NEW YORK -- TiVo Inc. on Monday introduced a feature that lets television viewers send personal information directly to advertisers when they see certain commercials, a move designed to open up TiVo's technology to more markets.
The move underscores advertising's importance to the future of TiVo, which comes only a few years after its introduction sent a chill through the ad sector with technology that let TV watchers skip over ads.
TiVo will now give advertisers direct access to viewers who are interested in their wares. The digital video recorder (DVR) maker said the upgrade lets some 1 million of its Series 2 stand-alone subscribers instantly respond to specially encoded advertising.
In addition, ads embedded with special "tags" will pop up as small pictures, sporting branded logos, even when users are fast-forwarding though commercials. The upgraded system will be launched with campaigns from General Motors and Time Warner Inc.'s WB Television Network.
However, TiVo says the changes will not affect the way users normally view shows and skip ads, and will not force them to watch any ads they choose to ignore.
Under the new system, consumers can select an option to tell TiVo to release their contact information to an advertiser. For example, after watching an ad for an automobile or family vacation, users can use the remote control to request a brochure be sent to their home.
"Advertising is a substantial growth area," said Kimber Sterling, director of advertising and research sales at TiVo. "It is not a material revenue for us yet, relative to our overall revenue picture."
Advertising is the key to TiVo's distribution agreement, announced earlier this year, with Comcast Corp., the nation's largest cable television provider. TiVo is set to deploy its ad platform on Comcast's existing DVRs beginning next year.
To be sure, many consumers purchase DVRs hoping to avoid commercials. But TiVo said that lots of users choose to watch long-form commercials, typically about cars or Hollywood films, after they are downloaded discretely to TiVo set-top boxes.
QUESTIONS ABOUT LONG-FORM VIDEOS
"They (viewers) are spending two to four minutes engaged in the brand -- that is what makes that so valuable," he said. "We see between 5 percent and 30 percent of people who enter the (enhanced) showcases will release their names to that company."
TiVo says TV advertisers, facing dwindling TV audiences, are anxious for new ways to reach TV watchers and insist that viewers enjoy special ads.
Analyst April Horace of Hoefer & Arnett said that while the new system may pique the interest of other advertisers, there are lingering questions about how much bang-for-the-buck exists in making the more expensive long-form ads.
"It is a business model in a state of flux," said Horace, who rates TiVo shares at "sell." "They still have to prove to advertisers that there is better return on investment in that kind of long-form advertising. Who is to say that money isn't better spent on ads on the Internet?"
Sterling said that for a typical long-form commercial on TiVo's service, between 5 percent and 15 percent of users choose to view the ad. While that number may seem small, it's big enough for TiVo to guarantee hundreds of thousands of viewers for ads that may be bypassed on network TV or radio.