TiVo Inc., which has built its business around ad-killing digital video recorders, launched on Wednesday a new division to help advertisers assess and counter the damage.
The new Audience Research and Measurement division continuously monitors a random sample of 20,000 subscribers to gather ad-zapping data, the Alviso, Calif., DVR pioneer said. Information is not kept on the behavior of individual subscribers, but is collected as a whole.
The service places TiVo in direct competition with Nielsen Media Research, which also quantifies the impact of ads on viewers. Unlike the latter service, however, TiVo can provide ad-specific information on almost every nationally aired commercial.
The popularity of TiVo's DVR stemmed from its ability to skip advertising that subscribers found annoying. The capability, however, worries TV advertisers who see it as lowering the effectiveness of marketing on TV.
The damage is expected to grow as DVR use increases. Nearly half of U.S. households are expected to own DVRs in 2010, as cable and satellite companies heavily market them to consumers, according to JupiterResearch. The installed base is expected to increase to 55 million households from 7 million last year.
TiVo is looking to make money off of advertisers' concerns, while also establishing a badly needed source of revenue. TiVo is struggling to remain relevant as cable operators and telephone companies start offering set-top boxes with DVR capabilities. Analysts expect those devices to dominate the market in a few years, whereas today, standalone DVRs, like TiVo's, dominate.
TiVo said its ad data would help advertisers understand the types of advertisements most successful with its subscribers. The information is meant to compare with broader audience measurements from other sources in order to get a more complete picture. Other information could, for example, provide demographic data that TiVo won't be providing, at least not initially.
Instead, the company's research would include assessment and analysis of the ad impact of fast-forwarding, rewinding, replaying, pausing and other subscriber behavior. In addition, advertisements would be identified by network, genre, time slot, day of week and other information.
"Helping advertisers better understand the television viewing audience will bring about more effective advertising content," Todd Juenger, vice president and general manager of TiVo Audience Research and Measurement division, said in a statement.
In building its new research unit, TiVo is working with carmaker Nisssan and OMD Next, a consortium of 14 clients of ad agency Omnicom Media Group. The consortium focuses on testing the impact of new media platforms on traditional advertising models. Clients of OMD include Bank of America, General Electric, Visa, Discovery Channel, McDonalds, and Anheuser-Busch.
In search for other revenues besides DVR subscriptions, TiVo has also launched Internet services that deliver online video from partners to consumers' televisions. Called TiVoCast, the service delivers over a broadband connection programming from the National Basketball Association, the Women's National Basketball Association, The New York Times, Heavy.com, iVillage and CNET Networks.