Maybe you’ve been shopping around for a new car and, coincidentally, have seen a lot of commercials airing during the morning news for the automotive makes and models you’ve been considering. Perhaps you’re looking for your next vacation destination, and there during the breaks of your sitcoms have been spots for beaches in Florida and mountains in Montana. If it feels more and more these days like the ads on your television have been selected just for you, there’s a good chance they actually have been, most likely by INVIDI Technologies Corporation and its Advatar software.
The company, founded in 2003 by Bruce Anderson, David Downey, and Sandro Torrieri, specializes in “addressable advertising” for television. It has roughly 70 percent of the US pay-TV market under contract, and its Advatar product is now installed in the set-top boxes of approximately 30 million of the 105 million pay-TV households in the United States, directing the TVs to play different commercials during breaks based on individual consumers’ demographic data.
INVIDI is adding a million more households each month, and its next big venture will be to virtualize its Advatar software for the cloud, which will give the company access not only to more TVs but also to computers, phones, and nearly any other device with—or connected to—a screen.
TV VS. INTERNET: BY THE NUMBERS
There’s a reason advertisers are primarily concered with reaching viewers through television: Most Americans watch programs on TV rather than on computers or smartphones, and most watch programs traditionally rather than through the use of time-shifting devices such as TiVo. Here’s a look at the monthly nationwide viewership averages from Nielsen’s first-quarter report of 2015.
12
Hours of video online per viewer
2
Hours of video on a smartphone per viewer
152
Hours of traditional TV per viewer
16
Hours of time-shifted TV per viewer
Bruce Anderson, a thirty-year veteran of the satellite and communications industries and now INVIDI’s COO and CTO, spends much of his day working with and explaining the Advatar technology to his company’s current and potential clients: the cable- and satellite-TV providers who distribute set-top boxes to their customers. INVIDI already works with Comcast Xfinity, Verizon FiOS, DIRECTV, and DISH Network, among others, and its Advatar software is designed to be adaptable to their different broadcasting infrastructures.
It’s also designed to work anonymously to keep consumers’ information private. The providers gather data on their customers—everything from their incomes and ages to the sizes of their homes—from third-party data-collection companies such as Experian Information Solutions, Inc., and the Advatar software codes it into pure demographic data linked to the unique IDs of the customers’ set-top boxes. Each time a commercial break occurs on TV, the set-top box consults the Advatar software for a decision on what ads to run. “If there are twenty households watching the Syfy channel and it goes to commercial break, those twenty households potentially get twenty different commercials based on the characteristics of those households,” Anderson says.
“If there are twenty households watching the Syfy channel and it goes to commercial break, those twenty households potentially get twenty different commercials based on the characteristics of those households.”
The Advatar software also helps the providers turn a greater profit on the roughly two minutes of ad space in the average fourteen minutes of ad space on each TV channel each hour. “It used to be that if you had a thirty-second slot, you could schedule one ad and sell it for y dollars,” Anderson says. “Now you can put ten or fifteen or twenty different ads into that same slot and monetize every viewer watching that commercial break.”
INVIDI began with a focus on TV, rather than Internet streaming, because that’s where the most eyeballs are. “TV is still measured in hours per day on average, and online streaming and Video on Demand are all measured in half hours per month,” Anderson says. “It’s an $80 billion industry versus a $3 or $4 billion industry.” And the company’s Advatar software allows clients to track and measure consumer responses to advertising in much the same way they already can online.
The next step, as INVIDI begins courting Internet-protocol-TV providers, and the whole of the broadcasting landscape continues to shift toward DVR, on-demand, and streaming viewing via TV, computer, and phone, is virtualization of the company’s software. By storing Advatar in the cloud as a service, INVIDI will no longer have to worry about installing its product in pieces of hardware. Instead, TVs, computers, phones, and other devices will simply call the IP address of the software, provide their unique IDs, and take their direction on ad decisions from there.
“It’s really trying to take as much of the brick-and-mortar infrastructure out of the loop as we possibly can—because that’s the stuff that’s going to start changing very rapidly,” Anderson says.
The company hopes to begin rolling out its virtualized software as early this quarter, and once it does so, you might never see an irrelevant ad on your personal device again.