Time Warner Cable is in early discussions to create an auction system for advertising spots on video-on-demand channels, modeled after Google's AdSense system on the Internet, the company's CEO said.
The No. 2 U.S. cable operator, a unit of media conglomerate Time Warner Inc., is considering a plan much like that of Google Inc., which allows advertisers to bid online to target ads at viewers with specific viewing habits.
For instance, car manufacturers or dealerships could bid to put their ads on the television screens of viewers who favor the Speed Channel.
The move is another sign of how the TV industry is borrowing and improving upon some of the most lucrative practices of the Internet.
We can start doing what Google does -- auctioning off spots, Time Warner Cable Chief Executive Glenn Britt told Reuters in an interview on Sunday at the cable industry's annual convention in Atlanta.
We have the ability, using our set tops and new software we're putting in, to begin targeting advertising, he said at the show sponsored by the National Cable and Telecommunications Association. We're actively looking at this.
The early-stage discussions indicate how Time Warner, which plans to spin off 16 percent of its cable division, will compete as the telephone industry starts to offer TV services.
The spin-off is expected after Time Warner completes its purchase of bankrupt cable operator Adelphia Communications Corp., which Britt said would happen at the end of the second quarter.
He said Time Warner Cable would be able to create such an advertising system because it had detailed usage data on some of its customers. It would adhere to privacy laws and not identify individual users to advertisers.
He declined to specify whether Time Warner Cable or other vendors would develop the technology.
Google's AdSense automated system allows advertisers to bid for popular search terms. Video-on-demand advertising is still a fledgling concept and it was not immediately clear what kind of demand Time Warner would be able to tap into.
BACK TO THE FUTURE
Craig Moffett, a senior analyst at Sanford C. Bernstein, said cable's biggest asset is its customer data storehouse.
Google and Yahoo have made fortunes out of very good information about what consumers do, but virtually no information about who is doing it, he said. Cable operators have the potential to do that one better.
While Internet media companies track mouse clicks reliably, the users themselves are largely anonymous, analysts said. But cable operators can easily combine the name, number of children and other data with a household's viewing habits.
You can pair that data with whether they watch home improvement shows, and if they're interested (in an ad) from something like Home Depot, Moffett added.
Time Warner is testing a Start Over feature in limited markets that lets viewers restart some shows if they are still airing. The company plans to deploy the feature in seven to eight additional markets this year.
By 2007, it plans to offer a more ambitious extension of its Look Back feature which will let viewers watch shows on participating networks from a day or several days ago, Peter Stern, executive vice president of product management at Time Warner Cable, told Reuters.
TV is more powerful than the Internet at the end of the day, Britt said.
Time Warner shares closed up 26 cents, or 1.56 percent, at $16.88 on the New York Stock Exchange.