Step by step, cable system operators and advertisers are marching us toward a brave new future where advertisements will be specifically targeted to certain zip codes, neighborhoods - even individual homes, and eventually different TV sets within the same home - depending on what advertisers think they know about who's watching that tube.

Thanks to technology that makes possible what is called digital ad insertion, big cable operators like Tele-Communications Inc. can now show different ads to viewers in different neighborhoods, during the same commercial break. And that technology is spreading quickly.

Last Monday, TCI and SkyConnect, a company that makes servers for digital ad insertion, announced a US$4 million deal to install a system serving 1.4 million subscribers in the San Francisco Bay area. By year's end, TCI says it will have digital ad insertion systems in place for 90 percent of the 24 million homes in its nationwide service areas.

In fact, today's ad targeting revolution only hints at what will soon be possible as the industry grows up. If digital set-top boxes gain popularity - as companies like Microsoft and TCI are betting - ad targeting will be taken to a whole new level. With two-way cable communication, cable operators will be able to serve different ads to a teenager watching The X-Files in her bedroom and her parents catching Mulder and Scully in the den.

(c) Wired News