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DirecTV Enlists SMG To Sell Addressable Ads For 10 Million Subs

DirecTV announced an agreement with Starcom MediaVest Group, which plans to sell household-addressable ads for the No. 1 satellite TV operator that will be delivered to 10 million subscribers with DVRs, based on demographic data and other criteria.

As part of the deal, SMG has committed to spend $10 million to $20 million on the new service in 2011, the agency confirmed.

SMG and DirecTV said the addressable-ad technology is set to begin testing in 2011. After testing is complete, DirecTV in the second half of the year expects to deploy household addressable advertising capability to the nearly 10 million customers expected to have DVRs with 25 of the top-rated cable networks.

At DirecTV's Dec. 2 investor day conference, CEO Mike White said, local advertising represented a major growth opportunity for the operator. Over the next two years, White said DirecTV plans to be able to sell targeted local ads on 50 channels in 50 cities.

"While we do a great job on ad sales, we've historically not had a capability to do local advertising," White said. Cable companies get around $5 per sub per month for advertising, whereas DirecTV gets around $2 per sub per month, he noted.

DirecTV had previously said it would launch local ads in January 2011, using ad-insertion technology from Invidi Technologies. Ads sold in the local inventory available to DirecTV will be delivered to subscribers' DVRs and then served up based on different criteria.

Through the DirecTV platform, SMG's clients will be able to segment ads on a national level to selected consumers based on multiple factors including geography and customer segmentations, as well as third-party sources and the marketers' consumer databases.

The companies touted the fact that they'll be able to deliver targeted ads on a nationwide basis.

"This is a glimpse into our industry's future. Up until now, we've only been able to test the power of addressability in local markets. We proved its value beyond a shadow of doubt, but hadn't yet conquered scale until now," SMG CEO Laura Desmond said in a statement. "As a result of this partnership with DirecTV, we can now invest our clients' dollars in addressable messaging at the national level. We believe this is the tipping point, an entirely new marketplace is being created and shaped that will increase marketing effectiveness."

Added Bob Riordan, senior vice president of DirecTV Advertising Sales: "This partnership with SMG will create a whole new revenue stream for DirecTV and ensure that our viewers are being served up with ads that are relevant to their lifestyles. It's a win for DirecTV, advertisers, and our viewers."

SMG's clients include Procter & Gamble, The Coca-Cola Co., Kraft Foods, Mars Inc., Samsung, Walmart Stores and General Motors.