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TiVo in a Full Nielsen

Just how real is the so-called TiVo (Nasdaq: TIVO  ) effect? Prepare to find out. According to today's edition of The Wall Street Journal, by November, TV tracker Nielsen Media Research plans to deploy a system for rating TV ads.

It's an interesting idea. The Journal reports that the new Nielsen system will sit alongside digital video recorders, tracking when viewers watch pre-recorded shows and when they fast-forward through commercials. That way, the service will provide the first concrete data in support of the presumed "TiVo effect," which has been blamed for a dramatic shift to digital advertising that has heavily boosted the fortunes of Google (Nasdaq: GOOG  ) , Yahoo! (Nasdaq: YHOO  ) , and others like them.

That means it's time for TiVo to put up or shut up. Will it be the new destination for TV ad dollars, or is the TiVo effect just another stock market boogeyman? There's plenty of evidence in favor of the former; the digital video recording pioneer has tested ads on its platform with some success. Accordingly, it may be the new gateway for advertisers trying to sell to couch potatoes like me. But until now, it's been impossible to prove that thesis.

Nielsen's data will change that. If, as expected, the ratings show a dramatic drop in viewership when a program breaks for a commercial, TiVo's Street cred as an advertising platform could rise dramatically. That could lead to a bidding war for the technology among those with an interest in earning a larger slice of the global ad budget. But if not ... well, look out below.

Therein lies the key problem with investing in TiVo: Outside of time-shifting TV, the value of its service is a matter of broad speculation. It could be remarkably useful to Madison Avenue, or it could be as worthless as a $3 bill. I'm still betting on the former, but like millions of others, I'll have to wait till at least the new fall season to cash in my chips.

Put down the remote and pause for related Foolishness:

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Fool contributor Tim Beyers still thinks TiVo is the best thing to ever happen to TV. Tim owns options to buy shares of Apple. Find a complete list of his holdings by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.

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