Top marketers are going digital to track the delivery of commercials into U.S. homes.
The new system could revolutionize advertising the way product codes changed the selling of sliced bread, advocates say. One day, it could even enable advertisers to target individual households.
The top four U.S. broadcast networks -- Viacom Inc.-owned CBS, Walt Disney Co.'s ABC, General Electric Co.-owned NBC and News Corp.'s Fox -- have signed on to comply with a new 12-character code for tracking all advertising, a system heralded as a new standard for monitoring the $263-billion U.S. ad industry, the two advertising trade groups behind the system said.
Called Ad-ID, the technical switch is being compared to the introduction of the universal product code, or UPC -- the tiny bar codes that 30 years ago changed the way supermarket chains tracked and delivered inventory across the country.
Ad-ID gives advertisers a centralized Web-based system that helps assign unique codes to their properties. More than 100 leading advertisers and trade groups have endorsed the system. The compliance of top broadcast networks paves the way for making it a standard.
Ad-ID's designers are the Assn. of National Advertisers Inc. and the American Assn. of Advertising Agencies.
"There's no central authority that preexisted Ad-ID," said Barbara Bacci Mirque, senior vice president at the ANA, which represents 330 top advertisers. "Now there will be a central authority."
Advertisers have been creating their own eight-character analog codes to track mainly broadcast TV commercials, an antiquated, patchwork system that cannot cover ad properties served across an explosion of new media vehicles, including hundreds of cable and satellite channels, radio and the Internet.
In the immediate term, Ad-ID will cut out costly code replications that have led to the wrong commercials being aired. Mirque cited one case in which a movie studio mistakenly duplicated the code of a large fast food chain for its ads.
But advocates say the biggest benefits are yet to come, as advertisers invest millions of additional dollars into directly targeting consumers rather than aiming scattershot spending across large audiences. The system can accommodate multiple versions of ads.
"It's going to allow advertisers for the first time to precisely target individuals for whom the message has relevance," said Peter Sealey, adjunct professor of marketing at UC Berkeley. "This way we can create, on the fly, a different ad for a different household."
For example, a diaper manufacturer could select households with babies while a dental adhesive maker would pinpoint their denture-wearing neighbors, based on information that consumers provided.
Sealey said advertisers would gain an unprecedented ability to see how their spending affected sales, especially as retailers adopt radio-frequency identification. RFID, the system that could replace bar coding, tracks the movement of individual products such as groceries from a few feet away.
In about five years, Ad-ID and RFID could be used together, he said.
"Then we could measure whether we delivered the commercial to you, and, as I am monitoring your pantry, whether you bought the product too," he said.
Television network executives were not immediately available for comment. The ANA provided copies of compliance statements from ABC and CBS.