Yankee Group announces that there is a significant shift taking place in the advertising industry—cable and IPTV operators will lose out to internet video platforms in the competition for the incremental ad revenue that supports investments in interactive television. By the time cable and IPTV operators will be able to deliver interactivity to a large number of households, content owners and advertisers will have already made long-term interactive platform investments online.

According to the recently published Yankee Group Report, The High-Water Mark for Interactive Cable, digital and interactive advertising is the cornerstone for the infrastructure investments necessary to support interactive programming. Cable networks will continue to command large linear audiences and above-the-line advertising revenue, but cable operators will be limited in their ability to deliver interactive experiences that can compete with internet video.

“Ubiquitous broadband connectivity is driving a new media mix for time-shifting and ad-skipping audiences,” said Daniel Taylor, senior analyst, Yankee Group Consumer Research group. “Advertisers see interactive television as a way to reach viewers in this increasingly saturated media environment. But in light of recent internet video developments, it's time for cable operators to face facts about their abilities to deliver interactive experiences.”

As internet video becomes the predominant platform for interactive television, cable and IPTV operators have numerous opportunities to grow their advertising revenue by as much as $3.8 billion in the United States by 2012. Both programming and advertising will become more focused and viewer-driven, and content owners will develop media brands and viewer relationships, measuring campaign performance by the viewer click. Targeting and digital ad insertion technologies in linear and on-demand programming will drive television advertising revenue from nontraditional television budgets including local and direct response.

In this Report, Yankee Group also provides important recommendations for cable and broadcast networks and IPTV operators to drive maximum value from this industry shift. They include:

• For cable operators: Get advertising right with video on-demand.
• For cable networks: Design integrated cross-platform product strategies.
• For broadcast networks: Offer video-on-demand libraries with a revenue split.
• For IPTV operators: Work with cable operators, but support two sets of standards if necessary.