Skip to main content

Kraft, TCI Cook Up an Addressable Future

Just hours after Kraft Foods Inc. and Tele-Communications
Inc. jointly announced a 'landmark' deal -- involving 'the first
household-addressable television advertising applications' -- some participants late
last week stressed that addressability is not as imminent as the announcement made it

TCI will enable 'micro-marketing' by Kraft, which
is owned by Philip Morris Cos. Inc., to 'reach consumers with targeted messages on a
household-by-household basis' in seven markets where TCI's digital technology is
furthest along, the MSO's press release said last Thursday.

But John Sawhill, executive vice president and chief
operating officer at National Cable Communications, TCI's national spot cable rep
firm, later emphasized, 'This is not addressable.' That capability is 'a
year or two away,' he added.

Grey Advertising's Alec Gerster, executive vice
president and director of media services, agreed.

'I would not qualify this as an addressable test at
this point -- although it may end up that way. I don't need to get down to individual
people,' he said. 'Near-term, this will involve geo-demographic targeting.'

For example, as the release said, Kraft could target
different spots to urban and suburban markets within the same region.

In the Kraft/TCI announcement, Gerster said, 'Our goal
with the program is ultimately to be able to deliver one message to the cook in the
kitchen and another to the family in the den.'

Kraft's spots could eventually become more interactive
'as the technology gets more sophisticated,' the announcement added, quoting Don
Miceli, Kraft's vice president of media services.

In any case, the multimillion-dollar deal is a coup for
cable. Kraft is described in the release as 'the largest packaged food company,'
whose brands range from Kool-Aid to Post cereals.

'Packaged goods people have very strict criteria and
you have to meet those' to get the business, Sawhill pointed out.

As an indication of how long it can take to make the sale,
Sawhill noted that Adlink in Los Angeles sold Kraft on its first spot cable buy last year
-- but Kraft had been pitched by Adlink and NCC since 1994.

Gerster, noting specific Kraft brands have yet to be
chosen, said the first buys will include Chicago and two or three other markets where TCI
is 'farthest along in terms of digital switching' and the like. TCI said
Kraft's spots will be digitally inserted into such networks as Cable News Network,
ESPN and Nickelodeon.

At TCI Media Services, Jerry Machovina, senior vice
president of ad sales, said the MSO has targeted 'a select group' of like-minded
national advertisers.

TCI spokeswoman LaRae Marsik said later that the MSO is
seeking 'six to eight non-competing' marketers, including a major brewer and
others in the automotive, fast foods and financial categories.

TCI said up to seven DMAs will eventually be involved, with
Marsik estimating that those -- San Francisco, Seattle, Denver, Chicago, Dallas/Ft. Worth,
Houston and Miami -- could reach up to 4 million subscribers.

John Malone, TCI's chairman and CEO, has -- in recent
discussions about the OpenCable digital set-top box initiative -- said that major
advertisers qualify as 'anchor tenants' that should help offset digital costs.
At the Western Show in December, Malone said that OpenCable 'should encourage outside
vendors, long-distance carriers, telcos and advertisers to come in and be able to
anticipate a large-scale customer base and very high technology.'

Since then, Malone has tried to validate that concept by
forging a digital box order from General Instrument Corp. for 15 million-plus units and
doing deals with Sun Microsystems Corp. and Microsoft Corp. for key set-top software

Leslie Ellis contributed to this report.