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VOD Advertising BusinessIs Slowly Coming to Life | @jlafayette

If you’ve waited a week to catch up with Rick and the gang on AMC’s
The Walking Dead and dial up an episode on-demand via your cable system, odds are you won’t have to sit through too
many commercials.

Despite the show’s immense popularity,
an episode watched last week via Comcast’s
Xfinity VOD service was chock-full
of promos for Comic Book Men, another
AMC show, rather than paid ads.
In fact, the first thing a viewer sees is a
promo for Comcast, touting how awesome its multiscreen
offering of Disney content is. After that,
AMC has sold a spot for CarMax, which runs before
The Walking Dead begins. Within the show, the sole
commercial is for Geico.

With the advent of dynamic ad insertion into digital
VOD streams, TV executives are hoping to cash in on
the growth of delayed viewing (see Special Report:
VOD/Advanced Advertising
). During the
first three days after a show airs, most networks load
the same commercials into on-demand versions of
the program. Commercials viewed on-demand during
those three days get counted in the show’s C3 commercial
rating, the measurement on which ad sales
and audience guarantees are based. After that, the
technology allows networks to resell the ad time, but
an informal review of on-demand ad loads finds few
paid ads and lots of promos in commercial pods.

Dave Campanelli, senior VP at Horizon Media,
which handles buying for Geico, sees value in VOD
advertising now. “There aren’t a whole lot of advertisers
there, so we like the uncluttered environment and
dedicated audience,” Campanelli said.
On top of that, viewers often can’t fastforward
through spots on most systems.

Now that the first three days of VOD
exposure are counted in a show’s C3 commercial
rating, Campanelli said he is reevaluating
whether it’s worth buying the
eyeballs of viewers who watch more than
three days after the show airs in addition to those
who watch within the three-day window.

“If it’s a push by a network, something that’s a
selling point for them and helps the totality of our
deal, we’ll look at it if the value proposition’s there
for it,” Campanelli said. And more networks
are pushing VOD now. “The networks and
the providers are really banking on VOD to
combat DVRs and Netflix, so they’re placing
their bets there,” he said.

At AMC, Scott Collins, executive VP for ad
sales, said the network has more actively been
selling VOD ads for the last year or so and now
has staff dedicated to VOD ad sales.

“Before, it wasn’t as desirable without dynamic
ad insertion. We’re experimenting and
testing all kinds of things,” Collins said. “It’s
definitely a work in progress, and we did upfront
VOD deals this year. They were few and
far between a year ago, so I feel people are paying a
lot more attention.”

Sponsor List Is Growing

The on-demand version of ABC’s Grey’s Anatomy,
viewed four days after air, contained ads from a few
outside sponsors — Liberty Mutual, Bowflex and — as well as spots for several Disney-related
products, from films such as Thor: The Dark World to
DVD releases of The Little Mermaid and Monsters
and a Disney Jr.-themed Lego set.

In on-demand, CBS shows such as Elementary
and The Crazy Ones were filled with promos for
other CBS series, including The Big Bang Theory,
and public service announcements.

Last month at a National Association of Broadcasters
conference, David Poltrack, CBS chief research officer,
said that VOD usage has exploded and that from
an advertising point of view, “VOD is a significantly
better situation for us than DVR playback.” Poltrack
said that CBS is doing a trial of dynamic ad insertion
with Comcast. “All the systems seem to be together.
Of course, we have to make a business deal now.”

While CBS has yet to make its business deal, some
other networks have signed on to enable dynamic
ad insertion on VOD. Marcien Jenckes, Comcast
Cable senior VP and general manager of video services,
says the U.S.’ largest cable operator has been
using the technology for a year and a half. But for a
network to get access to the capability, they need to
make a deal through Canoe Ventures, the advanced
advertising group set up by the cable industry.

Working through Canoe is intended to let the networks
operate under a single set of economic and
technical terms on a national basis, Jenckes said.
At this point, Canoe can insert ads on Comcast and
No. 2 MSO Time Warner Cable, and he is hopeful
other operators will be on board soon.

Programmers including ABC/Disney, NBCUniversal
and Fox are enabled through Canoe, according to
Jenckes. AMC has made a deal and should be up and
running with dynamic ad insertion in the near future.
(Up till now, AMC has put ads in VOD the old-fashioned
way, by inserting them directly into the content,
which makes it expensive to change or update.)

Jenckes thinks that over the next year, most networks
will sign up and start to use the technology.

“We think we’re very far along. All the technology
is in place to do it. In fact, there’s millions of impressions
that are inserted today,” Jenckes said. And
there will be even more next quarter. “I think you
will see a lot of examples.”