U.S. cable TV ad plans may face privacy concerns
NEW YORK (Reuters) - U.S. cable TV providers plan to share data on viewer habits to build a powerful tool to court advertising money, but the venture is expected to face opposition from privacy advocates who don't want consumer behavior so closely tracked.
Comcast Corp (CMCSA.O), Time Warner Cable Inc (TWC.N), Cablevision Systems Corp (CVC.N), Charter Communications Inc CHTR.O, Cox Communications and Bright House Networks launched Canoe Ventures this month and appointed ad executive David Verklin to run it.
Canoe will create an interactive television ad platform to enable marketers to insert ads targeted at viewers based on data such as what they are watching and where they are.
The cable industry hopes to mimic many of the strengths of Internet advertising, such as showing ads relevant to the Web pages a user visits or to searches made.
If successful, Canoe could help stem the flow of advertising dollars to the Web and away from television.
David Joyce, analyst at Miller Tabak, forecast Canoe would help cable ad revenue jump 7.6 percent in 2009 to $3.18 billion, following an estimated 2.1 percent rise this year and a 3.3 percent drop in 2007.
But some advanced behavioral targeting technologies have caused consumer backlash. For example, Web search leader Google Inc (GOOG.O) and social networking site Facebook have faced many questions on their privacy practices.
Charter Communications already had to halt its own targeted ad plans for its Internet service, after a pilot program to share Web page view data in four markets drew customer complaints and caused an uproar with privacy advocates.
Charter even faced calls to suspend the practice from Ed Markey, who chairs the U.S. House of Representatives' subcommittee on telecommunications and the Internet, as well as Connecticut Attorney General Richard Blumenthal.
"I am very troubled about the legal and privacy implications, especially in light of longstanding federal law restricting cable company sharing of subscriber information," Blumenthal said, describing Charter's practice of sharing Internet use data with advertisers as "potentially illegal."
But cable operators and Canoe executives have said the new platform will work carefully within the parameters of the U.S. Federal Cable Communications Policy Act.
FULL DISCLOSURE
The cable industry is betting that full disclosure to subscribers about the information being collected, the ability for them to opt out, and the attraction of more relevant ads would help overcome potential misgivings.
Viewership data collected by Canoe from cable set-top boxes could be combined with Web usage data, offering a "360-degree view of customers," according to Landell Hobbs, chief operating officer of Time Warner Cable. He called it "powerful stuff." but again reiterated that the industry would operate well within U.S. cable's government-mandated privacy boundaries.
Canoe's Verklin said anonymous "addressability" of ads will bring immense value to advertisers, cable networks and cable operators by reaching specific audience groups.
"We can find ways to make dog owners hold up their hands so we can put dog food ads only in those households," he said.
Analysts are hedging their bets on whether privacy concerns would become an issue, even if Canoe operated within its legal boundaries.
Craig Moffett, analyst at Sanford Bernstein, said though Americans are coming to terms with lower privacy standards in their lives, cable operators would still need to separate customer details from set-top box IDs to avoid complaints.
"It's all but certain that the cable operators will have to set a third-party clearing house for information to safeguard privacy concerns," Moffett said.
Reuters/Nielsen
