OTT Advertising Support Gains Traction with NSPs

Paul Larbey, head of IP video business, IP/optical network group, Nokia

Paul Larbey, head of IP video business, IP/optical network group, Nokia

New Edge Platforms Facilitate Search for New Business Models

By Fred Dawson

September 29, 2016 – It looks like the time has come for game-changing collaboration between content providers and network service providers on advanced advertising and other areas of support for business development in the OTT space, notwithstanding past failures in the legacy TV domain.

A number of vendors have introduced platforms that would support such capabilities at the edges of operators’ networks, sparking new trials aimed at exploiting the potential of dynamic placement of targeted ads in live and on-demand IP video streams to supplement revenues in the traditional pay TV and broadcast markets. As Imagine Communications CEO Charlie Vogt notes, the stakes are especially high for broadcasters.

“This is the scariest part of our business,” Vogt says, speaking of Imagine’s long-standing role as a leading broadcast industry supplier. “We’re seeing the advertising spend shift from traditional linear to online, and our customers have to figure out how to participate in that.”

The opportunity to support new business collaborations between NSPs and broadcasters stems from the need on both sides to come up with new revenue sources. For broadcasters embracing IP “glass to glass,” which is to say, from camera to viewers’ screens, the sense they must pursue direct-to-consumer (DTC) distribution of their content as a way to bolster their brands in a fragmented market has made monetization of those efforts top priority. For MVPDs, margin squeezes and subscriber losses in the pay TV business mandate finding new ways to leverage their networks to create new revenue streams.

Entities introducing new edge-based ad support platforms run the gamut from those with roots in the broadcasting space like Imagine and Amagi to CDN providers like Akamai and Comcast Wholesale to NSP suppliers like Nokia and Ericsson, albeit with varying degrees of publicly proclaimed commitment to the idea. Notably, Ericsson with its Unified Network Delivery initiative aimed at supporting NSP B2B models, Comcast Wholesale with its new CDN offering and Akamai, which struck a deal last year with Adobe to enable CDN-based dynamic advertising, all have solutions on offer but have said little about them.

In the high-profile camp, Imagine has now made official the dynamic advertising capabilities it had in mind, as previously reported, when it introduced its Selenio Video Delivery Edge (VDE) platform last year. As explained by Imagine’s chief product officer Brick Eksten, unlike solutions designed strictly for IP delivery, the firm’s Regional Advertising Distribution System (RADS) combines OTT cacheable content delivery technology with dynamic advertising insertion and QAM-compatible transport stream output to provide broadcasters, MVPDs and anyone distributing TV-caliber content over the Internet the ability to deliver regional and localized targeting of interstitially placed commercials.

RADS works by facilitating the creation of localized MPEG Transport Streams, which can be customized with unique ads before being directed to specific regions. “By adding a single appliance to their networks, broadcasters and cable operators can serve both OTT and traditional distribution from a single workflow, reducing costs and increasing the value of their content by offering advertisers the ability to diversify their campaigns and deliver ads to a better-targeted and more engaged audience,” Eksten says.

The question is, totally apart from their own local ad placement needs, do MVPDs think it’s a good idea to pursue wholesale business models serving content providers whose DTC strategies could undercut the pay TV subscription business? Judging by findings from a new global survey probing innovation priorities of over 200 pay TV executives published by NAGRA and U.K.-based researcher M, the jury is still out.

Only four percent of the dozens of companies covered by the survey currently offer advanced advertising and data services on a B2B basis, the researchers said. But, looking at just North America, the survey found the proportion of MVPDs offering such services is 35 percent, with AT&T/DirecTV, Dish Networks, Time Warner Cable and Cablevision listed as being among current purveyors.

Survey participant Carlos Miranda, CTO at Dish Mexico, makes the case that with market positions shifting as content providers move beyond B2B in the old pay TV paradigm to B2C, the traditional B2C distributors have a significant opportunity on the B2B side.  “This is the new way to look at relationships between operators and content provider,” Miranda says.

In Dish’s case, the support is more likely to come in the vein of billing and marketing services, given the company doesn’t own terrestrial networks with edge facilities in which to position support for advanced advertising at the local level. But the same reasoning can be applied when it comes to B2B advertising and data services that terrestrial MVPDs might provide, says Com Hem CTO Thomas Helbo, another survey participant whose company happens to be in Europe.

The Swedish MVPD has an opportunity to build new opportunities using the “intelligence we have in the network with two-way set-top boxes to collect the data,” Helbo says. “We should provide that and be stronger in the advertising space.”

Totally apart from the Comcast Wholesale CDN initiative, there’s clearly interest in the edge insertion opportunities at Comcast Cable, as evidenced in a paper presented by Comcast senior fellow Weidong Mao and system engineer James Barkley at the INTX conference in May. In it they spell out a concept that sounds a lot like the Imagine VDE and RADS, where a converged CDN platform can support IP and QAM video delivery in live and on-demand modes with a common advertising system capable of dynamic insertion on all streams.

The main purpose of their idea is to leverage an advanced edge platform to converge IP and QAM video processing to serve the primary goal of enabling transition to all-IP video delivery over time. But they also tout an advertising benefit.

