A brilliant idea in need of a commercial break

Virtual advertising allows numerous corporate sponsors to use the same advertising space during a live television broadcast by inserting a series of messages or images that are specific to a territory, language or culture. It is well suited to fast-moving sports such as football or rugby where the screen changes constantly.

Knibbs and Mercer have developed the pattern recognition system to the point where they are able to track any nominated element during a sporting event - say a perimeter advertising board - and electronically insert an alternative image. This could be a sponsor's logo or a different advertising message and could be on screen for five seconds or for the whole event.

The clever bit is that they have made the inserted image appear as if it really existed at the live venue by preserving perspective, shading and movement in front of the new image. The system can replace or superimpose upon any moving or stationary image during a television transmission in real time.

For example, instead of a dedicated camera tracking the movement of one player, the system allows a player to be followed by changing his shirt colour. This allows viewers to watch the selected player in the context of the whole game, rather than from the limited perspective of one participant.

In addition, perimeter advertising can be amended to suit the language or customs of the watching television audience.

Take, for example, Premier League football. Beamed to 152 countries every week and watched by more than a billion people, there is little sense in a brewer having his message shown on say, Saudi television, where alcohol is banned. In this instance, alcohol ads could be changed to a more appropriate product to meet the likely demands of the local market. Mercer and Knibbs have persuaded a Premiership football club to let them film reserve games in order that the pair can show prospective investors just how their system works in real time.

The club in question is acutely aware of the benefits of virtual advertising and, more pertinently, of being the rights owners of the 'product' (ie the football match) being transmitted.

The virtual advertising industry is still in its infancy and there is some resistance to its growth from existing sponsors, particularly from those who pump colossal sums into the Premier League or events such as the World Cup.

They liken it to 'ambush marketing', done on the cheap. A virtual advertisement transmitted for the whole of a football match could cost the same as a standard 30-second advert transmitted during the commercial break. Nevertheless, there has already been a basic form of 'virtual' insert during Premiership games transmitted overseas.

As the foot-and-mouth threat receded, part of the perimeter advertising boards shown on matches broadcast abroad were virtually rearranged to read 'VisitBritain.com'.

The virtual advertising industry is set to flourish as existing broadcast rights deals are renegotiated or new rights, such as those for broadband, are introduced.

Last week, the Scottish Premier League decided to jettison Sky television as the broadcaster of live games from July.

A factor in this decision was the SPL's recognition that the sale of the league's virtual advertising rights could generate significantly more money than was likely to be available in the next broadcast contract. The implications for pay-per-view are enormous as virtual advertising can be directed according to demographics.

Sports could be made available via pay television on the basis that subscribers provide details of their postcode, age, sex and so on.

By analysing this information, the subsequent broadcast would then contain advertising messages specific to the subscriber's demographic profile.

Such an arrangement benefits all parties. The sport generates more revenue from more sponsors, the advertising message is more targeted and the sports fan receives the broadcast more cheaply in return for providing the demographic information either via the internet or interactive television.

A bit Orwellian, perhaps, but Mercer and Knibbs are convinced they have developed a system that all sports will use. Incredibly, their search for fresh funding continues.