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Now playing on TiVo: Targeted ads

Many consumers buy DVRs to skip commercials. Still, the market leader is offering viewers the option to watch targeted ads.

Given the choice, would you watch commercials?

TiVo, maker of the popular digital video recorder (DVR), announced a new "program placement" feature on Tuesday that offers customers the option to watch a product commercial or a promotion for another show after viewing a recorded program.

Each time TiVo customers view a recorded program, the new menu options will appear alongside the delete or save options. Those new options will include a brand logo or question asking if the viewer would like to watch promotional content, which can run up to two minutes.

The feature is opt-in, so that customers can watch products they are interested in and skip the rest.

For advertisers, TiVo is offering to target their ads to a specific show or genre. It will also record the view and response rate metrics associated with the spot. The Weather Channel, for example, is offering a spot for a new show called Abrams & Bettes. TiVo can measure how many people view the promo, and how many set their TiVo to record the show after viewing the promo.

But will TiVo owners watch any of these commercials? The whole culture of TiVo is based on avoiding commercials, said Todd Chanko, a JupiterResearch analyst who recently completed a report on the television market.

"Is this what people signed on for? Is this what people bought into when they subscribed to TiVo? No, they wanted this weird device that comes up with programs you might like, tapes shows and helps skip commercials," he said.

"What is the incentive for a viewer bent on fast-forwarding past those commercials, to then take the time to watch a Burger King ad through which he or she has ostensibly fast-forwarded past while watching the show? I don't understand the psychology behind it," Chanko added. "There is a conflict between their primary source of revenue--subscribers--and advertisers who want subscribers to ignore, or somehow choose to no longer engage in, the behavior TiVo has been promoting since its inception."

Even if all the TiVo owners decided to start watching the program placement commercials, that's not going to make a large difference overall for television advertising, Chanko also pointed out.

Local broadcast and cable TV networks would still be left struggling to get advertisers because of the commercial-skipping phenomenon, and advertisers would still be looking for ways to get a larger audience.

As of fall 2006, 13 percent of TV households in the U.S. owned DVRs, according to Chanko's JupiterResearch report. Of those, only 2 percent owned standalone DVRs, including TiVo. The remaining 11 percent of DVR households had boxes provided by cable, satellite or telecommunications services.

"It might be interesting for advertisers, but by and large, I don't know how it helps the ad-supported broadcast or cable networks. From TiVo's perspective, it is just trying to ad additional sources of revenue. Its goal is to stay alive. Except for a few exceptions (TiVo has deals with DirectTV and Comcast) the cable companies and satellite companies are all using Motorola or Scientific-Atlanta DVRs," said Chanko, adding that TiVo has "been locked out of a huge chunk of business."