ADexact technology allows for targeted TV ads

ADexact Corporation of Waterloo, Ont., believes the secret to breakthrough TV advertising is a simple one - relevance. In other words, delivering the right ad to the right viewers at the right time. And the company has developed the technology to do just that. The ADexact system uses the digital television infrastructure to enable broadcasters to send different ads to different households.

ADexact Corporation of Waterloo, Ont., believes the secret to breakthrough TV advertising is a simple one – relevance. In other words, delivering the right ad to the right viewers at the right time. And the company has developed the technology to do just that. The ADexact system uses the digital television infrastructure to enable broadcasters to send different ads to different households.

The way the system works is that cable and satellite subscribers would opt in to receive relevant, targeted advertising based on household demographic profiles; since the ads are targeted, the system is being treated as permission-based marketing similar to e-mail marketing. Initially, Peter Moran, SVP of sales and marketing for three-year-old ADexact, believes advertisers will use existing creative for their targeted efforts but that they will become more strategic and tailored over time.

He says ads can be targeted by adding banners or tags at the end of a regular commercial, adding translucent overlays that perhaps show a map to the local car dealership, or by creating executions specifically for various household demographic profiles. Ultimately, adult-only households would see spots for cleaning products and sports cars while those with kids would get the diaper and minivan executions.

‘In an environment where people perceive clutter, it’s only clutter because it’s not relevant,’ says Moran, adding that there has been lots of interest in the technology from broadcasters on both sides of the border. ‘Give a household the kinds of ads that help it on a day-to-day basis. There’s no reason to skip commercials if they’re relevant [and] interesting.’

Moran says the system is advertising at its finest – permission-based marketing that combines TV with the best of direct marketing and the Web. He says the system will increase commercial effectiveness for advertisers, and broadcasters will benefit through the expansion of their inventory capability.

A test of the ADexact system with a major U.S. cable company kicks off this fall, while the Canadian test is expected to start before the end of this year. Moran says control groups will be formed in conjunction with each test and then viewership and buying response in each of the control and test groups will be compared.

‘We believe our data will show the commercials that are played in the targeted households will be significantly more efficient, have significantly better recall scores and, most importantly, [have a] better buying score then those that are not targeted,’ says Moran.

Today advertisers are doing everything possible to break through the cluttered TV environment and to avoid ad zapping via systems like TiVo. Embedded content, creative that pushes the envelope and, in the U.S., shows like NBC’s The Other Half have gone as far as to offer sponsored segments for products that, aside from ‘promotional consideration provided by’ in the show’s closing credits, are a seamless part of the programming.

TiVo recently jumped on the commercial bandwagon with TiVo Advertainment, which allows its subscribers to shift from regularly scheduled network advertising to longer format but more entertaining messages. In the case of electronics retailer Best Buy, the advertainment offering is a mix of music videos and CD giveaways.

Advertising in the new ADexact system is not interactive, says Moran, nor will it be in the foreseeable future. ‘There are other companies working diligently on interactive opportunities. They’re going to be successful, but we think the generational shift necessary to make TV move from a passive to an interactive medium will take time.’