&Headline=MSOs Aren’t Waiting for Canoe In Pursuit of New Ad Initiatives
&Article=February 18, 2010 – Notwithstanding the fits and starts of the cable industry’s struggle to go national with an advanced advertising platform, individual MSOs are aggressively building out their own foundations in response to mounting demand from advertisers for better ROI on ad dollars.
New initiatives underway at Comcast, Time Warner Cable, Cox Communications, Cablevision and many other cable companies are either in advanced stages of initial trials or already in commercial rollouts. Priorities and strategies vary widely, but all are exploiting the data-gathering capabilities of their set-top and back-office infrastructures to provide advertisers better ways to match ads to audiences and to measure audience engagement.
Time Warner Cable, for example, has quietly launched a data-gathering initiative that employs Openet, Ltd.’s cable-optimized Audience Measurement solution to provide advertisers a much more accurate accounting of how their ads are performing. At the same time, says a TWC executive, speaking on background, by leveraging second-by-second feedback from set-tops that can be turned into reports on what subscribers are watching across the full channel lineup, the new platform gives TWC’s local ad sales force a better idea of what their spot avails are really worth.
“If the data show a large share of the audience is tuning out ten seconds into a spot ad, we can report that to our advertisers,” the executive says. “And, with this platform, we can measure all the channels, not just the ones that Nielsen measures. That gives us the ability to put real value on all the niche channels that otherwise go unmeasured and therefore are undersold. And, at the local level, there’s far more value in the comprehensive information on local viewing of all channels that we can assemble compared to the limited amount of metering Nielsen does in any given market.”
While the Openet platform affords operators the ability to build addressable advertising around user profiles compiled anonymously from viewing behavior and demographic and geographic data, TWC has no plans to take this step, the executive says. TWC, like many other operators, does not want to incur potential publicity fallout from such applications.
“Privacy is a bigger issue with addressability than is the case when you use the data to produce rating metrics,” he notes. “As long as we’re collecting that information in an anonymous way the ‘icky’ factor doesn’t come into play.”
Meanwhile, at Cox the latest steps on the advanced advertising front have to do with introducing dynamic ad placement into time-shifted programming as part of the “MyPrimetime” initiative underway in many of the MSO’s markets. And the company has acted to streamline all types of ad placements generated by its sale teams with introduction of the cable industry’s first all-digital system for managing ad distribution.
The company says that more than 90 percent of the 43 million Cox Media spots produced annually are now managed digitally through its SpotXpress program, which allows clients to upload spots via a secure online portal, eliminating the delays associated with shipping physical content. The digital media management system also ensures that spots maintain optimal video quality and audio fidelity by avoiding the transfer to analog media.
Digital ad distribution obviously will facilitate implementation of dynamic ad placements in on-demand programming, including the company’s MyPrimetime service, which allows subscribers to access programming from network storage 24 hours after it has aired. In November the company announced it had launched a dynamic on-demand ad placement trial in Phoenix with NBC Universal to test the value of inserting different advertisements into the same programs so as to allow viewers to experience relevant ads regardless of when they watch.
The companies are working with an unnamed large advertiser in conjunction with ads placed in two programs: NBC’s The Office and USA Network’s Monk, both of which are available through MyPrimetime. During the trial, up to four ads and/or promos in both programs are refreshed several times per week, including ads at the beginning of the program as well as ads within the program, known as interior breaks.
“The addition of dynamic ad replacement and impression reporting gives Cox MyPrimetime the richest available feature set for supporting advertising in VOD,” says David Porter, vice president of advertising product development at Cox Media. This not only helps Cox Media built ad revenues; it creates a monetization incentive for programmers to allocate high-value content for time-shifted viewing.
“We’re talking about the most popular content on TV, and programmers are not going to be willing to put that on VOD for 30, 45 days unless there’s a way to monetize that,” Porter says. “The only way to do that is to replace the ads.”
But, of course, there’s much more to the benefits that come with dynamic ad placement. “We think about how often you can refresh it,” Porter says. “We think about being able to report usage discretely on those ads – so I can tell you how many people saw your program and I can also tell you how many people saw a specific ad within your program. If you put all that together, we have a very compelling platform for the programmer, for the advertisers and for the consumer.”
