Jan. 7 (Bloomberg) -- Dish Network Corp., the second-largest U.S. satellite provider, is developing a feature that would let advertisers see what people are watching in real time, setting the stage for last-minute auctions of ad space.
The company is looking to build on a viewership-tracking service introduced in November on its Hopper set-top boxes. The feature, called “What’s Hot Now,” allows Hopper users to see what other Dish customers are watching and flip to the most popular programs.
By collecting real-time data through set-top boxes, Dish may develop a new way for the industry to sell advertisements, Warren Schlichting, Dish’s senior vice president of media sales and analytics, said in an interview. The move also could improve the company’s relationship with advertisers, the victims of a technology that Dish introduced to skip commercials using a single button on a remote control.
“Dish has unfairly gotten an anti-ad reputation, when in fact Dish is just trying to innovate,” Schlichting said. “This is another really interesting potential innovation.”
Giving advertisers live data on what customers are watching at any moment could let Dish auction off commercials and have them inserted seconds before they air. The results would provide more specific and accurate audience information in an era when more people are skipping commercials, Schlichting said. Dish, based in Englewood, Colorado, also may be able to charge higher rates for shows that prove surprisingly popular.
Perfecting the technology would allow advertisers to hedge wrong-way bets made in advance on shows that fail to capture an audience, John Shelton, chief executive officer of Strata Marketing Inc., which writes software for media buyers and sellers. More than $50 billion in ad dollars flow through Strata systems each year.
“It’s a good idea for Dish,” Shelton said. “Companies would use this to fill holes if a certain show didn’t do as well as expected.”
While DirecTV and other Dish rivals have features that let viewers see what shows are popular at the moment, none has converted the data into an advertising exchange. Google Inc. backed away from doing something similar in August, shifting its focus to the Web and mobile video.
The technology also could help Dish overcome its anti-advertiser image, which stems from technology that permits customers to skip commercials without having to manually fast-forward them. Called AutoHop, the feature comes with the Hopper box and can be used with recorded Fox, CBS, ABC and NBC shows the day after they air.
Walt Disney Co.’s ABC is seeking a preliminary injunction to shut down the feature. News Corp.’s Fox, CBS Corp. and Comcast Corp.’s NBC Universal filed separate suits in May claiming Dish violated copyrights and breached retransmission consent agreements. Dish trails only DirecTV in U.S. satellite subscribers.
“The dirty secret is half the people skip commercials, whether it’s using the Hopper or somebody else’s,” Dish Chairman Charlie Ergen said in a November conference call. “We just allow you to do it with the push of one button.”
More than $63 billion will be spent on TV advertising in 2013, according to estimates by ZenithOptimedia, a media buying agency within the world’s third-biggest ad company, Publicis Groupe SA.
Tapping into What’s Hot data would mean advertisers don’t have to rely on Nielsen TV ratings, which aren’t published until after shows have aired. For now, though, using What’s Hot as the basis for ad exchange is in an embryonic stage, Schlichting said.
The idea is to have certain commercial slots tagged as auctionable. If a show becomes popular with a demographic group, a company could bid against other advertisers for a 30- or 60-second slot. The highest bidder would win the right to air a commercial of its choice.
A TV ad exchange won’t necessarily revolutionize how commercials are bought, Shelton said. Large companies still want to plan their ad budgets in advance, he said.
Still, even if Dish’s ad exchange is only used incrementally, it could be a big step toward moving away from a system where ratings are estimated and ads are locked in months in advance for imprecise audiences, Schlichting said.
“There are still a lot of ifs,” he said. “But it’s a pretty thrilling idea that you can make a decision, insert an ad and be done.”
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