On Demand Advertising Market Set to Boom
January 2nd, 2008
The market for video-on-demand (VOD) advertising is raring to go. The technology is there, and the interest is definitely there, but there are several crucial stepping stones cable operators have yet to cross – namely negotiating business models and receiving premium VOD content.
Everyone in the value chain from advertisers and ad agencies to networks and operators – realizes the huge revenue potential the technology holds for each one of them.
“This is the first time, in terms of a disruptive technology, that every constituent in the value chain benefits,” says Scott Ferris, SVP and GM of emerging media at Atlas on-Demand. “This is a very unique advancement in television for everyone, especially the consumer.”
Last February, Tandberg Television and Comcast Spotlight – the ad sales arm of Comcast Corp. – announced the deployment of TandbergTV’s AdPoint platform for the placement and management of dynamic ads on VOD. And last September, Lawrence, Kan.-based Sunflower Broadband commercially launched the technology with the help of Atlas’ automated campaign management, ad decision logic optimization and reporting tools, and SeaChange International’s AdPulse on-demand advertising system.
In November, Charter Communications trialed the technology in its headquarters market of St. Louis with C-Cor’s nAble on-demand ad-insertion solution, Atlas’ technology and TVN’s ad distribution system. Currently, many other hush-hush trials and tests are being conducted by operators nationwide.
“Operators are pretty much full-throttle, full-speed ahead with this,” says John Morrow, VP of strategy development and execution for Scientific Atlanta, a Cisco company. “Everyone is on the edge of their seat, working hard to conduct trials and validate the attractiveness of the technology.
With operators giving viewers more on-demand choices, and viewers responding by ordering more and more on-demand titles, the time is ripe for inserting timely, pertinent ads in VOD sessions.
Custom orders! Traditionally, ads have been pre-baked into the VOD content, so advertisers have to know what ads to place, and where to place them, months in advance. These monolithic, static assets have to be pulled from the video server and re-encoded with a new ad if the original one grows stale, and that process can sometimes take weeks.
With dynamic ad insertion, when a VOD stream is requested by a consumer, a campaign manager instantaneously picks the most relevant ad or ads to accompany the content, and a dynamic playlist is created on the fly. “This creates a unique, one-to-one relationship that every advertiser dreams about because video-on-demand, by definition, is a unicast stream,” SA’s Morrow says. “Every time a consumer orders a movie or anything else, there is a definite link between the subscriber and the cable operator.”
More and more consumers are time-shifting their TV-viewing experience, making traditional TV advertising an even more shot-in-the-dark proposition, and making addressable advertising extremely enticing. Instead of reaching a mass audience, the ad will reach a segmented – or niche – audience, increasing the CPM (cost per thousand) of the ad. When advertising on Sunflower’s VOD offering, advertisers can easily see CPMs that are anywhere from 10 to 50 times higher than on linear channels, says GM Patrick Knorr.
And manufacturers are ready to make dynamic ad insertion a widely deployed reality. Vendors such as C-Cor, Cisco, Concurrent, Harmonic, Motorola, SeaChange and TandbergTV have developed ad-insertion solutions. Atlas provides ad-pairing abilities – and has a relationship with C-Cor, Concurrent, SeaChange and TandbergTV. And Everstream, along with Rentrak, fills in the measurement hole with granular data.
One of the biggest holdups in the VOD advertising space is the business models that need to be worked out between the networks and the operators. “But once it’s clear to the advertisers that they can place much more valuable ads in targeted ways – like with video-on-demand advertising – that the value is proven, that it’s measurable…then of course the money will start to flow, and the ads will be purchased, and we’ll all move forward,” says Guy Cherry, principal architect of video systems for C-Cor.
By Traci Patterson
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