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Dawn of a new ad age

With TiVo, more people are skipping commercials, but CNET News.com's Michael Kanellos says new technologies will make advertising pitches even harder to avoid.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
5 min read
After stealing a couple of cars and pummeling your archenemy with the rifle butt of a tear gas gun, there's nothing like a Gatorade and a couple of maple bars from Dunkin' Donuts.

That's the idea--sort of--behind Massive, a start-up trying to find a way to reinvent a battered advertising industry. Maybe it's a little extreme, but it's not so crazy. At the recently concluded Consumer Technology Ventures conference, folks in the know offered a gloomy prognosis for the ad industry, if change fails to take place. "Making someone watch ads is doomed," said Josh Goldman, CEO of Akimbo Systems, which has created a set-top box for video on demand. Goldman and others believe that the emergence of disruptive new technologies such as digital video recorders and game consoles left the ad industry no option but to morph.

It's a serious issue, and not just because my job depends on it.

Advertising has been part of commerce since the first cities emerged in Mesopotamia. Some historians have said the first jingle was developed by the Catholic Church to sell indulgences. Despite people's claims to hate advertising, they also seem to remember funny campaigns. Biased as it is, ads do impart information.

Besides, without ad-supported TV and radio, you'd have to pay to watch Extreme Makeover. Think about it.

Some historians have said the first jingle was developed by the Catholic Church to sell indulgences.

How does Massive's technology work? When gamers log on, Massive begins to track their actions and serves up appropriate ads on the billboards and signs inside video games. It then gives a tally to advertisers, who pay by the impression. The system can be used on online games--or on offline games in which the computer is nonetheless hooked to the Internet.

In a racing game, for example, Massive's technology could feature rotating ads for the latest products from Hewlett-Packard or Blockbuster on the banners circling the track. (It's anachronism-friendly too, so Gandalf won't lay siege to a Kragen Auto Parts outlet.)

The idea has strong appeal. The top 100 advertisers have already signed up, and by the end of next year, 36 games will likely be on the Massive ad network, which will reach more than 19 million viewers. Up until now, games have featured artificial ads, or static product placement spots that quickly go stale.

How big can it become? If CEO Mitchell Davis is right, this will be the second-largest media network for 18- to 34-year-old men.

The inspiration for Massive came one day, when Davis was playing "Grand Theft Auto."

"I noticed fake billboards and thought that was crazy," he recalled. Not only did the lack of real ads make the games look unrealistic, it meant that there was tons of untapped advertising real estate out there.

One would think that there would be a substantial outcry against privacy on this, but Davis said the reaction has been relatively muted.

"Gamers care about one thing: realism," he said. But Massive wasn't the only company with an interesting product pitch.

Gotuit Media
Think of Gotuit Media's software as TiVo with search. It cuts up TV programs, indexes the various segments and lets you watch just what you want by clicking on the desired scenes on a menu.

In a trial conducted in Maine, Time Warner Cable applied the software to National Hockey League games and highlighted films. Using the remote control, users could view goals, goals by specific players, fights or other scenes. A news section of channels lets viewers skip to international news, news from specific providers or even raw footage captured by Reuters but not shown on regular TV.

The ad component is at the bottom of the menu screen. When trolling through the video selections, ads for albums appear at the bottom of the screen. On the NHL screens, a banner appeared for the relentlessly ad-biquitous Dunkin' Donuts. (Of course, if you actually tried to serve doughnuts at a venture conference, you'd be forcibly escorted out by security.)

When a Starbucks logo swirling around a mall floor gets stepped on, it turns into a pint of ice cream.

Unlike IBM's Marvel technology, which searches through video by the images, Gotuit looks at the metadata behind a scene and indexes it accordingly. About 70 percent of the work can be automated.

The company has even come up with technology to insert video snippets in the few seconds between when a viewer selects a segment and the segment pops up. The click-through rates on Gotuit-generated ads hover around 5 percent to 7 percent.

So far, Time Warner Cable has tested the technology in a few markets and is looking at ways to expand the service geographically in 2005. Gotuit is also talking with other large cable companies.

Reactrix Systems
Is it mind control or entertainment? That's the question you begin to ask yourself after watching Reactrix's immersive, interactive ads.

The company beams large ads onto floors, walls and, in the near future, windows and 3D objects that get people to play with corporate logos. Touching a still image of water in a watch ad on a store wall sends out ripples of waves. When a Starbucks logo swirling around a mall floor gets stepped on, it turns into a pint of ice cream. Think night club lighting effects, but with ads.

McDonald's is installing the company's systems in its play places to create a digital sandbox, Reactrix CEO Mike Ribero said. Future ways to beam public ads are being developed in conjunction with Nike for the Niketown stores.

"Traditional media is not nearly as effective as it once was," Ribero said. A trillion dollars gets spent on advertising and marketing worldwide a year, but the audience is becoming more fragmented.

The ads seem to work. In a recent test at a retail outlet, 85 percent of the people noticed the ads, and 29 percent interacted. Fifty-five percent could recall at least one of the products advertised. Many people featured in a video admitted that they realized that it was advertising, but their kids liked it.

So far, the systems, which consist of a projector linked into a server that churns out the ads, have been installed in a few U.S. retail establishments. The company hopes to invade the shopping meccas of Asia next.