Monday, December 10, 2007

Is TiVo A Media Company Or An Accountability Company?

In today's New York Times, Tom Rogers, the chief executive of TiVo, said in an interview, "We are very much a technology company. At the same time, in the last year and a half we've substantially moved in the direction of becoming a media company."

I would challenge Mr. Rogers on that. Because what TiVo has actually become in the last year and a half is an accountability company.

NBC Universal has figured this out and has signed on to receive TiVo's second-by-second viewership data. As has Carat, Starcom, Interpublic and Crispin, Porter & Bogusky. According to the New York Times article, the other networks are also following suit.

The reason is that second-by-second data is truly the Holy Grail when it comes to accountability. And since TiVo offers a second-by-second sample size of 20,000 subscribers versus Nielsen's 3,000 DVR homes, they look to be the holiest of all.

Which is quite a turn-around for the one-time pariah of the ad world. Allowing viewers to skip advertising they didn't want to see made TiVo the devil-incarnate when they first came on the scene.

But, back then, no one looked beyond what TiVo was really offering. Yes, TiVo allowed viewers to skip advertising they didn't want to see. But, at the same time, TiVo also allowed viewers to click-in to advertising that they did want to see.

Of course, back then, we all just wished this viewer-control thing would go away. And with it, TiVo.

No such luck.

So, as it's now becoming obvious that user-initiated advertising will become the format of the future, a few of the more forward-thinking companies are signing on with TiVo early, trying to figure out how they'll make money when reach and frequency are no longer the end all and be all.

One way they could do it is through accountability, which just so happens to the number one priority of advertisers today. If NBC, or a media agency, or even the ad agency, has the data that shows how long viewers watched the actual commercial, they will be able to turn that data into dollars by being paid based on how "engaging" the commercial turned out to be.

In other words, by monetizing viewer time spent.

You would think smart advertisers would go right to TiVo and subscribe to the data themselves. This way they would know exactly how well, or not well, their commercials worked in the marketplace. And then they could start establishing the models that would allow them to pay their marketing partners based on this performance.

The networks, media agencies and ad agencies are all trying to build the models before the advertisers do. They want to make sure that the models are built to their specs, based on what they do best.

This may, or may not be what the advertiser actually wants or needs. But the longer advertisers sit on the sidelines, the greater the possibility that this is what they will get.

TiVo is, in many ways, a microcosm of what a viewer-controlled ad industry will be like in the future. Each commercial will be viewed only by the interested. Because this number will be much smaller than what the industry deals with today, time spent with the message will become more important than the number that see it.

Measuring time spent requires second-by-second data. TiVo has it. Their gold mine isn't in trying to scale out their technology. Their gold mine is in the fact that they were the first to give the viewer control. And now they have the data that shows what happens when the viewer decides to use it.

If I were Mr. Rogers, I'd sell TiVo as an accountability platform and stop worrying about scale. Nielsen, after all, has done quite well with only 3,000 homes.

I think, Tom, you can do quite well with 20,000.

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