Interactive Advertising Revenue Slipping Away

“The idea that we will know who a person is and be able to deliver an ad specifically for them based on what we know about them is way off. Besides, much of that information is available to the ISPs as well. Where you live and how much money you make is something anyone can figure out online,” Taylor said.

Jim Warner, vice chairman and chief strategist at the TM Forum, agrees that cable and IPTV providers are in danger of missing out on a big revenue opportunity from advertisement.

“I see all content players developing their Web strategies. I don’t know that very many are looking at a communications service provider strategy,” he said. “Now clearly, I believe both telecom and cable operators have a play here. There are clearly advantages that service providers have, whether that’s guaranteed delivery or better location data. And, legalities notwithstanding, there is a lot of information about the customer that can be leveraged.”

Warner is spearheading the TM Forum’s Content Encounter initiative at next week’s Management World conference in Nice, France. Content Encounter is like a super Catalyst Project, one of the several proof-of-concept demonstrations the forum puts on at each of their conferences. The demonstration next week has added an interactive advertising component for IPTV and mobile advertising. In addition, the forum’s Cable Interest Group has launched an initiative to take advantage of customer data to use in upstream application such as advertising.

Warner thinks the actual revenues from advertising will be incremental, relatively small and won’t support the video services on their own. However, the service provider role in the advertising value chain could be important.

“There is a strong association between the content provider, the advertiser and the end user. There is a need for some kind of brokerage mechanism for putting these together and I think the telecom operators are in a great position and have the systems and expertise to do that,” Warner said.