By Kenneth LiMon
Time Warner Cable is in early discussions to create an auction place for advertising spots on video-on-demand channels, modeled after Google's AdSense system on the Internet, the company's top executive said.
The cable services division of media conglomerate Time Warner Inc. is considering a plan much like that of Google Inc., which allows advertisers to bid to display ads in front of viewers with specific viewing habits.
For instance, automobile manufacturers or car dealerships could bid to put their ads on the television screens of viewers who spend a lot of time watching the Speed Channel.
The move is another sign of how the television industry is borrowing and improving upon some of the most lucrative practices of the Internet.
Last year, Comcast Corp. told Reuters it was looking at how to create a search engine-like on-screen guide to navigate the vast number of channels and videos on demand that could some day be made available.
"We can start doing what Google does -- auctioning off spots," Time Warner Cable Chief Executive Glenn Britt told Reuters in an interview 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," Britt said at the show sponsored by the National Cable and Telecommunications Association. "We're actively looking at this."
The discussions are still in the early stages, but indicate how Time Warner, which plans to spin off 16 percent of its cable division, will compete amid the looming threat of competition from the telephone industry.
The spinoff is expected to occur 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.
Britt said Time Warner Cable would be able to create such an advertising system because it possessed highly detailed usage information on some of its customers.
The company would not identify individual users to advertisers, adhering to strict privacy laws, he said.
Craig Moffett, a senior analyst at Sanford C. Bernstein, said cable's biggest asset is its storehouse of customer information.
"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 in homes with cable set top boxes, cable operators can easily track the name, number of children and other data, combined with a household's viewing habits, Moffett said.
"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," he added.
BACK TO THE FUTURE
Time Warner, the second-largest U.S. cable operator, has deployed a feature in limited markets that lets viewers start some shows from the beginning if it is still airing.
The company said about 70 percent of its customers in its test market in Columbia, South Carolina, used the "Start Over" service an average of about seven times per month.
It plans to deploy the feature, available on networks including General Electric Co.'s NBC Cable channels, Turner, News Corp.'s Fox Cable channels and HBO, in seven to eight additional markets this year.
By 2007, the company expects to offer a more ambitious extension of the idea it has dubbed "Look Back," 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.
(Additional reporting by Yinka Adegoke)
Copyright 2006 Reuters Limited.
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