The ability of IPTV to track user habits will allow more targeted adverts in new formats, according to companies backing the technology.

Agilent Technologies said that knowing the individual viewing and lifestyle habits of customers allows IPTV companies to offer a more personalised ad service than a traditional mass broadcast.

"Maybe they see you watch a lot of automotive programming and then you get your special channel and here is an advertisement about the new Porsche," Larry Desjardin, director of R&D at Agilent, told vnunet.com.

Providing advertising that viewers actually want to watch will be of paramount concern to the industry because one of the most common uses of personal video recorders is to fast-forward through the commercials.

Alan Lipperman, chief video architect at Redback Networks, and one of the original creators of RealPlayer technology, agreed that introducing forms of advertising that are not available in a broadcast or cable infrastructure would increase its value.

"One model I like is sequential advertising. Instead of a commercial being a single 30-second piece of video it is a longer story," he said.

"Since you know whether someone has received the first part, you can send the second part 15 or 30 minutes later."

Lipperman added that an IPTV environment also allows advertisers to continue a campaign across multiple channels.

"When the user is continuing to watch later, even on a different channel, I can show episode two," he said. "I can really create a conversation with the user."