Abstract. This paper presents the innovative approach of the IST project iMEDIA towards Consumer Clustering and Targeted Advertising in a Digital TV Environment. iMEDIA covers the need of Advertising Companies to identify broad classes of TV viewers who will respond similarly to marketing actions, and thus develop their target advertising techniques. The consumers are equipped with a settop box (STB) with storage facilities and a modem. The definition of consumer profiles and clusters is based on demographics, preferences, and analysis of the consumer interactions with the TV, which are tracked automatically. In order to protect consumers’ identities, consumer data are stored locally on the STB and the classification of a consumer in a specific cluster takes place at the client side. Consumer data from the consumers, who permit it, is periodically transferred to the Server where Data Mining techniques are applied. The extracted consumer behavioral rules associate the clusters with consumer profiles and interaction/navigational data and are sent through the broadcast channel to the consumers’ STBs for the classification of each consumer and the playback of the advertisements that match consumer interests.