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When Will TV Ads Get Webified?

TV ads these days are looking more and more like web ads, incorporating better targeting and analytics, and moving towards a model of charging by the impression or even by a specific response taken by a viewer. The influence seems to be flowing in only one direction, however, as web video ads are looking less and less like their TV counterparts. The webified TV revolution isn’t coming yet, but VCs and strategic investors are building up the war chests of startups in anticipation.

As we mentioned in our headline roundup this morning, TV advertising targeting startup INVIDI received $25 million in Series C funding from WPP, Menlo Ventures, InterWest Partners and EnerTech Capital, for a total of $53 million raised since being founded in 2000.

The Princeton, N.J.-based company promises to report age, gender, location, income, and ethnicity of viewers without disrupting their privacy. Despite scouring the company’s web site, I can’t say I was able to make sense of exactly how this works, but the marketing videos say it involves things like remote control click streams and program guides correlated with census information, as monitored from within the set-top box. And since WPP led INVIDI’s investment round, I have to believe it’s more than just voodoo.

In other funding news, this week REVShare, a television advertising exchange that’s an ancient 18 years old, raised $20 million from The Carlyle Group and H.I.G. Ventures. The Temecula, Calif.-based company says it has been profitable since being founded in 1989, and has tripled its revenues since 2003. REVShare touts a cost-per-action model in which advertisers name a price they will pay every time an ad gets a viewer to call a toll-free number or visit a web site, in a fashion similar to Google-like cost-per-click performance web advertising.

Other startups working on bringing online-style advertising to television include Black Arrow, Visible World, Navic and Spot Runner, which among them have significant strategic backing from players like Comcast, Time Warner, WPP, Interpublic Group and CBS. Google also has significant designs on the space. And product placement continues to gain traction, both online and off.

Meanwhile, video-on-demand measurements are improving, increasing the potential for VOD to be monetized through advertising rather than payment. This week HBO said Nielsen would be measuring viewership of on-demand programming from HBO and Cinemax.

Research firm SNL Kagan said today it expects U.S. VOD revenue to be worth $6 billion within five years. We asked the firm to provide a growth rate, but haven’t heard back yet. The firm did say in a press release that it expects advertising to be an increasingly important revenue model for VOD, evolving “gradually” to a cost-per-thousand-viewers (CPM) model similar to web banner ads.

But it’s not a zero-sum game. Just a month ago, another research firm, Screen Digest, projected that VOD revenues would not be enough to recoup losses in DVD sales, given the movie business’ hefty costs of producing, casting and advertising.

So what do you think? Does this pile-up of news portend a significant change is coming soon?

4 Responses to “When Will TV Ads Get Webified?”

  1. But did you see the part in the SNL Kagan part that said “Executives at VOD-based channels have seen great demand from sponsorship revenue, an increasingly important financial factor since 95% of all VOD content is free.” Kind of a strangely couched factoid, no?

    I left voicemails and sent an email asking about this, so am hoping to hear back some more detail tomorrow.

  2. That $6 billion figure is spending on VOD, not advertising. The ad revenue on VOD is very small. I did quite a bit of research on this and the only figure I could find was $75 million annually, and this was a wild-ass guess from an industry type.