The same strategic vision underlies the initiative underway at Comcast, which last fall announced it had launched a VOD ad insertion program in Jacksonville, Fla. At the time Comcast said it was inserting standard 15- and 30-second promotional spots as well as newly introduced 20-second spots designed to drive tune-in for upcoming shows and specials on PBS KIDS Sprout and FEARnet, but it’s clear this is just the beginning of an initiative that is likely to spread company wide.
“The press release announcement is great,” says Nick Troiano, president of BlackArrow, which is supplying the campaign management and decision system for the Jacksonville project. “But what I think it really represents is Comcast – and other MSOs are doing the same – is now making a concerted effort and prioritization of dynamic VOD.”
Moving in stride with advanced advertising in the time-shifted space is all the work surrounding interactive ad engagement, telescoping and addressability in linear programming, where MSOs are leveraging EBIF (Enhanced Binary Interchange Format) or EBIF-like software to enable such applications across the digital set-top footprint. As previously reported (December, p. 1), the pace of advanced advertising rollouts on the EBIF platform is accelerating, but it’s still impeded by the need to overcome network and processing barriers to efficient use of the technology.
A big step toward improving the functionalities and implementation processes associated with EBIF was taken by CableLabs and Canoe Ventures in early February with their joint announcement of a new version of the standard. They said the new EBIF 106 includes support for “unbound” applications, which are apps like Caller ID, sports/news tickers and electronic guide extensions that are not bound to any specific program, and for addressability based on customer or device data stored in the set-top.
The new version will also provide support for the time-shifted environment with applications that can report whether viewers are watching live or time-shifted programming or that allow users to set recording times and reminders in their interactive guides. And, crucially to achieving much-needed administrative efficiencies, the platform now supports application permissions and resource management to ensure applications match with the terms of specific business arrangements.
“I think you’re going to look back on this period in time as an inflection point where advanced advertising becomes main stream in the cable industry,” says Cox’s Porter. “And I think EBIF is what’s going to get us there.”
In contrast to the highly individualized approaches to dynamic ad placement in VOD, where MSOs and suppliers have incrementally developed enhancements to legacy VOD platforms to enable things like short-form ads and disablement of fast forward, EBIF provides a standardized platform that will work across the entire industry, Porter notes. “From day one EBIF has been thoughtful about advertising and interactivity and really is designed and spec’d to facilitate advanced advertising,” he says.
But Porter acknowledges the pace of rollouts of applications this year will be piecemeal. “Look at any rollout of new technology, and it goes one market at a time,” he says. “You launch in one market and then as you launch in another market or system there’s rework that’s necessary. So I think the key here is patience. It will take some time before we have this ubiquitous across every cable home.”
Results from early implementations of advanced advertising in the linear programming domain are fueling operators’ commitment to the agenda. As previously reported (November, p. 13), Cablevision has moved ahead aggressively with an interactive ad platform that is not based on EBIF but with the stated intention of evolving to EBIF over time.
Cablevision recently released statistics signaling strong results for its Optimum Select campaign, which began in the fall. Measuring what it calls the conversion rate on various offers accessible through the select button on subscribers’ remotes, Cablevision reported the campaign began with a 40 percent conversion rate in conjunction with promotions offered by Gillette, Benjamin Moore, Century 21, Halls, Unilever and Colgate-Palmolive and recently hit 70 percent on ads from Colgate-Palmolive. Local ads from healthcare providers, travel agencies and other outlets are delivering similar results, the company said.
“You press select and basically via that commercial you can get a sample at home, you can get a coupon, you can get a brochure from an advertisers,” says Barry Frey, executive vice president of advanced platform sales at Cablevision. “It’s all opt in. That’s the beauty of this on-demand world where we’re addressing the consumer needs. We’re giving them the choice.”
Cablevision is also in the middle of an18-month experiment in targeted advertising with Visible World, which provides support for on-the-fly customization of advertising tied to data on income, gender and other parameters. Visible World, which has long supported rudimentary addressability based on geographic zones, intends to launch the highly targeted capabilities as a product later this year in conjunction with its work with Cablevision.
As all these individual MSO initiatives build momentum through engagement with the programming and advertising communities, participants continue to point to an eventual coming together to support national advertisers’ purchasing efficiencies through the services provided by Canoe Ventures. But it’s clear it will take awhile.
After the first Canoe initiative aimed at creating a national ad buying option tied to local zone profiles failed to get off the ground because operators could not agree on how to define and share sensitive market data, the venture turned to an initiative leveraging use of EBIF to support a request-for-information application that advertisers could purchase to run with national campaigns. The RFI offer was scheduled to launch last fall but was postponed to this spring.
