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DirecTV will launch First targeted TV commercials

U.S. satellite broadcaster DirecTV plans to launch a service allowing you to broadcast targeted television advertising. As written by The Wall Street Journal , “targeted advertisements” can be seen in 10 million homes.

After years of promises and false starts, TV commercials targeted at individual homes may finally be ready for prime time.

DirecTV Group Inc. is planning the biggest rollout yet of “addressable ads,” allowing advertisers to reach close to 10 million homes with commercials tailored to each household. Dog owners, for instance, could see ads for dog food, not kitty litter, while families with children could be shown minivan spots.

The satellite-TV service provider has struck a partnership with Starcom MediaVest, a unit of Publicis Groupe SA that buys ad time on behalf of heavyweight marketers such as Procter & Gamble Co. and Coca-Cola Co. Starcom has committed to spend $10 million to $20 million on the new service next year.

Targeted TV ads are the latest manifestation of a fast-growing phenomenon: the gathering, repackaging and trading of personal data. Driving this move is the fact that targeted ads command much higher prices than regular ones. The practice of online data-gathering has been featured in The Wall Street Journal’s What They Know series.

DirecTV plans to roll out its targeted ad service in August or September next year.

“We are finally at the tipping point,” said Laura Desmond, chief executive of Starcom Media Vest. “Advertisers’ biggest complaint so far has been that many tests of this service haven’t been big enough in terms of scale.”

The DirecTV service, she added, is “national and scalable.” In total, DirectTV has about 19.1 million subscribers.

In the DirecTV setup, an advertiser would specify the kinds of homes it is interested in. DirecTV will tap third-party data providers to find households in its subscriber base that fit that profile. That data could include information such as income and gender to whether a household recently purchased an advertiser’s products or had a baby.

The data will be loaded onto the household’s DirecTV box and when it is time to run the ads, the box “votes” for the most appropriate commercial for that household from a spectrum of ads preloaded onto the box’s digital video recorder.

The third-party data providers will include companies such as data-collection group Experian. DirecTV said it is working out details of the service and declined to offer examples of other possible data providers.

DirecTV said the information used to target ads won’t include viewing habits. The technology DirecTV is using in its set-top boxes is from Invidi Technologies. Invidi offers a variety of targeting technologies, some of which have been used by other operators. These include targeting by age, gender or geography. Invidi makes inferences about the age and gender of the viewer based on Nielsen data on the viewership of the channels the set-top box has been tuned to.

A test conducted by cable-TV operator Comcast Corp. and Starcom in 2009 that reached 60,000 households in Baltimore showed that homes receiving targeted ads changed the channel 32% less of the time than homes that received nontargeted spots.

Set-top boxes increasingly are being tapped for data on viewing habits, as advertisers demand more precise measurement of who is watching their ads. In 2008, Nielsen started receiving some second-by-second viewing data from cable-system operator Charter Communications Inc.—information it sells to advertisers and media agencies.

Addressable ads will total $11.5 billion in the U.S. by 2015, according to projections from Bank of America Merrill Lynch. “We believe the U.S. television industry is finally on the cusp of transforming advanced advertising into meaningful reality,” wrote BOA analyst Jessica Reif Cohen in a note to investors. (Advanced advertising includes both targeted ads and interactive ads). Still, Ms. Cohen said, targeted advertising “is still a few years away from wide-scale deployment.

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