Microsoft Gets Into Interactive TV Ads; Buys Navic Networks For An Estimated $200 to $300 Million

Microsoft is going after the $70 billion spent on TV ads every year. This morning it announced that it will acquire Navic Networks, a company based in Waltham, Massachusetts that delivers interactive ads across cable TV networks.

The price was not disclosed, but a source close to the company pegs it at between $200 million and $300 million. Navic raised about $43 million between 1999 and 2001 from Himalaya Capital, Highland Capital Partners, Pequot (now FirstMark Capital), Pilot House Ventures, and Gary Lauder.

Navic’s ads are interactive overlays similar to what some advertisers are trying with online video. Except that they are targeted by zipcode to each cable subscriber. As you are watching a regular TV commercial, for instance, you could click on an overlay that opens up a window with more information on the screen, or ask for a brochure to be sent to you via e-mail or regular mail (since the cable company has your address, that’s easy).

TV still represents the majority of advertising spending, and Microsoft needs to be a player there if it wants advertising to become a significant portion of its revenues. While Navic brings interactivity to TV advertising, it does not yet tie back into online advertising campaigns. Microsoft could bridge that gap.

Google is already experimenting with TV ads that can be bought through AdWords and measured on Google Analytics. But Google is confined to Echostar satellite TV subscribers, because the cable companies don’t want to give it access to their subscribers (and have their own effort, the Project Canoe, to crack this nut). Spot Runner is also moving towards integrating online and TV ad campaigns. Although, it runs regular video ads on TV, not interactive ones.

As I’ve argued before, what we need is the interactivity and targeting ability of Web video ads on TV. Perhaps this is a step in that direction.