What's new at Tivo: Ads

                                                               

From the WSJ:

TiVo will today launch Product Watch, a service offering on-demand ads to its subscribers. TiVo has signed up about 70 advertisers, including marketers such as Kraft Foods, Ford Motor, General Motors and IAC/InterActive's LendingTree, to participate in the service. TiVo announced plans for the service in November.

For the most part, the marketers won't run traditional 30-second TV commercials. Instead, they will offer longer ads that attempt to be more informative than typical commercials. Kraft, for instance, will offer 20 different cooking videos that will show such things as how to grill its Tombstone pizza, potato-salad basics, or how to create a cantaloupe-and-Jell-O dessert.

General Motors, likewise, will offer detailed video presentations about its vehicles. Ford is trying something more entertaining: one-minute takes of magicians Penn & Teller performing various tricks on a golf course, with a Ford vehicle shown nearby.

TiVo users will be able to search for ads in several categories, including finance, lifestyles and travel and leisure. LendingTree's ad, in the finance category, features personal-finance expert Suze Orman giving step-by-step overviews of different types of loans.

Similar ads already are available on video-on-demand services offered by cable operators such as Comcast. Madison Avenue and the TV industry are closely watching consumer reaction to the services. Growing availability of on-demand ads comes as marketers are scaling back their emphasis on traditional TV ads, while Web ads and DVR use become more popular. For some marketers, on-demand ads could be a new way to reach TV viewers.

The TiVo service "could be a good indication of what advertising is going to be like in coming years," says David Cohen, U.S. director of digital communications at Universal McCann, a media-buying firm owned by Interpublic Group that is involved in the project. TiVo has more than 4.4 million subscribers.

Traditional TV ads are a turnoff to many, interrupting the flow of a program. But TiVo is betting that viewers will use its on-demand ad service to research products or services they are thinking about buying -- much as people search the Web for information on potential purchases. "People have gotten comfortable using electronic media to search for ads and product information," says Tom Rogers, TiVo's chief executive officer, referring to how consumers use the Web. "Now the medium they spend the most time sitting in front of gives them the opportunity to do that."

To entice advertisers, TiVo will charge marketers only for viewers who download an ad -- an arrangement akin to the pay-per-click model in paid-search Internet advertising. The only other charge will be a setup fee when the advertiser first signs on. Charter advertisers will get the first month free of any charges. TiVo wouldn't discuss details of the ad deals, including the size of the setup fee or the length of time that advertisers have committed to run their ads.