TiVo's Ad Business: Promising, Stunted.

While TiVo has a lot of problems, it does have one modest success: It’s found buyers for its set-top data. NBC U, Carat, Starcom, and other advertisers are now paying TiVo to watch the second-by-second behaviour of its subscribers.

But that business — like TiVo’s future — depends on growing the subscriber base, and corresponding sample size. “Advertising benefits from having an increased number of subscribers,” CEO Tom Rogers said on the Q3 conference call. “That’s the biggest inhibitor in the growth of ad sales.”

And TiVo still — still! — isn’t making much headway on subs. The company added just 4,000 net new subscribers in the third quarter– 4,000! — compared to 53,000 in the same quarter last year. Meanwhile, the cost to acquire a new subscriber jumped from $230 to $300, and subs through DirecTV are plummeting.

But the fact that networks and advertisers are buying into TiVo’s data, flawed as it is, underscores how desperate they are for alternatives to Nielsen.

Earlier: TiVo Q3: Beats EPS, But Business Still Screwed

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