American Airlines Tests Rovi’s Connected TV Ads In The UK

Jeff Siegel, RoviBeginning in Q3 of last year, American Airlines began buying connected TV ads using Rovi’s interactive guide page. The goal was to raise its profile among travelers coming from the UK.

The airline won’t disclose how much it spent with Rovi’s ad network – through its agency Universal McCann – on interactive TV ads, but American Airlines claims 55% of the UK’s connected TV viewers saw its messages in Q1, which is 14 percentage points more than the connected TV audience who saw its ads in Q4 2012. One in 10 connected viewers were shown to have also clicked on the ads in Q1, according to Rovi’s internal counts, slightly higher than the previous quarter. According to Rovi, one in 4 respondents exposed to American Airlines’ advertising on connected TVs watched a featured video ad, and 19% said they booked a flight based on the ads.

The foundation of Rovi’s business is an interactive channel guide. That guide is carried by most of the major cable and satellite operators, but the last few years, it’s been licensing its guide system to a number of connected TV manufacturers directly, including Toshiba and Panasonic. Being part of the set itself is seen as even more valuable to Rovi, eventually, as more consumers explore “over-the-top” access to programming via their internet connection, as opposed to relying strictly on cable TV subscriptions.

While it tries to build that business, Rovi has been trying to defend its patents on guide technology. It’s had varying degrees of success. In March, it settled a patent dispute over guide technology with Hulu – which is also looking to connected TVs for growth. Similar arrangements were struck between Rovi and Mitsubishi and LG Electronics. But this week, Rovi lost a similar patent claim to a much tougher rival – Netflix. On Monday, an International Trade Commission judge issued a “preliminary decision” that the streaming video player did not violate Rovi’s patents, Reuters reported. A full decision is expected in October and Rovi is expected to continue to make its case.

The reason these wars and settlements have been occurring is that the company that directs discovery of content is the one that builds the audiences that marketers and content distributors covet.

Unlike Netflix, Rovi’s discovery technology is designed to support advertising, not drive subscriptions. As a result, it needs to attract brand advertisers if it’s going to draw clients on the marketing and content distribution sides. But how can a “TV guide” create an ad business?

American Airlines and Rovi

In Rovi’s theory, if someone is watching TV and they switch away during a commercial, they’re fairly likely to check their cable company’s interactive guide. At that point, Rovi can serve long-form videos for a viewer to opt-in to. TiVo, though not in the same business as Rovi, also bases a great deal of its ad business within its interactive guide pages as well. The thinking is that users are in a mindset similar to search ads, except these ads are videos appearing on what is likely to be the largest, most central screen in the consumer’s house. And like TiVo, Rovi can bring third-party data to bear on those long-form spots by offering profiles of households who saw the ads.

That said, major companies in the airline and auto areas – where Rovi has lately focused — already have high-consumer recognition. So a Rovi, a TiVo or another connected TV ad seller will have a tough time convincing major marketers that an interactive TV spot grew a brand’s awareness by 10%. Such metrics are difficult enough to prove in general anyway. But if Rovi can show American Airlines that it drove a certain number of impressions to its website after cable customers activated a connected TV ad, then it can claim a certain success.

A look at Rovi’s reach suggests that it can achieve scale – if it can actually find the right viewers and deliver them to the right advertisers. Rovi says its UK footprint on connected devices is about a million homes. Globally, it says its guide reaches 219 million individual devices through 130 million viewers. As it has built up the ad and marketing team, Rovi’s worldwide headcount has risen to 1,800-plus staffers, nearly double where it was about two years ago.

“A 30-second spot doesn’t have the hybrid branding and immediate call-to-action that connected TV ads do,” said Jeff Siegel, Rovi’s SVP for sales and marketing, worldwide advertising, explaining the company’s value proposition. “We can more easily catch people with a specific mindset around making a specific purchase – like an airline ticket or a car. That’s been understood for a while. But now, we’re able to bring the traditional branding aspect to our ads and expand it and advance it.”

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