Monday, May 08, 2006

The technological front in the advertising war

Philips has filed for a patent on a digital video recorder whose remote would be disabled from skipping ads unless the owner paid a fee. Here is the write up. Not surprisingly, Philips aren't seriously thinking of marketing this yet but with changes in digital broadcasting, the option for utilising this type of technology is improving.

The problem with television advertising (and for that matter any media advertising) is that it is fundamentally an unnatural marriage. We lure viewers attention for something they want and slip in something they don't want in the hope that it will accidentally have an impact. The accidents happen sufficiently often that much media is advertiser-funded.

Interestingly, while many people worry about the moral implications of piracy when purchasing media, there are few (well actually no) qualms about skipping ads. Moreover, both the VCR and now the DVR industry is thriving on it. People are willing to pay to ultimately deprive broadcasters of revenues.

When it comes down to it, the economic issue here is that there is a lack of a separate market for advertisers. Advertisers want to buy attention but they can only get it through an indirect means. It would be much better of they could pay for it directly (and yes I know some websites attempted to do this) and leave the media providers with traditional means of selling their goods: you know, by getting people to pay money for them. But early issues with distribution -- namely, that it was hard to charge people for non-encrypted broadcasts -- have left us with the 'free-to-air' model.

All indications are that, absent government intervention, that model may be scaled back. But as I have noted before, one of the problems is that where you have consumer attention for one thing, it is tempted to sell abit of that to another party. So even if we see more paying by consumers, we will still likely see advertising there. Thus, technologies that prevent advertising avoidance will be invented to combate those that assist it. The technological war will only intensify.

[Update: Tivo have moved to put advertisements on their 'Now Showing' page so you can watch them whenever you want. Now if they could mount a camera on the box and see that you are watching them this would have the makings of a 'being paid for watch ads' plan. For now, I wonder if they will reduce their monthly subscription fee because of those ads]

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