New LG TVs Will Be Telling Marketers What You’re Watching

Your co-workers, friends, and maybe even your loved ones might not know you obsessively watch marathons of House Hunters International, but your TV soon will, with LG and others looking to launch Internet-connected sets that tell third-party marketers about all the horrible TV shows you watch.

AdAge reports that LG has been showing off in-development TVs that use software from a company called Cognitive Networks:

Cognitive pumps viewing information back to a database through the internet, allowing marketers to tailor messages in real time… Viewers who opt-in to the service gain access to advanced interactive features.

Even though LG is using next year’s TVs to demo the technology, it will actually be made available in sets that hit the shelves in 2013.

The software analyzes the pixels on your set to not only recognize what is being watched, but also where in the program you’re watching. AdAge gives the example of a pizza chain paying for a pop-in ad offering 10% off to viewers. The ad could then turn on the TV’s Skype function so you can call and order the pizza without ever having to move.

Cognitive says that Samsung and Vizio are also considering using the software, while Sony is working with a competing company, Gracenote, that also makes content-recognition software.

What’s in it for the TV manufacturers? A way to finally receive some of that sweet, sweet ad money that has historically only gone to broadcasters and cable companies.

“Our job is to produce recurring revenue for TV guys who are lucky if they can produce margins of 5% on their hardware,” explains the CEO of Cognitice. “The 4 bucks they make on a set, they can at least double with the $5 they may make a year from the new recurring revenue.”

A huge hurdle, and a reason to be hopeful that this idea will ultimately fail, is that LG and others will need to get this sort of technology out to at least 10 million customers in order to have a product that is appealing to big-money advertisers.

We don’t doubt that it can sell 10 million TVs containing the tech — just look at all the 3D TVs that have been sold in the last few years, in spite of the fact that there is virtually no 3D content available — but best of luck trying to get that many people to opt into an intrusive form of advertising. In fact, fewer than 1-in-3 TVs that could be connected to the Internet are set up, and an even smaller percentage actually use the built-in apps that provide services people want.

A VP for Dish Network tells AdAge that the tech might be interesting, but it’s a misguided effort from manufacturers who don’t understand the business of integrating content and advertising, and that cable and satellite providers would be smart to stay away from this sort of privacy-invading marketing.

“We’re not going to risk the creepy factor or pushing the envelope,” he explains, “for the sake of doing better in something that’s not core to our customer focus.”