Why ABC needs cable to deliver hyper-targeted ads through Watch ABC app

Steve Donohue, FierceCable

Word that ABC would stream live programming to the iPad left me thinking about a demo SeaChange (Nasdaq: SEAC) and Tellabs (Nasdaq: TLAB) ran at The Cable Show convention last year. The demo showed how programmers could use Web browsing data stored on the iPad to deliver targeted ads in live video.

The SeaChange – Tellabs approach to targeted advertising on the iPad is similar to the strategy Google (Nasdaq: GOOG) and Facebook use in targeting display ads to viewers based on their browsing history. But instead of a display ad, a cable operator and programmer would be able to pick which 30-second spot from their ad inventory to display on an iPad or another mobile device based on which websites a viewer has visited with a tablet or smartphone.

ABC hasn't detailed the technology it'll use to insert targeted ads through Watch ABC, which begins live streaming today in New York and Philadelphia. But if it pursues a strategy similar to the one SeaChange and Tellabs have been pitching cable operators and networks, it could potentially deliver different ads to viewers in the same household during programs like Modern Family or Dancing with the Stars. An adult who has used an iPad to hunt for new cars might see an ad for the Cadillac CTS wagon, while a teen who has shopped for jeans on her Kindle Fire would see a commercial from Old Navy.

ABC and other Big Four Networks are already working with Comcast (Nasdaq: CMCSA) and other major cable MSOs to deliver targeted ads in video-on-demand programming. Extending that partnership to mobile devices like the iPad, Kindle and Samsung Galaxy is a logical step for broadcasters and cable operators. The targeted advertising strategy is likely one of the reasons ABC will only allow subscribers of pay TV providers that have ABC authentication deals to watch live video on Watch ABC Now after its free trial ends in June.

But the difficulty of finding a fair way to share ad revenue from Watch ABC could also be one of the reasons ABC hasn't yet signed authentication deals with Time Warner Cable (NYSE: TWC), which already offers subscribers other Disney apps like WatchESPN.

Using an app like Watch ABC is one of several options many viewers will soon have to watch local broadcast TV on mobile devices. DyleTV has expanded to about 40 markets with its mobile video service, which is backed by Fox, NBC and several station groups, and relies on over-the-air antennas attached to smartphones and tablets. Syncbak is pitching broadcasters an authentication platform that could be used to deliver local TV programming to viewers with its mobile video app. Aereo is looking to shake up the business by capturing local TV signals with antenna arrays and delivering content to Web browsers and mobile devices.

The options can be overwhelming for viewers, and raise concerns from investors in media companies like ABC parent Walt Disney Co. (NYSE: DIS) about how increased usage of mobile video could impact ratings for traditional TV networks. Disney chief Bob Iger was pressed about Disney's ability to monetize programming on mobile devices last week on the company's first-quarter earnings call.

Iger said the key is for "either Nielsen or some measurement system to kick in that adequately compensates us for the increased consumption on new devices." He also teased the Watch ABC announcement, noting, "we're already talking as it relates to ABC in the upfront, selling packages to advertisers that go across all media."

Watch ABC will be a key item on the agenda at ABC's upfront presentation today in New York, where the company will unveil its new schedule. Let's hope the network also sheds some light on the technology it'll use to deliver targeted advertising. -Steve