TiVo and Nielsen

"Targeted marketing" is one of the most powerful buzz-phrases in the advertising lexicon. In its most benign form, it means simply offering information about products and services to those most likely to want them. In a more malevolent form, it means prying into private citizens' activities to discover what really captivates them.

Both of these may become more prevalent thanks to a recently announced alliance between TiVo, the San Jose–based maker of digital video recorders (DVRs) and Nielsen Media Research. On February 4, the two companies announced an agreement to supply information on DVR usage to the television industry. Such information could help the industry's efforts to retain advertisers and to help them get the most from their ad budgets. It could also conceivably violate consumers' right to privacy.

Nielsen has long delivered popularity ratings on TV shows, based on reports from volunteer viewers, in addition to random surveys. TiVo's unique ability to track its users' viewing habits could help Nielsen's clients focus ever more sharply on exactly what viewers respond to, by recording which commercials were skipped, which were watched, and which were watched repeatedly.

Such information certainly would reveal the entertainment value of the commercials in question, but not necessarily their effectiveness. Relating actual sales to the number of commercials seen is a bit of marketing analysis legerdemain that's beyond the scope of the initial TiVo/Nielsen agreement. According to the February 4 announcement, a "fully consensual panel" of users will provide data gathering info on DVR usage.

Some observers and civil libertarians have expressed doubts about the partners' intent to respect the privacy of TiVo users who don't wish to have their activity tracked. Such users can purportedly opt-out of any use tracking, but TiVo devices' two-way connection makes spying all too easy. Janet Jackson's now-famous "wardrobe malfunction" at the February 2 Super Bowl was the "most replayed" segment in TiVo history, according to reports the next day. That statistic would not have been possible had TiVo not been watching those who were watching the half-time show.

Although DVRs have reached only about three million US households, out of a total of about 98 million equipped with TVs, the technology is being rapidly adopted, incorporated into satellite receivers, set-top converter boxes, and combination devices with DVD recorders. DVRs give consumers unprecedented control over when they watch their favorite shows, and are beginning to erode several longstanding broadcasting assumptions, especially the notions of "prime time" and a "captive audience." DVRs could eventually re-write the relationship between advertisers and TV networks, in the process revealing far more than most citizens would care to reveal about their personal preferences.

Approximately one million of the DVRs in use are TiVo brand. The company began the year with its stock at a six-month high as the company raised $74 million in a secondary share offering. Promotional marketing also pushed TiVo devices into more homes than ever, as entry-level sub-$200 TiVo Series 2 DVRs debuted at retailers nationwide.