The cable industry appears to be struggling to come up with a targeted advertising platform to compete with the internet according to an article in the Wall St. Journal on the 27th of May, Cable Industry Weighs Its Approach to Targeted Ads.

Here’s why this is important. The online advertising industry has demonstrated the power of using internet technology, sophisticated software and data analytics to deliver ads more efficiently. (See my The Online Advertising Industry: Economics, Evolution, and Privacy for more details.) Moreover, online advertising is innovating rapidly. It is developing, more slowly than some had thought, behavioral advertising methods that increase the likelihood that an ad will go in front of someone who likely cares about it and will take some action as a result. More and more content is moving to internet-based connections—whether that’s PCs where you can watch YouTube or Hulu not to mention lots of other stuff—or mobile phones. That means eyeballs and advertising dollars are moving from traditional media—with the fastest to fall being newspapers of course—to the online world. Television broadcasting and cable haven’t been affected much by these trends–so far. The fact that the cable industry has been investing in Canoe and other methods to deliver targeted advertising shows that they wisely have seen the handwriting on the wall and know that a decade from now they too could be facing the death spiral that the newspaper industry is in.

But here’s the problem and the Wall St. Journal article emphasizes. The beauty of the internet is that it is a standardized technology and upstarts—that’s what Google still is!—can focus on developing cool technology without having to worry about making the plumbing work. The ugliness of cable is that the plumbing is a mess—it isn’t standardized and Canoe is trying to figure out how to get the different cable companies on the same platform so that the cable industry can offer advertisers a similar eyeball reach as internet-methods.

Meanwhile, the internet ad guys are moving on to the next great things. The economic meltdown has led some to take their eyes off of these inexorable trends. Online ad revenue is way down as advertisers pull back—why advertise to people who aren’t going to buy—and shift some of their attention to long-term branding efforts where television still has some advantages. The bloom seems to be off Google. Fortunately for society, and unfortunately for traditional media and advertising, internet-based technologies for delivering content and ads are just so much better than the alternatives—like electricity to whale oil—that the long term trend is in its favor. The cable industry needs to accelerate its efforts to find a stop-gap method—that’s all Canoe is—to compete with internet-based advertising and find a long-term solution that is fully compatible with internet-based technologies.