Dynamic VOD Ads: Ready to Turn the Corner?

Back in February, I wrote a cover story for Multichannel News that said three areas of advanced-advertising were poised to “take root” in 2010: interactive TV ads, set-top metrics and dynamic VOD ads (see Advanced Ads: 3 Reasons Why the Wait is Over).

So did that happen? Kind of.

Let’s say the seeds have been planted for Canoe’s RFI ads, but with nothing in the way of real national campaigns to tout just yet (see Canoe’s Verklin: National ITV Ads Are Here Now). Cablevision, the advanced-advertising trailblazer among MSOs, has made headway on interactive ads and on other fronts as well (see this week’s Advanced Ads: Message Muscle as part of our 2010 Operator of the Year package; subscription required).

Set-top box metrics continue to have a play in certain areas, particularly for local TV markets, but the industry is still wrestling with standardizing the data.

And as for dynamic VOD ads, the category has been locked in a holding pattern of testing and trialing, aside from Cablevision’s capabilities (see Rainbow Tests VOD Ad Insertion With Bresnan, Fox Cable Checks Out Dynamic VOD Ads, Comcast Splices VOD Ads in Fla. and Cox Teams With NBCU For Dynamic VOD Ad Test).

For on-demand advertising’s true believers, it’s been a long, sometimes frustrating wait for those say the technology is there, that it works — and the operators and programmers just need to find the will to generate more money out of their ad-supported VOD services.

Canoe Ventures, for its part, is looking at building out a national, dynamic ad insertion platform in 2011, which “will increase the value of on-demand content for programmers, MSOs and advertisers,” according to SVP of products Jim Turner.

Added Turner: “Television programmers and sales executives have been looking for viable solutions to further monetize ad-supported VOD and help bring Internet viewing of television content back to the TV. We will be conducting pilot tests with cable networks in 2011, but we do not yet have a specific timetable for deployment.”

I asked several other industry executives what it will take for dynamic VOD advertising to take off as a business. Here are some excerpts from their comments:

Joan Gillman, Time Warner Cable EVP & president of media sales: “Time Warner Cable has successfully completed two preliminary technical trials for dynamic pre- and post-roll insertion and we recently initiated a robust, fully integrated technical trial to validate mid-roll functionality. The next step is to make the technology work within an open standards-based ecosystem… The quicker all involved parties work towards that end, the quicker the industry will see value in scaling the solutions and enhance the value of TV advertising through these addressable technologies.”

Paul Woidke, OpenTV SVP of advanced advertising: “There’s a raw desire to put appropriate advertising next to video content… The next hurdle that has to be crossed is that there be some sort of agreement in the industry about how this happens. We see operators moving beyond tentative, sort of labs trials, into field trials and deployments…. It comes back to the content providers and advertisers to step up to the plate.”

Nick Troiano, BlackArrow president: “The technology is not the issue — it works, and it works well. In terms of catalyzing the market, you need some component of reach. I think scale, first and foremost, means reach into number of households addressed. The Comcasts of the world need to deploy dynamic VOD advertising capabilities across their footprint. There is no interest in reaching just 500,000 households. You need multiple millions.”

Jeff Sherwin, This Technology LLC co-founder: “DAI is not just about VOD. It’s a much larger opportunity. The networks and the operators feel that the catalog is only to going grow, and there must be a business model to support it — it can’t sit out there for free… An open architecture [for dynamic ad insertion] ensures that the interests of the most important parties in this equation (operators, networks and Canoe) have options, compatibility and control and that the industry as a whole is positioned to forge ahead with a smart, lucrative advanced Dynamic Ad Insertion strategy.”

Malcolm Stanley, SeaChange director of advertising product management: “From a technical perspective, this is not a science project anymore. We’ve proven it with Virgin Media in the U.K. We say, ‘Where and when would you like to do this?’ What’s holding people back? You have a very large group of interested companies moving deliberately through a lifecycle of creating available tranches of inventory. They’ve identified low-hanging fruit, and targeted linear with the RFI EBIF insertion. The next low-hanging fruit is VOD. But there’s an awful lot of operations work that needs to happen to get it to a truly national business.”

Craig Woerz, MediaStorm co-founder and managing partner: “The big issue right now is the education process. We were one of the first agencies with clients in the original VOD space without dynamic insertion. [Advertisers] didn’t complain. They just complied with the four-week split. Now we have more dynamic ad insertion. But from an advertising standpoint I don’t necessarily know that people have had the education about why that’s an important environment.”