of that is direct mail, quite a bit is newspapers and radio. A modest portion is Internet. Sixty dollars is TV. TV dwarfs all the others by a factor of two to three. Of all the TV advertising , the operator is getting around $6--around 10% of the total ad spend. The rest is spent on national networks. When Turner puts an ad in, its national. They have no idea other than gross ratings points who’s specifically watching. There’s a big opportunity for money to shift toward the operator with their greater knowledge about who’s tuned in in real time. There’s also an opportunity for advertisers to focus messages much better.

On the debate: There’s an interesting debate right now: If I have an “avail,” an available slot to put an ad in, today the same advertiser buys the whole avail; if you’ve got a 2-minute ad slot, American Express buys the whole first 30 seconds for everybody. We now have the opportunity to [sell that slot to] a whole bunch of different advertisers. It could be American Express or Ford sharing that 30 seconds. Alternatively, you could say AmEx still buys that 30 seconds, but we can do a different ad for different demos. You could conceivably have gold-card-holders get one ad and someone who doesn’t have an AmEx card gets another. AmEx would provide the grouping of who would get which ad. You’d match them up against the group. AmEx would never know who was watching a particular show. But the big question, and what people are debating, is: If you give advertisers the opportunity to pick and choose, and they don’t have to buy the whole 30 seconds for a particular area, will there be untouchables? Do you create a weird version of the digital divide like the “addressable divide”? What if no one wants to advertise to you? If you give advertisers the ability to only go after their targets, you end up losing all the untouchable audience.

On the answer: It’s an interesting debate. I can’t point to good analyst data on this, but I have a hard time figuring out who would truly be an untouchable. Also, you’re opening up the world to a higher degree of targeting, and so to a lot more advertising. People that today have to send out direct mail and advertise in circulars, they’re hyperlocal--someone who only wants to hit a handful of neighborhoods. Today it’s impossible for them to advertise on TV. But opening more avenues could bring in new revenue opportunities.