WASHINGTON — Americans have been watching television commercials for more than 50 years. Pretty soon, commercials will be watching them.
Cable and satellite giants are installing technology that will enable them to zap targeted TV commercials to different homes based on the occupants' age, gender, ethnicity, income and other personal details, including what shows they watch.
If neighbors are watching "West Wing" at the same time, the household with young parents will see an ad for Pampers diapers, while the retirees next door learn about the bonding strength of Fixodent. Wealthy homeowners might get ads for Nordstrom, while lower-income renters see commercials for Wal-Mart. Chevrolet could tout Corvettes to single men and Suburbans to families with kids.
Eventually, companies hope to refine the technology to target different viewers in the same family. They might send ads for the new PlayStation 2 to the teenager's room while reserving the life insurance pitch for mom and dad in the den.
AT&T, the nation's biggest cable operator, plans to test such "addressable advertising" this fall on 30,000 customers in Aurora, Colo., who have upgraded to digital cable, which makes the targeting technology possible.
Other cable and satellite firms, including Cox Communications and Time Warner, are expected to follow with their own pilots. If all goes well, software developers predict large-scale roll-outs of targeted TV ads could begin next spring.
But will consumers embrace the technology as a convenience or view it as an invasion of their privacy?
The cable industry is betting that consumers will focus on the pluses, much as they have embraced supermarket loyalty cards that track their purchasing habits in exchange for discounts and coupons on products they frequently buy.
"If I told my male friends they'd never have to look at another tampon commercial, they'd say, 'Sure. Here's my information. Sign me up,' " said Vicki Lins, a senior vice president at Los Angeles-based Adlink, which is developing addressable advertising in Southern California.
Adlink already allows advertisers to target individual neighborhoods. It helped S.C. Johnson Wax send TV ads for flea and tick spray to Southern California beach communities at the same time that it was airing ant and roach commercials in urban areas.
But Jeff Chester, president of the Center for Digital Democracy in Washington, an organization that analyzes new information technologies, worries that addressable advertising and other interactive features will allow cable companies to amass invasive profiles on what consumers watch and what they buy, perhaps without their knowledge.
"These set-top surveillance systems are being deployed without a public debate, and viewers may not understand what kind of information is being collected or how it's used," Chester said. "We're creating a dossier society."
Chester noted that cable companies also would be able to monitor when a household's television set is turned on, giving them information about when customers are likely to be at home.
He said Congress needs to tighten federal cable laws to ensure that companies cannot collect any kind of information about subscribers without first clearly disclosing their practices and getting their subscribers' approval.
Under the 1984 Cable Communications Policy Act, cable operators must disclose annually what type of personally identifiable information they collect about subscribers and obtain approval before sharing it. How the law would apply to customer information used internally by a cable company remains unclear.
Others say sending different TV ads to different households, particularly based upon factors such as ethnicity and income, would further divide American society. "For all its problems, television has been one of the greatest impetuses in unifying language and culture," said Robert Gnaizda, policy director at the Greenlining Institute, a San Francisco-based consumer group that battles redlining and other discriminatory practices. "If you start segmenting everyone, we may lose that."
Companies May Offer Incentives
Cable and advertising officials insist that they are moving slowly with the new technology and vow to seek customers' permission before sharing any personal information with outside companies. Some companies may offer incentives, such as monthly rebates or premium channels, to those who sign up.
"This is an opportunity for customers to get information that is more relevant to them," said Tracy Baumgartner, a spokeswoman for AT&T Broadband. "Privacy is one of AT&T Broadband's major concerns. The information we have about our customers is not available to third parties."
Addressable advertising has been the Holy Grail of cable for years, promising to combine the power of TV with the precision of direct marketing and the interactivity of the Internet. Cable companies hope advertisers will pay twice as much to reach such a targeted household as a random one.