Meanwhile, owing to the focus on EBIF-based opportunities, Canoe has not been aggressive about setting up a uniform mechanism for selling ads into the time-shifted programming domain. But it’s clear the big players in cable are counting on Canoe to be there as they continue to forge ahead with their individual initiatives.
“Today Canoe is very focused on deploying a lead-generation product that would allow consumers to request brochures and samples and things like that contained within a 30-second commercial,” Porter says. “That’s a very compelling product, and at Cox we have a similar product that we’ve deployed since 2003. It’s wonderful. And so it makes complete sense for Canoe to capitalize on what we’ve done in our local markets and bring it to a national scale.”
As for Canoe’s role in VOD advertising, Porter says, “They’re looking very closely at what Comcast, Cox, Time Warner and some of the other MSOs are doing in terms of developing the architecture, the business models and the work flow to make that happen. I think if you fast forward a year or two from now you’ll see the dynamic ad insertion at a very prominent spot at Canoe.”
The fact is, says BlackArrow’s Troiano, the industry has a ways to go before sales of time-shifted programming avails on a national basis will be feasible. “The cable environment is a heterogeneous environment,” he says. “That’s not going to change anytime soon.”
Even though, conceptually, dynamic ad insertion with addressability might be an easier sell than interactivity in terms of the sales processes and changes in ad buying modes that come with the latter, getting to a national purchasing platform in VOD is much harder, Troiano adds. “The standards, the technology infrastructures across MSOs have not matured enough to actually allow for that cross-platform, cross-operators sales process,” he says. “We’re working with all the right MSO operators to figure out how to standardize the processes and workflows and the technologies to support incremental buys.”
It’s a big task that starts with understanding who the customer is. “Even though we sell our products to both the Comcasts of the world, the distributors, and we sell them to the programmers, the NBCs, CBSs, etc., we really consider our customer the ad sales person, because the ad sales person has to be able to effectuate that buy,” Troiano says. “And they need to know two things. They need to know what’s my available inventory, and then, assuming they can deliver that ad, how do I get paid for it. If you can’t solve those first two questions for the ad sales person, you’re not going to see a big shift of ad dollars.
“It’s not just the campaign management, the buying and selling of the ad,” he continues, “It’s what are the processes on the programmer side to prepare that content or that ad, how do they actually send it and share with operators, how do they actually deliver the content so that they get paid on it and how does it get reported. So when we talk about unification, it’s within that entire supply chain – how do you actually create efficiencies and workflows and standardization across that so that you can facilitate an ad buy.”
But there’s more to it than standardizing procedures, he adds. The addressable advantages that come with placement of ads in on-demand programming that’s requested by a specific user bring with them the need to share information and to determine how granular the profiling data should be.”How the MSOs will share or not share information with the programming community” is the question.
The difficulties attending cooperation essential to achieving the national clearing house vision have fueled skepticism and impatience across the advertising community. Speaking at the recent Future of Television conference in New York, media industry investment advisor and analyst Jack Myers articulated the perceptions of many on this score.
“Cable operators have completely different systems,” Myers said. “They’re unwilling to come together in any kind of meaningful coalition or collaboration to develop a single platform for the advertisers. They can’t even do versioning on a geographic basis without coming up against tremendous internal cross-MSO politics.”
But money talks, and the realization from the early forays into dynamic time-shift placements and interactive linear advertising that the revenue projections floated by industry leaders aren’t pipe dreams may finally move cable operators to take the necessary steps. “I certainly understand the frustration from Madison Ave. about how long it’s taken,” Troiano says. “I think the reality is consumption of VOD is growing every year and every month. It’s growing pretty aggressively, pretty quickly. As long as consumers continue to embrace it, advertisers are going to want to reach those consumers.”
And there’s big money at stake. As Porter notes, the revenue surge cable is looking for isn’t about getting a bigger piece of the current TV advertising pie. “The overall marketing ad budgets are not going to grow,” he says. “They’ve been consistent throughout the years.”
Instead, it’s about direct marketing. “What we’re looking to do is find a more accountable way for marketers to spend their dollars with us and a more seamless and efficient way for the consumer to engage in that advertising,” he continues. “Direct marketing is a huge business and commands the lion’s share of advertising dollars. We are now bringing accountability and direct marketing to the television. So we expect a lot of those dollars will flow over to TV.”