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How To Bring Internet Advertising to TV—The Long View

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Over the past couple days, conversations I’ve had with two different video-startup CEOs—Suranga Chandratillake of blinkx and Nick Grouf of Spot Runner—has got me thinking about what needs to be done to make TV advertising as relevant as video advertising. We have a long way to go, but it boils down to two things: 1) replacing 30-second commercials on TV with relevant ad overlays that pop up at exactly the right moment during a show, and 2) automating the buying, creation and placement of TV ads to make it more like buying search ads.

Yesterday, blinkx CEO Suranga Chandratillake dropped by my office and we got to talking about video ads. Blinkx is a video search engine, but it is also building a video ad network called AdHoc that attempts to place contextually-relevant, clickable text ads in a bar above the Web video being watched. For example, in the screen shot of the soccer video above, you will see a text ad for shoes. YouTube is doing something similar with its new AdSense for Video ads. The ads themselves don’t have to be text. They can be banners or logos that pop up, or even new videos-within-a-video under the control of the viewer. The point is that they exist within the main video itself, not after or before it. And they appear briefly at relevant points during a show.

Determining whether an ad is relevant for a video is done with some of the same techniques used on Web pages. Both YouTube and blinkx look at the tags and text surrounding a video, but blinkx actually goes beyond what YouTube does. It uses powerful speech-to-text translation technology to create a transcript on the fly and then matches relevant ads to the words. The ads appear as those words are being spoken. Suranga showed me the transcript-creating capabilities of blinkx, which are not visible to users on his regular site, and it was impressive. He clicked on a word in the transcript and that point in the video started to play. Once you can do that, inserting relevant ads is trivial. He says blinkx can also match ads to related concepts extracted from the transcripts.

What would it take to run ads like this on regular TV? Even if the ads are not clickable, simple banners or graphical buttons that appear in sync with what you are watching would grab your attention. Imagine a Nike logo popping up when you are watching basketball, or cruise ship when someone in a movie mentions the Bahamas. It could be annoying, but not if used judiciously. And it would certainly solve the problem of people fast-forwarding through ads with DVRs.

The big issue would be separating the ads from the underlying video so that new ads could be placed when the show goes to cable or is shown in reruns. Right now, all of those graphics you see on TV are pretty much baked into the video. Suranga said it would basically require new TVs with powerful chips and Internet connections. The computer chips alone would add about 50 percent to the price of most TVs, so it will still be a while before that happens. The other option, of course, is set-top boxes. But the cable companies don’t have any incentive to allow ads they don’t control to be seen on their set-top boxes (which is why they are trying to figure this out themselves).

On the other side of the equation is placing the ads. What is needed is something like Spot Runner’s system, which lets businesses create ads and plan media buys across cable and network TV. These ads are targetable by demographics down to the neighborhood level. Google also has its own experiments with regular TV ads through a trial on the Dish Network, where it has software on Dish set-top boxes. But Google could be doing a lot more. Says Grouf

Google is not selling targeted ads now on TV. It is selling national ads through the smallest company in the satellite space. We expect them to become more aggressive, but have not seen it yet.

These two conversations keep ringing through my head. I can see a day not too far where ads on TV start to look like the text and graphical overlays we are beginning to see with YouTube, AdHoc, VideoEgg and others. But you also need an automated placement and creation system like Spot Runner’s, which today only deals with regular 30-second TV spots. Combine the two together, and there’s the future of TV.

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