Verizon FiOS

The $56 billion Ad question

January 3, 2011: 5:00 AM ET

Advertisers want TV's large audiences with all the benefits of the web. But how?

Advertisers will spend $56 billion putting ads on TV this year, but they'll invest just $1.4 billion in web video ads. Few are more eager to see that ratio shift -- and web TV take off -- than Irwin Gotlieb, CEO of WPP's media-buying arm, Group M. Gotlieb happens to be one of advertising's biggest technophiles. (He has divided his Westchester County, N.Y., home into zones serviced by Verizon FiOS, Cable­vision, and DirecTV, and he routinely compares speed and quality.)

If TV helps advertisers reach a lot of people at once, and the web helps them target specific customers and interact, Gotlieb wants to do both simultaneously. That's why he's a proponent of the advanced advertising that turns your TV from a one-way medium into a dialogue -- in which you and your television talk to each other. That's how Merrill Lynch analyst Jessica Reif Cohen described it in a recent report in which she said that in the next five years this type of advertising could become a $14 billion market.

The cable industry thought it would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, has launched just one notable product: a 30-second ad format that invites you to click on the ad and get a product sample -- detergent, for example, or perfume -- mailed to your house. Individual operators aren't much further along. Part of the challenge is technical: The cable operator needs to create special software and data-collection tools each time it inserts an interactive ad into a broadcast. And if the industry wants to target ads to, say, households with kids or the homes of seniors, it faces a host of privacy issues.

Gotlieb, who sits on the advisory board of chipmaker Intel (INTC), is more enthusiastic about Silicon Valley's attempts to webify television, and he's been following Google (GOOG) TV closely. "It offers incredible opportunities," he says, describing how software could allow his clients to replicate the web's interactive ads, to say nothing of the search-ad opportunities that might be available on a new platform. But it will take time. For now they are still highly experimental.

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