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Mega-Merger Could Be A Boon for Advanced Ads

Given the size and scale of the mega- MSO it’s poised to produce, the proposed Comcast-Time Warner Cable deal could lead to seismic shifts in how programmers and operators buy and sell ads, and pave the way for a broader use of new technologies.

Many agree that the industry is ripe for significant changes in the MSO-programmer ad relationship.

The industry is due “for an evolutionary rethink of the advertising value proposition from an avails-split discussion between programmers and operators to a revenuesharing concept between programmers and operators,” Tim Hanlon, founder and CEO of The Vertere Group, said.

It’s debatable that the two minutes of local ad inventory offered each hour is serving the needs of marketers due to the “demographic and geographic gymnastics necessary to provide value” for brands that are not local in focus, Hanlon said.

“The dirty little secret of local ad sales for cable is there is plenty of inventory available on any given day,” he said. “I think it behooves the TV industry to think through more enlightened business relationships.”

In Hanlon’s opinion, a shift to a revenue-sharing model should be a priority, suggesting that it would enable ad targeting well beyond the local level — a “complicated headache” that comes with a questionable payoff, he said.

With a Comcast-TWC combination on the table and the potential for more consolidation on the horizon, he believes revenue sharing could improve advanced advertising scale and buying power.

Hanlon believes cable VOD advertising can also play a part in this evolution.

In the cable world, that’s been the primary domain of Canoe. While the Comcast- TWC transaction could lead to more efficiency, the MSObacked advanced-ad venture already has its VOD ad platform rolled out to the combined footprint of those particular MSOs. Canoe expects to have its two other partners — Cox Communications and Bright House Networks — fully deployed by year-end.

Canoe’s “marching orders” for this year is to sign up more programmers, Chris Pizzurro, head of sales and marketing, said.

Canoe’s already made some progress there with the recent additions of A+E Networks and AMC Networks, joining a group that includes ABC and ABC Family, several NBCUniversal properties, Fox, a batch of channels from the Scripps Networks stable, and independent VOD programmer Sportskool.

Among the group evaluating a Canoe connection is Mag Rack, a video-ondemand- only programmer that’s offered in about 40 million homes. CEO Joe Covey said Mag Rack has long-lived under the assumption that VOD digital ad insertion is just around the corner. “I’m starting to believe that it’s real … I’m optimistic,” Covey said.

DAI is critical to Mag Rack, which doesn’t have a linear service. “We have to fight hard to get ad dollars,” Covey said.