Cable companies are out to boost that accuracy even further. Right now, they earn only about $20 per thousand viewers on average for a 30-second commercial, compared with closer to $25 for broadcasters. But "our advertisers have told us they'll pay as much as 10 times more for this kind of hyper-targeting," says Comcast Spotlight Inc. President Charles Thurston, whose company will test Invidi's software next year. "If the targeting is 10 times better than today, that price is not out of the realm of possibility," says Betsy Lazar, General Motors Corp.'s (GM ) director for advertising and media operations. And instead of selling one commercial per ad break, cable companies could sell six, though each would be reaching a much smaller group.
Advertisers such as GM are obsessed with better targeting, partly to reach TiVo-wielding viewers who skip ads. GM's latest tactic: telescoping, in which it creates spots specially for TiVo-equipped homes that flash an icon over a Cadillac ad, for example, indicating that a longer Caddy "film" is available in the video-on-demand menu. GM says 10% to 25% of viewers have been clicking on the longer ads. GM execs think coupling that strategy to Invidi's system could boost results.
Other marketers are eyeing the new technology as well. David Verklin, CEO of Carat North America and an adviser to Invidi, says clients, including Pfizer (PFE ), Hyundai, and Orbitz, (CD ) are interested. Orbitz Chief Marketing Officer Randy Wagner says reaching consumers with ads that they won't skip is a priority. She likens the goal to Amazon.com's strategy of recommending products based on past purchases. "It's so relevant, it feels like a service instead of selling," says Wagner.
The real test for Invidi will be if it can sell the system to the broadcast networks. Hyper-targeting consumers who are watching a relatively small cable show is fine, but what advertisers really want is to use this technology on big prime-time programs. For ABC (DIS ) or CBS (VIA ) to offer advertisers the option, however, they'll have to go through cable operators, who own the set-top boxes. That may be unsettling for network execs, but demand from advertisers is likely to drive cooperation. "It would be significant if we could just slice off consumers over 50 in any program for pharmaceutical companies," says David Poltrack, CBS' executive vice-president for research and planning. Note to couch potatoes: The boob tube is about to get a whole lot smarter.