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End Run Around TiVo?


Let's get the clich?s out of the way: On-demand world. Consumer control of media. Audience fragmentation, gnat-sized attention spans, no patience for commercials. Hello to ad-skipping technologies such as TiVo. The mass-marketing model withers.

All this angst begets Visible World, a company with technology that digitally customizes ad content to reach fine slices of the broadcast and cable-TV market. A broadcast ad promoting tropical vacations, for instance, can switch background music from disco when targeting young singles to something more restrained for baby boomers. Auto ads can direct viewers to special sales at the local dealer, and be updated as offers change.

"I knew, when clients saw it, they would see it as a solution," says Executive Chairman Bill Katz, formerly CEO of ad giant BBDO Worldwide (OMC). "To their concerns about target fragmentation. To concerns about ROI. To their concerns about TiVo (TIVO)." At Visible World's Manhattan offices, Katz taps on a keyboard and within seconds transforms an ad that shouts out to one Midwestern suburb into one that names a different suburb a few miles down the road.

AMONG THE BIG ADVERTISERS playing with the technology are United Airlines (UALAQ) and 1-800-Flowers.com (FLWS). This spring, Fox Broadcasting Co. (NWS) began offering Visible World's capabilities to its clients. And Visible World is winning kudos from the commentariat. "It will conquer," trumpeted Advertising Age columnist Randall Rothenberg. "Quickly emerging as a solution," said TheStreet.com Inc. (TSCM). Visible World's investors include the likes of Reuters Group (RTRSY), Comcast (CMCSA), and ad conglomerate Grey Global Group.

Sure, the technology is interesting, but can it derail the DVR express? For big advertisers, it promises flexibility and cost containment. Think of the video-editing man-hours that previously went into creating and distributing hundreds of locally targeted car commercials, which now can be customized via a few pecks at a keyboard. Sharply targeted ads can provide advertisers with much more detailed information about what was seen when and thus better address return-on-investment concerns. And imagine what election-year air wars will be like once Democrats and Republicans can finely target ads to infinitesimal degrees.

But that's not the big game. The real prize is getting consumers to pay attention to TV ads at all. Visible World and its rivals are betting that ad relevance matters and that viewers will see customized ads as a sort of programming. But with 10 million households expected to have digital video recorders by yearend, says Forrester Research Inc. (FORR), that premise is under pressure from the get-go. You don't buy TiVo because ads don't speak directly to you. You buy TiVo because ads are nuisances. (Possible exception: the rare breed of compelling commercials.) If that's the case, how do insert-your-small-town-here ads change that?

"If someone edits out the commercials, it doesn't matter how relevant they are," concedes Seth Haberman, Visible World's bushy-haired founder and president. "But if people know the commercials have changed, if they are more relevant, we believe the skip rate will be lower."

In an ever more consumer-driven landscape, Visible World is still a top-down solution to an end-user problem, and one that bets on a shift in consumer perceptions. The problem isn't insufficient relevance, it's that ad-skipping is now a learned behavior.

Had Visible World hit broadcast TV before ad-skipping technologies did, it might have influenced consumer behavior. Viewers might have grooved on the novelty of ever-more-micro-targeted ads. But DVRs came first, and the remote long before. To save one clich? for the end: These horses are distant dots on the horizon. It's a little late to be shutting the barn door now. zz

By Jon Fine


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