Startup may give free TVs for test of targeted ads

SATURDAY, SEPT. 29, 2007

A startup company wants to give about 200 Spokane-area households free 47-inch high-definition televisions next year.

The catch: Channel surfers must accept a built-in device that knows their demographic information and transmits their viewing choices through the Internet, allowing EmbracingMedia to feed them specially tailored ads and collect market data.

EmbracingMedia CEO Jim Birch hopes the trial will show the viability of his firm’s technology, which he envisions as revolutionizing TV advertising. The company, assisted by nonprofit economic development agency Connect Northwest, has a prototype and soon will seek $5 million from investors to support the trial, which could launch next spring. Birch contends much TV advertising is wasted because people are exposed to ads that don’t interest them and demographic information about TV viewership is sketchy. In Spokane, for example, market information company ACNielsen relies on people accurately writing down what they watch.

“By making the ads relevant for the individual, then they’re more likely to actually watch the ads,” Birch said. “As much as we want to believe television is free, it’s not. You pay for it either from watching advertisements or you pay the cable company or the satellite company. … Our goal is that we make the ad-supported model continue to work and make it more efficient.”

The company would seek to increase the advertising market by allowing more companies to advertise cost-effectively, Birch said. It also would provide market data as an “ACNielsen on steroids,” he said.

Incorporated last year, EmbracingMedia has four employees and has spent about $300,000, raised from East Coast investors, on the prototype, Birch said. The company claims it has eight patents pending with the possibility of 10 more. Birch said it’s in talks with major content companies, such as Fox, NBC and CBS, and with chip and TV manufacturers.

To create personal profiles, users would complete an online survey that asks about age, religious views, family and interests. A biometric sensor in the television remote would identify who’s watching and signal the system to target that person with pertinent ads independent of on-screen content. Only the person holding the remote would be targeted.

“The intriguing piece to me is, as consumers we’re all bombarded with about 3,000 brand impressions every single day,” said Randi Neilson, a Connect Northwest board member and former Itron marketing vice president. EmbracingMedia will help people filter those, making life more relevant, she said.

EmbracingMedia’s plan relies on consumers opting-in. While the TVs offered in the trial will be free, in the future the company might lure people through a discounted television price or some other incentive. The company also would offer digital video recording features, which currently cost extra from companies such as TiVo Inc. And the technology could screen out objectionable ads, such as beer commercials for children, and offer free out-of-area content, Birch said.

“We actually give people the ability to start controlling advertising in their household,” he said. He added the system could turn on televisions to alert people to disasters.

But whether people will turn on to the idea has yet to be seen.

“I think there’s some people out there that may not believe that it can work,” said Dennis Leidall, Connect Northwest executive director. “You’ve got to have naysayers.”

Neilson said EmbracingMedia’s incentives are going to “have to be pretty compelling” to attract customers.

“It’s not something that can’t be overcome, but I do think that’s a challenge and strategy that they’re going to have to address,” he said.

Birch said an online survey of more than 500 people nationwide showed more than half would participate for deals on televisions alone.

Birch demonstrated the prototype, a small black box, to a small group of businesspeople Thursday, selecting different profiles meant to represent a family. When a clip of anchorwoman Katie Couric went to commercial, the system showed candy ads for a 12-year-old boy or Botox ads for an older viewer.

While people have tried direct advertising before, Birch said, they have only targeted devices or have gathered data without consumers knowing.

“We’re out in the open; we’re out front,” he said.

The idea for the product, Birch said, started in late 1999 while he worked at Princeton, N.J.-based Sarnoff Corp., where he was responsible for technology licensing and transfer. After leaving in 2002, he spent the next four years in patent licensing.

EmbracingMedia this spring graduated from Connect Northwest’s Springboard program, which helps entrepreneurs refine their business plans or develop funding strategies. Past graduates include TriGeo Network Security Inc. of Post Falls, IT-Lifeline of Liberty Lake and Blue Water Technologies Inc. of Hayden.


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