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Comcast Taps BlackArrow For VOD Ads

BlackArrow, a San Mateo, Calif.-based firm which sells software for inserting targeted ads on either pay-TV or online platforms, announced that cable giant Comcast is now using its software to dynamically insert ads in video-on-demand programming in its Jacksonville, Fla. system.

Comcast is using the BlackArrow software to address what cable operators have long cited as a significant stumbling block to growing their VOD revenues: the ability to insert fresh, relevant advertising within free on-demand content, as opposed to prepackaged advertising that is assembled weeks or months in advance.

Comcast is currently using BlackArrow for PBS Kids Sprout and FEARnet, 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. It is expected to roll out the BlackArrow technology to other markets over the coming year.

“The ability to update VOD advertising will help us offer feature parity with traditional linear and Internet-based advertising systems,” said Diana Kerekes, vice president of video content for Comcast, in a statement. “We’re pleased to be working with a technology leader like BlackArrow as we look for ways to offer our programming partners expanded opportunities to monetize their content offerings.”

BlackArrow was founded a little over four years ago and currently has about 50 employees. It has raised some $38 million to date from venture-capital firms Mayfield Fund and Polaris Venture Partners and strategic investors Intel, Cisco and Comcast Interactive Capital. The company makes two core software products that it sells on licensed basis.

For operators, it provides “Decision Suite” software that runs on a generic computer in a cable headend and sits between the traditional “video pumps”, such as Motorola or SeaChange video servers, and back-office systems. The Decision Suite software, which for online applications could also sit in a content delivery network, uses both subscriber information and content data to direct the dynamic insertion of advertising based on instructions from the “Sales Suite,” a software system for programmers optimized to place advertising across multiple timeshifted TV platforms, whether it be video-on-demand, network DVR content or online video.

“As an advertiser, you could say you want to target males 18-39 watching a primetime show, but not on the day it was broadcast,” says BlackArrow CEO Dean Denhart. “Then what we do is optimize it against all those different evolving conditions.”

Denhart throws all timeshifted platforms under the umbrella of “new TV,” and he says that meaningful ad revenues attached to them are a pretty nascent thing, too. To wit, Denhart points to research indicating that consumers watched six billion hours of VOD content in 2008 but only $70 million worth of advertising was sold against it. Online video didn’t fare much better, he says, with seven billion hours generating just $730 million in advertising revenues.

As a former chief technology officer for Knight Ridder Digital, Denhart sees parallels between TV viewers’ shift from linear to timeshifted TV and newspaper readers’ shift from print to online. But he believes that with his company’s software, programmers and cable operators have a better chance of keeping pace with the shift to make sure that revenues don’t disappear with it.

“People are getting TV content from lots of different places, they’re not going to one place,” says Denhart. “So the challenge becomes, how do you reach them? Our goal is to allow advertisers maximum reach no matter what platform people are watching.”

While Comcast has purchased both the Decision Suite and Sales Suite products from BlackArrow, Denhart doesn’t expect to sell the complete solution to every operator. Instead, he expects to sell Decision Suite to cable operators and Sales Suite software to programmers. But he thinks his company’s technology has a good chance of quickly gaining traction. That’s because cable operators’ steady consolidation of video-on-demand hardware into large regionalized data centers reduces the number of places where the Decision Suite has to be installed. Many of those same data centers are also supporting new online video initiatives, such as TV Everywhere.

“You don’t have to rack new technology into each headend, and that’s huge,” says Denhart. “It’s much easier to add two servers to a data center, than to add two servers to every headend.”