Verklin Shares Canoe Ventures' Objectives, Business Models and Challenges

Canoe Ventures the joint initiative of six major cable system operators is focused on three primary objectives advises CEO David Verklin1 Allow advertisers to interact directly with television consumers2 Generate incremental revenue streams for programming networks by enabling new forms of inventory such as pollingvoting and 39requests for information393 Turn settop box data into currencies for advanced TV applicationsIn a wide ranging exclusive interview with Jack Myers Media Business Report Verklin outlined his vision for the future of Canoe Ventures and interactive television suggested that partnershipsrelationships with Google Microsoft and TiVo could be on the horizon argued that a TV media buyingselling exchange is a natural outgrowth of addressability and explained why there will be a creative renaissance for commercial creationIn the aggregate Verklin explains that Canoe will enable TV networks to both enhance and define the value of commercial inventory quotWe are focusing on all forms of new revenue models for our partnersquot Verklin commented In addition to new products that Verklin expects to rollout within the next 12months he anticipates several new research and analytic services and quotis excited about creating ways for others to make money We have a vision for a renaissance of commercial creation and of opening television for completely new advertiser categoriesquotWithin the next 120 days Verklin says Canoe will release its first product a creative versioning tool that will enable cable TV networks to divide national inventory into demographic footprints Canoe has overlaid census data on 2200 cable systems 1200 of which have more than 10000 households Working with Experian geography has been converted to demography enabling Canoe to provide networks with the ability to run different commercials in demographically homogeneous homes For example says Verklin a financial services company can target one message to high income homes another to midincome homes and a third to lower income households Verklin wondered aloud about the prospects of a marketer running a Spanishlanguage commercial in certain neighborhoods even though it would also run in some Englishspeaking homes The next product to be rolledout will be a similar product for broadcast networks followed by the ability for networks to sell the same unit to multiple advertisers divided by their target demographic universesquotThese are rudimentary offeringsquot Verklin acknowledges quotThey represent the first steps The ultimate promise is addressability to put dog food commercials only into homes with dogsquot He draws an analogy to a lumber mill quotA lumber mill used to have a single fixed saw blade leaving a lot of wasted wood Today when a log comes in at one end a computer analyzes the log and adjusts multiple saw blades that maximize the value of each log A log is comparable to a linear 30second commercial The computer is programmed to use settop data to maximize the delivery of messages to households carving out audience segments The only thing a pig farmer doesn39t sellquot Verklin laughs quotis the oinkquot But the reality of addressability is complex and while there are companies currently developing systems to manage cable settop data and create actionable business models Verklin perceives Canoe as an quotenablerquot that will work with media buyers and sellers quotYou need the computer to manage all the piecesquot he points out and quotyou can39t have addressability without a buyingselling exchange An exchange and ad serving model for television is a natural outgrowth of addressability An auction model finds the right pricing level for the multiple media segments that will become availablequotIn Verklin39s future vision seven of the current 14 to 16 minutes per hour of national commercial time will be sold nationally as they are currently The remaining seven to nine minutes of networks39 commercial time will be enhanced with interactive quotcollarsquot and addressability Verklin envisions voting and polling as the first of these applications that Canoe will offer along with enabling viewer requests for more informationVerklin39s team is meeting daily with a diverse spectrum of companies to explore additional capabilities designed to generate incremental revenues for networks and cable operators Canoe is spending significant time working with the technology leaders at the six participating cable system operators which include Time Warner Comcast Cox Charter Cablevision and Bright House A twopronged sales and support organization is being formed one group to work with sales organizations and another headed by former Carat executive Bruce Dennler to work with agency organizationsIn September 1999 Verklin who joined Canoe Ventures this year after a decade as CEO of Aegis Media Americas and Carat USA delivered a keynote address to 600 executives at the first Jack Myers Forum on Interactive TV Development and suggested quotthe American advertising industry is structurally unprepared for an age where Interactive TV commercials go on the airquot He suggested that quotmedia and creative will certainly become more equal partners in the industry revolution From a media sellers perspective our research is indicating that the selling models will have some component of the cost per air time like now but also incremental revenue if the media deliver sales leads and interaction There will be two revenue streams two ways to make money From the buying perspective the model that we see will have greater levels of media accountability We will know if something is working we will know if something is underperformingquotVerklin an outspoken advocate for interactive television expansion since the mid1990s is now at the helm of the industry39s most ambitious effort to bring iTV to the reality he envisioned more than a decade ago

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Verklin Shares Canoe Ventures' Objectives, Business Models and Challenges

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