June 7, 2012 – The stars have finally aligned to make advertising on VOD a real business with a national footprint for dynamic ad placement now taking shape as viewership of on-demand TV programming surges.
With Time Warner Cable now embracing a dynamic ad insertion (DAI) strategy using technology supplied by BlackArrow, four of the top five U.S. MSOs have publicly embraced DAI initiatives, including Comcast, Cox and Cablevision as well as TWC. “We now have a massive footprint for on demand advertising,” says BlackArrow CTO Joe Matarese.
Leading the way, Comcast, another user of BlackArrow’s technology, says it’s close to 100 percent DAI capable across its entire VOD footprint. In fact, Comcast and TWC, as the first MSO to deploy BlackArrow’s new ad router, are in the vanguard of MSOs who are extending the VOD DAI reach into the TV Everywhere domain to enable placements targeted to multiple categories of connected devices.
“Our partnership with BlackArrow will lay the foundation for new on-demand business and advertising models,” says Joan Gillman, president of Time Warner Cable Media. “Ultimately we expect that this will extend across a broad spectrum of television distribution platforms and devices.”
While Comcast has not publicly laid out plans for advertising on connected devices, the MSO and Nielsen have agreed to begin testing a ratings system for ads viewed on tablets and mobile devices, according to Ad Age. Reporting from the recent Cable Show in Boston, the publication quoted Comcast executive Matthew Strauss, senior vice president for digital and emerging platforms, as saying the company hopes to get other MSOs involved in the effort with the ultimate aim of aggregating all measurements into a single, unified currency.
While the industry ramp-up to any-device DAI capabilities has a way to go, ad sales on VOD have now moved into the mainstream with well over half the 55 million VOD-capable households in the U.S. now in line for receiving dynamically placed ads on TV programs offered over free VOD. “Right now we have systems handling 400 million placement requirements per month,” Matarese says. “Some programmers are filling every piece of inventory in on-demand. It’s moving fast.”
Indeed, says Cathy Hetzel, president of media measurement and research firm Rentrak, based on the latest viewing rates, the potential value of ad inventory on currently consumed VOD TV programs is worth about $1 billion. VOD-enabled “homes now watch eight hours of VOD a month and 80 percent of that is free TV programs,” Hetzel says.
That translates to about 17 free on-demand (FOD) shows consumed per month across the 55 million VOD households, Hetzel adds. Or, looking at the data another way, there are now 33.8 million set-tops accessing FOD each month, she says.
Not all the inventory on these time-shifted programs is suited for DAI, but most of it is. The DAI opportunity is especially strong for viewing that extends beyond the Nielsen C3 three-day window, when impressions are counted in the ratings for ads originally placed with the live programs. “Eighty percent of the free TV program viewing occurs after the first three days of availability [in] on demand,” Hetzel says.
Along with wide-scale deployment of campaign management and DAI placement platforms on the part of leading MSOs a key force behind the emergence of VOD advertising has been the demonstrated ability of multiple vendors’ systems to work with each other through the standardized interfaces and messaging protocols developed by CableLabs, the Society of Cable Telecommunications Engineers and Canoe Ventures. In the most recent interoperability testing of multi-vendor solutions at CableLabs, which took place in January, participants showed that ad decision managers (ADMs), ad decision servers (ADS) and other components worked seamlessly to deliver national and local advertising content and viewer-relevant messages in a variety of use cases for DAI.
Widely seen as a landmark event setting up the kickoff to scaling of VOD DAI, the Advertising Interop was a real-world replication of “an environment that would be valuable to a cable operator,” according to Rob Klippel, vice president of new products and operations at Comcast Spotlight. “This event demonstrated that national, regional and local advertising opportunities can be served from multiple sources and coexist within a single VOD session,” Klippel said in a release following the tests.
Fostering such interoperability in the context of supporting DAI across all devices is what BlackArrow’s new Ad Router and other recently introduced enhancements to the vendor’s Advanced Advertising System are all about, Matarese says. “Everything we’ve put in place we’re setting up for multi-device advertising,” he notes.
The Ad Router, a component of the BlackArrow Decision Suite, is designed to reside at the operator’s data center and control and mediate all real-time advanced advertising workflows, including ad routing requests that are based on various platforms and inventory owners. The Ad Router allows operators to send national and local ad avails to different ADSs, enabling programmers and local sales organizations to use their existing campaign tools for real-time ad fulfillment, Matarese explains.
The Ad Router also can route ad requests from different platforms to different ADSs to enable cross-platform consistency for operators in business policies, reporting and measurement. BlackArrow has integrated the platform with leading back-office systems and, by leveraging standards like SCTE 130, the Ad Router brings multiple vendors’ ADMs into the messaging matrix as well.
Another new component of the product portfolio, the BlackArrow Business Suite, enables programmers to manage metadata and avails against their content. For example, programmers can specify how ad loads change through programming windows, such as the key C3 measurement timeframe. “A big goal as the industry moves to on-the-fly ad placements across all devices is not to disrupt the C3 window,” Matarese notes.
The Business Suite also helps programmers gain visibility into asset availability at the operator plant, and it can dynamically remove or replace “baked in” ads in on-demand content without having to re-pitch assets. “All we want to know from the device is we have an avail,” Matarese says. “We get the signal on which combination of ads is running on the break and we parse that down. So instead of working from on-demand ad file system, we’re able to do things on the fly, determining which video formats need to be assembled and then signaling down to the client which ads to grab off the CDN.”
The BlackArrow system also allows operators to set the policies for providing programmers access to data that can be used for targeting ads, he notes. “The MSO may choose to share certain information or may even charge for it, so we control this flow,” he says.
Moving into the connected device arena poses many challenges, not the least of which is conforming the DAI process to the complexities associated with adaptive rate streaming, which enables distribution of video in continuous streams at maximum bit rates available to each device. Two new alliances with BlackArrow are among various initiatives underway to accommodate advertising in the streaming space.
One is with RGB Networks, supplier of advanced video processing technology for network operators, which has teamed with BlackArrow to create a standards-based means of enabling service providers to deliver specific ads to individual viewers watching live or on-demand programming on connected devices. As a subset of its Enhanced Video Intelligence Architecture, RGB’s Ad Insertion for Multi-bitrate system includes means of performing adaptive bitrate encoding of ads, detecting and communicating ad avails, inserting ads and packaging H.264-encoded programs and ads together into all the leading adaptive rate protocols.
Using these capabilities together with the ad targeting intelligence of the BlackArrow system allows network operators to deliver “hyper-targeted ads to smartphones, PCs, tablets, connected TVs and virtually any other device that receives premium video programming,” says Ramin Farassat, vice president of product marketing and business development for RGB Networks.
On a parallel track, BlackArrow and multi-platform video software firm SeaWell Networks have teamed to leverage the BlackArrow system for placements in live and on-demand content streamed through the SeaWell Spectrum platform, where ads are stitched into one continuous adaptive rate stream with functionalities that prevent ad skipping.
“We’re at the starting point where we can make sure ad campaigns scheduled on the TV programs are running properly on all devices,” Matarese says. “As we look at developing more sophisticated campaigns we need to work through the measurement issues and how to bring in the use of set-top and other data from the operator side. There’s a lot of work to be done in the multi-device space, but getting the foundation in place is a great beginning.”