The development of compression and transmission techniques for digital video and audio signals coupled with the advent of the Internet have resulted in an ability to transmit audio and video programming to subscribers from a multitude of locations.  Reception areas are no longer limited to the reception area of a radio or television transmitting tower, a cable TV head end, a telephone central office or another geographically determined location.  Instead, the subscribers of programming may be distributed over a wide geographical range and, in fact, exist in a multitude of countries. 
For example, a group of subscribers distributed across the globe having a specific interest can have simultaneous access to the programming of interest.  In cable television systems, these programs are generally transmitted to groups of subscribers, each group being associated with a node.  A node is traditionally associated with a receiver which receives an optical signal from the cable TV head end, converts the signal to an electrical signal, and transmits the signals to the homes.  The video programming is frequently transmitted from one central location to multiple cable television head ends, and then distributed to the nodes and ultimately to the subscribers.  Although the viewership for the programs transmitted in this manner may be quite large, generally, there exists characteristics that can be associated with each node due to the respective geographic location. 
The nodes in certain areas may have subscribers with a particular range of household income or other demographic characteristics that are distinct from the subscribers in other nodes both nearby and distant. 
Similar characteristics exist for the television systems that receive digital programming from satellites.  Generally, the digital video programming is frequently transmitted from one central location to multiple cable television head ends, and then distributed to the nodes and ultimately to the subscribers. 
The transmission of the programming based on specific geographic areas continues to exist, especially in cable-based systems and satellite-based systems, but is substantially affected by the advent of the Internet.  In the Internet environment, the information contents may be received from any computer on the network, irrespective of where the subscriber is located.  Furthermore, in the Internet environment, the information contents may be customized based on subscriber needs and preferences. 
In all of the above-mentioned systems, including cable-based, satellite-based and Internet-based systems, the program contents also include one or more advertisements.  These advertisements are generally inserted in the program streams by evaluating the program contents, making a rough determination of the target audience, and finding suitable advertisements.  For example, beer advertisements may be inserted into the football game programming, and gardening tools advertisements may be inserted into home improvement programming.  In cable-based and satellite-based systems, these advertisements are generally displayed as spot messages, and in the Internet environment, these advertisements are displayed as banner advertisements. 
Internet environments also provide for multicasting where audio and video streams are simultaneously transmitted to a plurality of subscribers.  The subscribers are grouped based on the type of program contents they receive, but there is no distinction for the purpose of advertising. 
Thus even though prior art advertising schemes try to match the program contents and the advertisements that are displayed within the program contents, such advertisement schemes are not fully effective.  What is lacking in these advertising schemes is the idea of targeted advertising, i.e., presenting different advertisements to different subscribers based on one or more subscriber characteristics, or different versions of the same advertisement to different subscribers based on one or more subscriber characteristics. 
The present invention is directed at an apparatus and a method for creating subgroups based on one or more subscriber characteristics.  Each subgroup corresponds to one or more subscribers and receives a particular program stream and one or more targeted advertisements directed at that set of subscribers. 
The subgroups may be created in many different ways.  In an Internet environment, the subgroups may be created by utilizing multicasting features.  Generally, the subgroups are created within a multicast group based on one or more shared subscriber characteristics.  The subgroup may comprise a group of subscribers, a group of households, an individual subscriber or a single household.  In a cable environment, the subgroups may be created based on the configuration of a regional end and one or more local ends, e.g., each node configured to a local end may represent a subgroup. 
In one embodiment, an apparatus is presented in which n digital program streams are received along with m digital advertisement streams, and p digital presentation streams are created, where p is greater than n. Each of the digital presentation streams corresponds to a different subgroup, e.g., a first presentation is transmitted to a first subgroup, and a second presentation is transmitted to a second subgroup, etc. 
In one implementation, different presentation streams are formed for different subgroups created within a multicast group. 
The targeted advertisements may be transported along with a program stream as a separate advertising stream.  This may be accomplished in many different ways, e.g., in an Internet environment, this may be accomplished by forming a program multicast stream which contains an entertainment stream, and forming a plurality of advertisement multicast streams that contain one or more targeted advertisements.  The program multicast stream is transmitted to a group of subscribers (comprising many subgroups), while a first advertising multicast stream is transmitted to a first subgroup of the group.  Similarly, the programming multicast stream and a second advertising multicast stream is transmitted to a second subgroup.  In this embodiment, the targeted advertisements are inserted into the programming multicast stream at the appropriate insertion time. 
The present invention also presents a method of receiving targeted advertisements where a first digital signal containing programming is received along with a second digital signal containing target advertisements which is inserted into the first signal at the appropriate advertisement breaks and presented to the subscriber.  The program streams may contain default/generic advertisements that may be substituted with target advertisements.  Alternatively, the program streams may contain empty segments where target advertisements may be inserted.