In 2008, Canoe Ventures, the JV of six large U.S. cable operators, became one of the hottest topics of conversation in the cable, programming and advertising industries. Last week, I was fortunate to get time with Vicki Lins, Canoe's Chief Marketing Officer, to learn more about the company's plans. Though Vicki has been pulling double duty between her role at Comcast Spotlight and Canoe in recent months, she had only just started full time with Canoe, so she readily admitted that she's still getting up-to-speed.

Ordinarily Canoe's advanced TV advertising mission would be off-center for VideoNuze's strictly broadband video-centric focus. But the reason it's relevant to understand is because I think long-term, the world that Canoe is trying to create on top of cable's digital set-top boxes is on a collision course with the world that broadband video is trying to create. I see both eventually competing for the same viewers, ad dollars and mind-share.

Canoe is critical to the cable industry because it recognizes that ever-better targeting, interactivity and ROIs are driving ad spending decisions. For 10+ years now, the Internet (and Google in particular) has been resetting marketers' expectations, thereby placing ever-greater pressure on TV ad executives to improve their game.

Vicki explained that first and foremost, Canoe is a service bureau, helping advertisers, programmers and cable operators wring more value out of their ad inventory. It does not intend to sell any ads itself. Canoe's key is leveraging its access to its cable partners' digital set-top boxes. First up is what's called "Creative Versioning" or zone-based addressability - the ability to break down users into logical segments that get specific ads. Another focus is productizing the viewership data being captured by those set-tops to out-Nielsen Nielsen (while of course respecting users' privacy). A third is trying to enable user interactivity - the ability to get deeper information, zero in on a product feature in an ad, order an item, etc.

All of this would benefit cable and broadcast networks seeking to more effectively monetize their ad inventory, as well as cable operators which sell a portion of cable networks' ad inventory locally. Clearly these are key constituencies, but as Vicki points out, Canoe must also address ad agencies, brands, cable technologists, local operations teams where Canoe's technology is actually deployed, cable marketers and others who have a stake in this process. It's a pretty long list, and one wonders whether a start-up is able to handle all of this at once.

But there are two even bigger issues that I see. First, I find myself wondering whether Canoe is even aiming at the right target with these initial plans. Instead, why doesn't Canoe just focus 100% of its energies on monetizing these cable operators' billions of current VOD streams? It's amazing to me that years after VOD's launch, I don't see any ads on Comcast (my cable company) VOD. My kids watch lots of Ben 10, Hannah Montana, Wizards of Waverly Place, etc on VOD yet never see a single ad for a sugared cereal or wizzy new toy. As a parent this isn't something I'm complaining about, but if I were a Comcast shareholder it would sure have me scratching my head. It seems like such a big missed opportunity...is there something I don't understand here?

As Denise Denson, MTV's EVP of Content Distribution and Marketing recently told Multichannel News, "We have over a billion VOD orders this year on Comcast alone, but we've made virtually no money in advertising in that space....With the convergence of TV and the Internet, there is a danger that the Internet's interactive content could usurp it. It's unfortunate, but programmers will have to put their content where they can actually monetize it."

And that brings us back to broadband video's challenge to Canoe. The fact is that broadband is a parallel and fast-growing VOD platform that is generating significant content provider interest because of it offers substantial control of the user experience and relatively robust monetization. As I wrote yesterday, broadband advertising innovation is being adopted by major media companies like MTV. And because broadband ad innovation is diffused over many companies (as is all innovation in the hyper-competitive Internet realm), there are rapid and continuous improvements. Conversely, by concentrating its set-top box ad efforts through just Canoe I think the cable industry is limiting the platform's vast potential.

Denise Denson hit the nail on the head: resources are finite and programming networks will focus their attention on platforms that offer the best scale and monetization opportunities. With broadband coming to TVs very soon, it will soon be a de facto competitor to cable's digital set-top box delivery. To preserve the value of its video platform, cable needs to shore up its VOD advertising and user experience and not let broadband surpass it. For my money, that seems like the most productive place for Canoe to first focus its attention.

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