Comcast, TiVo, PayPal Trio Show That Interactive Ads Are The Way To Go

CMCSA: Comcast logo

Comcast (NASDAQ:CMCSA) has teamed up with TiVo and PayPal to sell interactive ads that will allow its subscribers to purchase relevant products with their remotes. [1] Since advertising contributes slightly more than 5% to Comcast’s value, the direct value add from the potential success of such interactive advertisements will be small for the company.

However, the bigger inference is that this represents an approach to counter the issue that several broadcasters seem to have against Dish Network’s (NASDAQ:DISH) Hopper DVR feature which facilitates automatic ad-skipping. In other words, there may be a need to develop more effective advertisements that will better engage customers, and thus minimize the impact of flexible technologies that allow ad-skipping.

See our complete analysis for Comcast

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Interactive ads can do just that as they allow customers to explore beyond what typical advertisements show and they also make it simpler for them to purchase. As customers get more empowered, as a result of increasing competition among pay-TV companies, the broadcasters and advertisers will need to adapt accordingly. Offering more flexibility to the consumer will mean the advertisements need to be more effective. And this is possible by having advertisements that deliver messages effectively and offer higher interactivity.

Our price estimate for Comcast stands at $32.55, implying a premium of about 10% to the market price.

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  1. PayPal, TiVo, Comcast team up for click-and-buy ads, Chicago Tribune, June 13 2012 []