C3, C7, Who Cares? The Future Is DAI

When the digital video recorder came onto the scene in the early 2000s, it became apparent that the pay TV industry would fundamentally change. Viewers could watch their favorite shows at their own convenience and fast-forward through commercials. The industry ultimately responded with the “C3” window — a defensive measure that acknowledged the DVR and the delayed viewing habits it created.

Now that three-day window is expanding to seven days past the original airdate, allowing ad-supported networks to maximize their ad revenue. But what happens in a year? In five years? Will we measure C15? C45? The answer to monetizing TV doesn’t lie in adding days to the viewing window, but rather in dynamic ad insertion (DAI).

With DAI, advertisers will be able to deliver more personal, and ultimately more relevant ad content to delayed viewers. Targeting will be crucial not only for the brands that viewers see (how relevant is a Norelco commercial to Scandal fans?) but also for the timeliness of the ad itself. Why do I want to watch a Black Friday commercial on Saturday? I don’t, and as a consumer I’m more inclined to sit through relevant and timely ads.

As VOD and delayed viewing continue to grow and programming availability increases, advertisers will quickly see the value of DAI: delivering personalized, more targeted, timely ads leads to higher ROI and drives a bigger bottom line. Ultimately, we will see a revenue shift away from linear ad buys towards dynamically inserted spots that can be updated based on seasons, promotions and new viewer demographic information. And if an advertiser doesn’t want to update a commercial or a contract runs out? Networks can resell those spots as long as the content lives on VOD.

Once DAI goes mainstream, the overall quality of TV advertising will increase. Consumers will see more compelling content and advertisers will experience a more efficient buying process allowing them to deliver value to everyone involved. This is when innovation can truly begin. I predict that the general concept of advertising will shift away from simple product and company promotions in favor of a new form of entertainment to better complement the viewing experience.

Instead of adding content to a network website or app and leaving it to run as if it were still on TV, we will see a concerted effort to make ads match the viewing ecosystem. Highly rated series will be brought to viewers on-demand with limited or no commercial interruption by sponsors that now have more efficient “ad-monetization” tools at their disposal. Leading brands will work with content creators to sponsor episodes of existing programs or create new shows.

When we think beyond C7 and imagine the future of television advertising, it becomes clear that continually adding days to the monetization window doesn’t solve anything — it only delays the inevitable. Why limit ad exposure to a few weeks when DAI offers an unlimited opportunity? DAI in today’s ondemand viewing environment holds massive potential that truly maps to the way we watch TV today.

JR Cottingham is head of sales operations and strategy at Clearleap.