With Acquisition, Microsoft Gains Interactive TV Ad Foothold

Scott Ferris, general manager of Microsoft’s Advertiser and Publisher Solutions Group, is clearly excited over the possibilities presented by the company’s purchase of Waltham, Mass.-based Navic Networks, a TV ad technology company.

The 82-employee, seven-year-old firm, whose technology enables a degree of TV ad targeting and interactivity, is now part of Ferris’ group. That group also includes ad management unit Atlas, which has a video-on-demand ad offering of its own.

“They are not a typical start-up coming out of beta,” stressed Ferris. “They have a full complement of customers representing about 35 million digital set-top homes.”

Navic’s technology allows the dynamic overlay on TV ads of graphical banners that have interactive functions. These can be controlled by the viewers’ remote controls.

The company also recently released Admira, a Web-based TV ad placement system that allows media planners and buyers to target ads “by pivoting off real-time data coming off the digital set-top box,” said Ferris.

In announcing the Navic deal, Microsoft said its current ad platform will now “be able to facilitate enhanced digital advertising across online and offline environments.”

Analysts, including Sterling Media Intelligence Principal Greg Sterling, said the Navic acquisition is an effort by Microsoft to stay in the game, being played against the likes of Spot Runner and Google, for TV ad revenue.

“Internet-style targeting is coming to TV,” said Sterling. “There are a number of companies working on this. Cable TV provided different sorts of targeting in the past but it was pretty imprecise.”

Navic gathers information about viewers in a number of ways. Its HyperGate Transport technology keeps an eye on programs viewed and which ads were displayed.

“This is more akin to the Internet using real-time data to basically deliver an ad to a consumer who is watching a particular program at a particular time,” said Ferris.

While that doesn’t compare to cookie-based, Internet ad targeting, Navic-powered ads can come with quite a bit of interactivity. Using their remotes, viewers can see extended video clips, find localized information about products and enter contact information.

Ferris noted the Admira technology allows media planners and buyers to aggregate all the audiences that exhibit similar behavior patterns “to create a pool of viewers that meet marketing objectives.”

Terms of the Navic acquisition were not revealed.

Sterling wonders where all this effort to target TV ads is going in terms of pricing. He said advertisers would love to push for performance-based models, such as pay-per-click.

“There is going to be a lot of resistance to that among certain operators,” he said. “They just can’t support themselves that way.”

Another area of concern is the potential melding of online and offline information. For example, if a Navic-powered ad allows a viewer to send in an e-mail address via the remote, will that information allow Microsoft to target TV ads based on what’s known about the person’s online behavior?

Ferris said privacy standards would dictate the degree of such information mingling. He stressed the online and offline data mingling is not taking place now but said “it certainly is possible.”