The iTV Doctor Is In! The Canoe Story, Chapter Two: The Salesman

Dear Readers:

I have a friend who is a skydiver. And while I occasionally doubt her sanity for engaging in such a risky pursuit, she tells me that virtually all skydiving deaths are caused by a cascading series of bad decisions. In skydiving you can survive one bad decision: failing to check and properly calculate wind speeds and directions. You might even survive a second bad decision: going ahead with your fancy maneuvers, even though the wind had changed. Your third bad decision can kill you: believing you can hit the original landing zone, even as you drift into the power line.

Canoe's founding partners tried to make a very fancy dive (apologies to Christopher M. Byron, author of "The Fanciest Dive"--look it up), and it made lots of sense when they started. But they listened to inflated McKinsey forecasts instead of their own experience and instincts, and created forecasts that were, in retrospect, impossible to achieve. As deployment of EBIF slogged along, much slower than anticipated, they failed to adjust to more facile competitors (iPhones, iPads et al.) in their space. But in the end they avoided the power line by scaling down the company and moving over to the alternative plan (Dynamic Ad Insertion for VOD).

As we did with our previous column ("The CEO"), today we'll listen to the folks who were responsible for moving Canoe's business--all blended into a composite: The Salesman. As with The CEO chapter, all comments and opinions are taken directly from personal OFF THE RECORD interviews.

The Salesman

He should have seen it coming. After all, he'd been selling cable advertising for over a decade, and he knew the tenuous relationship that existed between the ad sales groups and "operations" at an MSO. Cable advertising is like the crazy uncle who brings you a couple bucks whenever he comes for dinner, but you don't really like him. For the operator, as long as the money was incremental, and the crazy uncle didn't ask for too much, it worked. But when the "ask" required something complex and expensive (like the deployment of EBIF), there was push-back.

It is axiomatic (and redundant) that cable operators are, in fact, operators. They operate massive and expensive cable systems, and at the end of the day the people who keep those cable systems up and running...well, they run everything.

So there was a conflict between Canoe's need for broad deployment of EBIF, and the fiscal conservatism of the operations folks. They have A-level priorities that drive real revenue, as opposed to pie-in-the-sky forecasts. But that alone didn't kill Canoe's iTV advertising plans.

Project Canoe, the predecessor of Canoe Ventures, was conceived and birthed by heads of advertising sales at the partner MSO's--Time Warner Cable, Comcast, Cox, and later Bright House, Charter and Cablevision. And while the underlying strategies for each of the founding members might have differed, the vision of Canoe was straightforward: to enable interactivity within local cable systems and allow the national cable networks to sell it to their national advertisers. A cable network could go to Ford with the concept of collecting the names of prospective Ford buyers on a :30 RFI commercial that would run in tens of millions of homes.

But a few things got in the way. Canoe would only allow Ford a single use of each of the names collected with the RFI spot, and Ford would not be allowed to keep the name. So if one of those people actually came into a local dealership, even if they bought a Ford, there was no way to know where that lead came from. Ford might pay pennies for the opportunity to mail out a postcard or a brochure (not, by the way, by email), but there was no way for Ford, or anybody else, to ascertain whether those leads turned into sales.

And that gets back to another conflict: ask the cable ad sales chiefs who their competition is, and they'll name local broadcast, newspaper, Internet, radio and all the rest. But their biggest competitors are the cable networks that Canoe was designed to serve. The cable operator gets two minutes during an hour of cable network programming; the network gets 10x that, or more. Same programming, same audience. Ten Times.

Tell me again why the operator wants to help the programmer make even more money?

Oh, it's called co-opting your competition: take their strengths and make them your own. Like Stephen Seagal does in his early movies--somebody rushes at him with a giant knife and he steps aside, grabs their hand and lets their momentum carry them forwards until they impale themselves on their own blade. The Canoe partners wanted to take the strength of the cable network ad sales operations and make it their own with interactive "enhancements," while re-establishing their familiar and comfortable role as gate-keepers.

It happens all the time--we are an industry accustomed to cooperative agreements between competitors, particularly with advertising. Witness the local ad interconnects that combine ad sales on cable, satellite and telco in a given market in order to reach critical mass for local advertising.

But in spite of that, nobody will work against their own self-interests. Allowing national cable networks to offer their best customers (Ford, GM et al) the best in advanced advertising, well that just struck a little too close to home.

And the nature of Canoe was counter to the self-interests of the cable ad sales folks. The Canoe founding members signed an agreement that gave Canoe Ventures an exclusive window to sell interactive advertising to the programming networks. During that time the operators (or most of them) would not approach the networks directly. And when that window expired, so did Canoe.

But wait, there's more (with apologies to Ginsu Knives). The final nail in the Canoe coffin was the year-long test with the ANA (Association of National Advertisers). Staffed with people who had more experience as ad buyers than ad sellers, Canoe made a critical error. Without any advertisers demanding interactivity, Canoe gave them all a perfectly reasonable excuse to hold off their decision for another year.

The press release on October 12th, 2010 read: "Canoe Ventures, a joint venture founded by the country's leading cable operators, in partnership with the Association of National Advertisers (ANA), today announced the CEE MEE Project. CEE MEE is designed to capture the Connection, Emotion and Experience of interactive television viewers and correlate that with the Measurement, Efficiency and Engagement metrics for advertisers. This first-of-its-kind program seeks to use this feedback to validate advanced television advertising solutions and refine those planned for commercial availability across a national cable footprint beginning in 2011."

That simply froze the market. There was barely enough to sell anyway--data restrictions, slow deployment, a side-trip to Community Addressable Messaging: not enough reasons to say "yes" and too many reasons to say "not now." And Canoe gave the ad buyers another reason to put their budgets elsewhere: "We'll wait for the results of the year-long test."

On February 16th, 2012 Canoe issued the a press release on the results of the test: "Canoe Ventures, the advanced television joint venture of the nation's leading cable companies, and the Association of National Advertisers (ANA) today released summary findings from its year-long study of interactive television (ITV) effectiveness. The collaborative research endeavor, named CEE MEE, aims to understand how the Connection, Emotion and Experience (CEE) of advanced television solutions, including ITV, relate to the Measurement, Efficiency and Engagement (MEE) advertisers seek. Initial conclusions from the CEE MEE research featured promising results for ITV effectiveness in viewer interest, unaided brand recall, likelihood to seek additional information and likelihood to purchase."

Six days later Canoe closed its ITV operation.

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The iTV Doctor is Rick Howe, who provides interactive video consulting services to programmers, advertisers and technology providers. He is the recipient of a CTAM Tami Award for retention marketing and this year was inducted into The Cable Pioneers. He is also the co-author of a patent for the use of multiscreen mosaics in EPG's. Endorsed by top cable and satellite distributors, "Dr" Howe still makes house calls, and the first visit is always free. His services include product development, distribution strategy and the development of low-cost interactive applications for rapid deployment across all platforms.

Have a question for the iTV Doctor? Email him at itvdoctor@itvt.com