Animas Weblog

All three of the major search engines have products that overlap in one way or another with where TV is going. Of the three, Google has announced most explicitly its plans to offer an advertising platform for TV, starting with web-delivered ads and content targeted to the user by monitoring the user’s TV viewing selections. With Microsoft piloting its ContentAds counterpart to Google AdSense, I think Microsoft also has the ingredients to offer a pretty competitive ad platform for TV, although they haven’t said so explicitly yet.

When I refer to an ad platform for TV, I’m not talking about the current generation of TV, or the narrowly defined IPTV which preserves the broadcast nature of our current TV. I’m talking about a new kind of narrow-cast, non-linear, personalized TV that unites small audiences (individuals) with the specific programming they want. There are immense technological barriers to this happening (ISPs, bandwidth constraints, infrastructure for managing the economy of value exchanged by this kind of TV), and a lot of inertia from advertisers, cable/broadcast network operators, media producers who want to protect the status quo. But even so, I think that’s where we’re headed.

The ingredients for building a Microsoft TV ad platform are the following… Growing penetration into home entertainment via devices in the homes: Windows Media Center Edition HTPC’s, Media Center Extenders (via XBox products and 3rd party extenders), the Media Center capability that will be built into Windows Vista. And not least of which, devices developed through Microsoft TV technology partners and distributed through Microsoft TV cable and broadband customers. The Microsoft TV platform itself could be deployed with minimal interactivity so that the continuity of the business model of a cable operator, for example, is maintained across the deployment. However, the more interactivity is possible through the platform, and the more platform customers are willing to adopt this more personalized and interactive TV paradigm, the more opportunity there would be for some other Microsoft technologies to be used for ad targeting.

Demographically targeted contextual ads could be offered as a plugin to the MS TV platform for the cable/broadband operators who really want to go after interactive models. The 360 has a great writeup on the granularity of demographic targeting that is possible through MSN AdCenter and the Lab. From that post:

The AdCenter Lab is also working on new methods for data mining to improve search ads, contextual advertising, behavioral targeting and emerging media.

This sounds like exactly what would be needed for ad targeting based on TV viewing patterns. Imagine the power of exposing this kind of demographic control to marketers who can reach viewers with high impact targeted TV ads.

Google and Microsoft could both potentially gain from the fragmentation of the TV ad market, if the paradigm shifts toward a more personalized interactive model. Small technology companies might have a chance to get into this vacuum and provide innovative ways for advertisers to reach viewers in the chaos of content. But Microsoft also has a very strong play if they can drive adoption of their IPTV platform, first as as a mere technological substitute for a broadcast-oriented customers, and then by offering value added services to customers that move toward a more interactive format to win and retain subscribers. If Microsoft could broker ad placement across large cable operators’ programming just as AdSense and YPN do across pages on the web, advertisers could place their ads directly with Microsoft rather than through the cable operators. Microsoft’s IPTV may be the fox in the hen house.