TiVo sets ads on programs to be deleted

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Before deleting that television show you just watched courtesy of TiVo, you'll be given the option to view a commercial, the latest in a series of enhancements the DVR pioneer will launch in an effort to profit from the proliferation of ad-skipping.

TiVo's newest initiative, called Program Placement, was announced Tuesday, just before a judge rejected a request by EchoStar Communications for a new trial in an ongoing patent dispute. The rejection means that TiVo and EchoStar will probably head to a federal appeals court.

Neither piece of positive news for TiVo impressed investors much Tuesday, when TiVo shares traded just 2 cents higher to $6.28.

TiVo said it has lined up several advertisers for Program Placement, which launches in two weeks, including Court TV, the Weather Channel and Burger King, each of which has chosen various TV shows to attach their commercials to in hopes that viewers will choose to watch them.

When TiVo customers hit their delete buttons, they will be given the standard two options of erasing a program or saving it, as well as a pitch from an advertiser to watch its commercial.

"It reaches the consumer who is watching in playback, where most fast-forwarding occurs," said Davina Kent, TiVo's vp national advertising sales.

Program Placement allows advertisers to choose types of programming to advertise across. For example, MasterCard is attaching its ads to several Christmas-themed shows.

"The key," Kent said, "is to target by genre, and not just a traditional 30-second ad but longer-form that is entertaining and informational."

She said most ads so far run about two minutes in length, but Kent expects that some future ones will run as long as 12 minutes.

Because TiVo is accepting only one advertiser per show, Kent envisions that bidding wars could drive prices for Program Placement higher over time.

TiVo, she said, is "selling ads on the TiVo users' interface and not touching the content," so there's no need to share ad revenue with the shows' rights holders.

The initiative is available to TiVo stand-alone subs who have Series 2 or Series 3 boxes, which is about 1.4 million of TiVo's 4.4 million total subscribers. DirecTV, which accounts for the bulk of TiVo subs, could add the service later.

TiVo is scheduled to report its quarterly earnings after the closing bell on Wall Street today, when it is expected to update its subscriber numbers.

Program Placement is TiVo's latest advertising solution, joining others like Product Watch, which lets users tell TiVo a category of advertising they'd like to receive. TiVo, and some bullish analysts, have been touting the company's Google-like ability to deliver advertising that's relevant to viewers and even desired, though so far TiVo management has not divulged how much revenue the company is taking in through its ad platforms.
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