TiVo Channels Google

It's no secret that one of the great allures of TiVo (Nasdaq: TIVO  ) is its ability to allow consumers to skip over commercials as they watch replays of their favorite shows. But that now may be coming to an end. According to a report at News.com, TiVo over the weekend began testing interactive advertising tools, including pop-up ads that appear while fast-forwarding through other ads.

The idea appears to be modeled after the same pop-up ads that appear in the background when you visit a website. But on TiVo, they would appear to the side of the screen and take up roughly 25% of the viewing space. News.com reports that TiVo is testing its interactive ad system with consumers who own its Series2 device. Only one advertiser -- a movie studio -- is participating.

It would be tempting to dismiss the idea, since much of TiVo's value comes from offering commercial-free TV. But I think doing so would fail to see the bigger picture. After all, targeted advertising works, as witnessed by the hypergrowth at Google (Nasdaq: GOOG  ) and Yahoo! (Nasdaq: YHOO  ) . Is there any reason that TiVo, which, similarly, can track your channel surfing habits, wouldn't offer a paid search mechanism?

It's worth asking because TiVo's subscriber base is at 3 million and growing. No, that doesn't make for the same national stage as the networks, but TiVo's software for tracking your viewing habits is as good as or better than any Nielsen report. Moreover, the firm's recent deal with Comcast (Nasdaq: CMCSA  ) , which serves more than 21 million viewers, should help boost its subscriber base substantially.

Maybe that's why TiVo appears to be aping Google. Seriously. Consider the possibilities: Google is the top-rated gateway to the Web; TiVo is fast becoming the gateway to your TV. Google is profiting from it through targeted paid searches; TiVo could profit by offering targeted paid surfing. See what I mean?

If the weekend's experiment proves successful, and TiVo's other interactive advertising tools catch on, it's a fast leap from selling boxes to selling a portal with high-rent advertising space. If you don't believe me, ask yourself: Why else would Comcast agree to fund engineering services to easily create interactive ads for TiVos designed for its network?

For related Foolishness:

TiVo is one of David Gardner's recommendations forMotley Fool Stock Advisor. Find out which other companies David has highlighted by subscribing today for six months without risk.

Fool contributor Tim Beyers doesn't own a TiVo, opting instead for DISH Network's DVR. He longs for the real thing, though. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.


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