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Originally published Friday, September 12, 2008 at 12:00 AM

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New Microsoft service to sharpen TV-ad targeting

Microsoft is preparing a way for next-generation television providers to sell ads that promises the accountability of online advertising...

Seattle Times technology reporter

Microsoft is preparing a way for next-generation television providers to sell ads that promises the accountability of online advertising.

The new service, announced Thursday and due next year, will be added to the company's platform for Internet-delivered television, Mediaroom, which is in use by 14 telecom-service providers worldwide and is being tested by several others.

"It will let Mediaroom service providers ... offer [advertisers] all the benefits of the Web in terms of targeting, measurability and interactivity from one comprehensive platform," said Terri Richardson, a marketing manager responsible for the Mediaroom Advertising Platform.

The move, announced at a trade show in Amsterdam, comes as Google boosted its TV ad-sales efforts through a deal with NBC Universal earlier this week.

The Microsoft platform will allow service providers to insert traditional and new ad formats into programming, including video-on-demand and DVR content, and alongside program guides.

Because content is delivered over a two-way Internet connection, ads can also be interactive, Richardson said.

The technology behind Mediaroom Advertising comes from Navic Networks, a Waltham, Mass., company Microsoft bought in June.

More than the new formats, advertisers are eager for the better measurability and targeting possible with this type of advertising.

David Graves, a veteran media executive and Forrester Research analyst, said advertisers have long complained they don't know what they're paying for when they buy traditional television ads. Audience is usually extrapolated from viewership surveys that rely on sample audiences that are orders of magnitude smaller.

Internet protocol television, or IPTV, is delivered to a set-top box so service providers can know precisely what homes an ad played in.

Combined with information such as purchase behavior associated with an address from companies such as Experian credit-reporting service, advertisers can devise a much clearer picture of the households viewing an ad.

That means geographically targeted ads for the new restaurant that just opened in your neighborhood, or eventually ads designed to appeal to an individual's tastes.

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"I think that the future of television is basically like what we said the future of the Internet was going to be: increasingly targeted ads," Graves said.

There's still a long way to go, however. With more than 1.5 million subscribers, Mediaroom-powered services don't yet "have advertising critical mass all by itself," Graves said.

But both Microsoft and its customers have big ambitions. AT&T, which uses Mediaroom to power its U-verse service, aims to have it available to 30 million homes across the 22 states where it has a presence today by the end 2010, said Destiny Belknap Varghese, an AT&T spokeswoman.

The company currently has about 550,000 subscribers.

Service providers and advertisers will also have to be conscious of privacy concerns as targeted TV advertising evolves. "That is a huge issue," Graves said.

Microsoft plans to combine the TV-ad platform with its growing suite of advertising tools, allowing advertisers to manage broader campaigns centrally.

"That's an inherent advantage," Microsoft's Richardson said. "... It ties into existing campaign and decision management tools that are being very broadly used in the online world today."

She would not say whether any service providers were testing the IPTV ad platform today.

AT&T was coy about its specific plans for the forthcoming advertising capabilities. "Definitely that's a space that we're watching and presents an opportunity," Varghese said.

Advertising sold on Mediaroom services will not mean ad revenue for Microsoft directly because the service providers own their own inventory.

Another asset Microsoft gained via Navic is a targeted TV-advertising network called Admira.

In the future, Mediaroom service providers could place their ad inventory on the network for purchase by advertisers. Microsoft would generate revenue by acting as the broker for the ad inventory, Richardson said.

It may be some time before television powered by Microsoft Mediaroom is available locally.

Verizon at one time planned to use Microsoft's IPTV technology to power the interactive programming guide and other features of its FiOS service, which was just launched in several communities in King and Snohomish counties. The guide, at least, does not use Microsoft software, according to a spokesman.

The closest AT&T's U-verse gets to Washington is Nevada and California. The company is focusing on markets where it already has a local presence, Varghese said.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2008 The Seattle Times Company

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