Key Component of Targeted Online Behavioral Advertising for Comcast’s Acquisition of NBC

After more than a year of deliberation, the Federal Communications Commission and the Department of Justice decided to allow Comcast to purchase 51% of NBC Universal from GE. With the recent explosion of Hulu, Netflix, and other online media services, Comcast is doing everything it can to mitigate the obsolescence of its television broadcast. One of the conditions, however, is that Comcast had to allow its rivals to license NBC’s programming, including its most popular shows (The Office, 30 Rock, etc.). This widens the network of companies that can generate online ad revenue from NBC programming.

A paradigm shift is taking place. Networks used to make programs available online as a perk, but now with advances in broadband technology, consumer appetite, and ad delivery systems, online media is not only a requirement, rather, they are starting to trump cable broadcast programming in many areas. With services like Hulu offering their premium package for just $8/mo, “cutting the cord” on the $100/mo cable package looks much more appealing. In addition, more forward-thinking outlets for on-demand media entertainment purchases, such as Apple and Amazon, are likely experiencing a competitive threat from new “free to consumer” or “low-cost” alternatives.

What’s in it for businesses? How can you “give away” online multimedia entertainment at such a low price? Improvements in ad delivery systems have enabled significantly more targeted ads to be placed. Gone are the days when people were boxed in by demographics alone. Companies now use cookies, survey information, and even your social media profile to put the right ads in front of you! The more “targeted” an ad can be, the more an advertiser is willing to pay a publisher for that space. Advances in behavioral targeting have enabled ads to change content and placement based on consumers’ interests and where they are in the buying cycle. Let me show you an example of how behavioral targeting is driving this movement:

1. You walk into an electronics retailer and sign up for the store’s “free” consumer card (eg, Best Buy Rewards Zone) for discounts.
2. They record your purchase information and send you emails to tell you about different offers, your total savings, or even to confirm your membership, etc.
3. You view one of the emails and a cookie is placed on your computer. This cookie identifies all of your purchase information and a profile for you, including demographic information.
4. You have a history of purchasing video games for your PlayStation 2.
5. You watch your favorite show on Hulu, from home, whenever you want, for free (or for a small monthly fee).
6. Watch PlayStation 3 ads on Hulu. While waiting for your TV show to continue, you click on the PlayStation 3 ad on Hulu.
7. You are now identified as an interested PlayStation 3 buyer and see PlayStation 3 advertisements wherever you go on the web (perhaps even within your email).
8. You finally buy a PlayStation 3.
9. Now on Hulu and all over the web you see advertisements for PlayStation 3 games and accessories. The games are the types of games you used to love to buy for PlayStation 2. Coincidence…definitely not.

Scary?
A little. Is it profitable for website publishers and entertainment media?
Absolutely. The best part is that consumers are lining up to partake in “free entertainment.” While Comcast may have acquired NBC to avoid obsolescence and stay ahead of the curve, it would be foolish to think that behavioral targeting opportunities aren’t a central factor here. Where else can you imagine a company paying billions of dollars to cut subscription revenue from $100 to $8 per month? The value of online entertainment for business is behavioral targeting.