Microsoft Buys Navic Networks, Deliverer of Targeted TV Ads

Microsoft said yesterday that it’s buying Waltham, MA-based Navic Networks for an undisclosed sum. Navic, founded in 2001, makes software for set-top boxes that TV advertisers can use to target ads at specific digital cable subscribers and measure their responses. Its software can also be used to add interactive features such as voting and polls—for example, a set of trivia questions that Navic recently offered to select viewers of Bravo’s “Project Runway”—as well as coupons and offers for additional information.

Navic, which had raised three rounds of venture financing totaling $43 million, will become part of Microsoft’s Advertiser and Publisher Solutions Group. The group runs digital advertising efforts across Microsoft’s entire media network, including MSN, Windows Live, Microsoft Office Live, Xbox, Microsoft Live Search, and Facebook.

The classic joke in the advertising business is that advertisers know they’re wasting half of their money—they just don’t know which half. Navic claims that its ad placement service, called Admira, combats that problem by “addressing” TV ads only to viewers who are likely to respond, based on measurements of their previous viewing behavior. Brian McAndrews, the senior vice president for Microsoft’s Advertiser and Publisher Solutions Group, said the Navic acquisition will help Microsoft partners manage their TV advertising spending better and maximize their returns.

“Viewers across North America are engaging with relevant advertising and interacting with their TVs in ways never before possible,” Navic CEO Chet Kanojia said in a statement. “Joining forces with Microsoft will enable our common vision of addressable television advertising solutions to continue to flourish and better meet the needs of our industry partners….We look forward to extending our technology into a vast array of new markets and software solutions.”

Navic is just one of a cluster of New England-area companies offering technologies that tailor advertising for interactive home video. Newton, MA-based Extend Media has a system for inserting fresh advertising into on-demand Internet video. Acton, MA-based SeaChange International, a leading maker of backend software and hardware for video-on-demand services, also has systems that can insert ads dynamically into on-demand video streams. And in the area of interactive coupons and information offers, Navic competes with Backchannelmedia, a Boston interactive TV company we’ve covered several times lately.

Navic’s lead investors were Pilot House Associates, Highland Capital Partners, Himalaya Capital Ventures, Pequot Ventures, and Lauder Partners.

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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