Cable Interactive TV Advertising Outlook Turns Cloudy

Interactive TV (ITV) advertising is on the horizon for some media companies and marketers. But an early venture in this advertising format seems to be floundering. And analysts are now wondering how big this market will be and when it will take off.

The interactive TV format involves prompting consumers to make selections with their remote control as they watch TV. For example, they can click on an interactive tag to indicate they want to receive more information on a specific product or service. These tags or links might appear at the bottom of the screen during a specific program or they might appear on the channel guide or through a dedicated button on the TV remote. Distributors of this technology include satellite or cable operators and phone companies. From a hardware perspective, ITV can be enabled both on TVs and game consoles.   Marketers are increasingly interested in this format because they might be able to reach consumers who are using TiVo or another time-​shifting service to view programming when they want and to skip commercials.

A key challenge for the format has been the standardization of a platform that allows buyers and sellers to execute transactions and measure the success of campaigns. Several cable MSOs (multiple system operators) deployed set top boxes to enable ITV. And a $150 million joint venture by cable TV operators, called Canoe, is underway. Early reports indicated that consumers who were exposed to ITV ads reported an unaided brand recall increase of 167%.

Getting the attention of advertisers might be another matter. Analyst Craig Leddy says, “The challenge for the industry will be to replicate these [early] results on a large scale and make TV advertising a business that deserves advertisers’ time, attention, and share of wallet.”

Last year, Parks Associates had projected that the addressable ITV ad revenue market could be worth as much as $5 billion. But actual ad sales have been slow, possibly because of technical challenges. So far, the Canoe venture has interactivity working in 20 million homes. In addition, ad insertion for video on demand TV is working well.

Industry experts say the format has great promise. Once the technology is set and cable TV salespeople can target both marketers and agencies, sales may improve.  But the time frame may be critical because competing technologies or the growing trend of consumers watching TV on their computers and mobile devices may make the ITV ad market a tough sell.

[Sources: Addressable, Interactive TV Advertising in the U.S. parksassociates​.com. Web. 28 Sep. 2011. An Interactive TV Advertising Overview. IAB​.net. Web. 28 Sep. 2011; Donohue, Steve. Cable’s Interactive Advertising Challenge. 23 Dec. 2010. Web. 28 Sep. 2011; Atkinson, Claire. Cable ad plan fizzles. Nypost​.com. 18 Sep. 2011. Web. 28 Sep. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.