“Common advertising systems can be enabled for both IP and QAM video,” the authors say. “Common reporting and data collection schemes can be applied to the infrastructure.”

By incorporating the QAM side of the content flow into the unified edge processing, they and Imagine go farther than the solutions commercially on offer for use with IP ABR streams. But, in the wholesale model where the focus is on IP, these solutions appear to be what’s needed across all market segments outside the legacy TV domain.

One sign that such ideas are gaining traction with ever more network service providers is the interest Nokia has found in its just-introduced Velocix Multiscreen Advertising solution, which builds on the Velocix Personalization Platform technology acquired in Nokia’s merger with Alcatel-Lucent. Three trials of Velocix Multiscreen Advertising are underway in North America, says Paul Larbey, head of the IP video business unit in Nokia’s IP/optical network group.

“North America, as a very mature market, is an obvious region where the time is right for use of our solution to support dynamic advertising,” Larbey says. “We also expect trials to begin in Europe later this year.” Support for dynamic ad insertions on live as well as on-demand programming is important to North American NSPs while the initial focus for European operators will be for VOD applications, he notes.

As explained by Larbey, Velocix Multiscreen Advertising is a virtualized software system designed for deployment on COTS-based CDN facilities that collects individual viewing information and presents it to an ad decision server to enable delivery of ads in any stream based on geographic, demographic and other parameters set by advertisers. The system can leverage the CDN to provide support for local caching of ads to better accommodate scaling and localization needs, he adds.

“The system acts as a single aggregation point across multiple stream,” Larbey says, noting that it can also be deployed on origin servers to support targeting when there’s no reliance on an NSP’s edge facilities. But the initial focus is on enabling NSPs to leverage their edge presence in multiple locations to create new business models, he adds.

Such capabilities are in sync with NSPs’ interests in efforts to license content for cloud DVR applications, Larbey notes. “Cloud DVR has been held back in many cases because of the digital rights issue,” he says. Now there’s an opportunity for service providers to negotiate with content owners for shared content rights to avoid having to provide personalized storage space for every file in exchange for enabling fresh, more relevant use of advertising spots in the programming.

The Velocix Multiscreen Advertising solution has been integrated with leading ad management platforms, including those provided by Cadent Technology (formerly BlackArrow), Adobe and Comcast’s Freewheel, Larbey notes. Integrations with Cadent include the supplier’s advertising control plane, which manages multiple advertising workflows through a centralized platform, as well as the Cadent ad decisioning server and Web-based application for planning, managing and analyzing advanced advertising campaigns. Also adding to the benefits NSPs can offer advertising customers is the advanced analytics support Nokia provides for ascertaining the true value of personalized advertising.

Another vendor seizing on the opportunity to create a foundation for new advertising business models is Amagi, which, as previously reported, has become a leading provider of IP-based broadcast playout and distribution as an alternative to legacy playout systems via its Cloudport platform, now serving TV networks in 25 countries. As an India-based company whose roots are in advertising, creating a server-side dynamic advertising platform for the OTT market is a natural step, says Amagi head of global marketing Sanjay Kirimanjeshwar.

“This is an extension of the way we started business in India as a targeted ad company on traditional TV,” Kirimanjeshwar says. “We were the first in India to do this and now buy and resell inventory in engagements with about 3,000 brands.” The company is also supporting geo-targeting for Indian broadcasters that want to sell advertising suited to viewers in Russia, Brazil, Singapore and elsewhere, he adds.

Amagi’s new Thunderstorm OTT ad-insertion platform is a server-side dynamic ad placement extension of the Cloudport workflow that is meant to overcome the drawbacks of client-based insertion processes. Inconsistencies in performance and, more importantly, broadcasters’ inability to prevent viewers from skipping or blocking ads have spawned growing demand for the benefits of a server-side solution, Kirimanjeshwar notes.

Monetizing video on every screen without dependency on device apps is especially important as broadcasters expand their offerings to live programming in the OTT space, says Amagi co-founder Baskar Subramanian. “The dynamic nature of live sports and news broadcast on OTT platforms calls for a responsive and accurate ad-insertion capability,” he says.

Amagi’s solution expands the usefulness of the platform beyond content that relies on ad marking mechanisms like SCTE 35 by using the watermarking system it has been providing to enable dynamic advertising in the legacy TV space, Subramanian adds. “We have used watermarking-based ad insertion to simplify the broadcast workflow, increase flexibility and eliminate huge integration efforts into existing broadcast traffic systems,” he says, noting the patented watermarking technology is used “to deliver millions of targeted ad seconds every month.”

While the Thunderstorm platform in its first deployments is being used at origin points in the OTT space, Amagi recognizes the role edge-based positioning of the insertion mechanisms has to play in localized targeting and quality of experience, Kirimanjeshwar says.

“More and more CDN people are expressing an interest in testing these capabilities with us,” he notes. “We are forming partnerships with some CDNs and in talks with many others.”    As for opening dialog with NSPs to promote use of Thunderstorm in their edge facilities, Kirimanjeshwar says, “It’s still very early days with people just taking baby steps. But we’re seeing a significant uptick in the rate of inquiries from service providers.”