Interactive Advertising: In Search of a Business Model - Levi Shapiro

Addressable interactive advertising on cable television should be a multibillion dollar business After all cable networks earned a record 27 billion last year from traditional advertising and the 2011 upfront saw double digit revenue growth In addition VOD on cable which enables dynamic ad insertion is the fastest growing form of timeshifted viewing According to Magna Global 60 of US households have VOD compared to 409 for DVR In spite of these positive trends technical and business issues are not yet resolved Key players in the VOD value chain cable operators TV networks advertisers and technology providers share their perspectives about what lies ahead for VOD Dynamic Ad Insertion DAI and addressable advertisingAddressable advertising delivers targeted messages based on demographic and behavioral data to individual households For example in the same apartment building an advertiser could deliver an ad for dog food to one household and cat food to another The goal is to target with information about geography socioeconomic status media usage lifestyle habits purchase behavior etcCarl Fremont is EVP Global Media Director at Digitas wwwdigitascom the digital media unit of Publicis wwwpubliciscom the world39s fourth largest global advertising conglomerate Carl presented findings last month for Stage I of an industry initiative called AAMP the Advanced Advertising Media Project This includes interviews with 20 senior executives from cable networks brands agencies and technology vendors According to Carl quotthe ecosystem recognizes the opportunity There is an expectation for growth In two years VOD advertising will begin to scale In the interim we need to understand the linkages between VOD the consumer and other digital media My hypothesis is that branded entertainment will have more impact in this new medium than the traditional thirty second spot The creative execution will need to adaptquotDiana Kerekes VP General Manager of Xfinity On Demand spoke at the On Demand Summit last month quotThe state of the union for VOD is extremely good At Comcast we launched our VOD service in 2003 Today we have over 25000 titles with more than 350 million views per month 80 of these views are freequotComcast wwwcomcastcom the nation39s largest cable operator with 24 million subscribers hopes to monetize a much larger proportion of those free views They have invested heavily in the two major interactive advertising platforms Canoe Live TV and VOD Black ArrowquotVOD can be a big business for cable We are just on the cusp of DAI Dynamic Ad Insertion monetizing all of those views that are free for the customer Programmers will have a valuable business model when this goes live creating a floodgate of content coming on demandquotTwo technology providers have taken the lead in offering tools like accurate subscriber and advertising data optimized placement ad decision services ADS and ad decision management ADMOne of these is Canoe Ventures created three years ago by the six largest cable operators Comcast Time Warner Charter Cablevision Cox Bright House and focused on Live TV Unfortunately for advertisers Canoe does not yet deliver a truly national footprint However there have been a variety of successful RFI request for information trials for brands like USPS GE HP Coca Cola etc The RFI is an overlay calltoaction at the bottom of the TV screen Viewers use their remote control button to request home delivery of free product samples The RFI overlay templates use the Enhanced TV Binary Interchange Format EBIF technology developed by CableLabs httpwwwcablelabscom the RampampD consortium of the US cable TV industry Later this year Canoe will add additional interactive features such as polling voting and triviaUSPS and their advertising agency Campbell Ewald worked with Canoe to run a DAI campaign last Holiday Season Managing Director Mark Bellisimo was pleased with the results quotEngagement and requests for more information exceeded our expectations and the cost per lead was competitive with other forms of mediaquotArthur Orduna CTO of Canoe Ventures spoke at the On Demand Summit quotWe are at the cave drawing stage of VOD advertising We think there is real money to be made for a lot of peoplequotquotDigital now has a standard EBIF for interactive television Programmers are adopting advanced SAFI and SCTE standards to capitalize on the billions of undermonetized views Canoe offers a onetomany value proposition enabling a single interface and single source of campaign reporting across all participating MSO39squotBlack Arrow which is funded by the likes of Comcast Time Warner Intel and set top players Cisco and Motorolaamp160 is focused on VOD Having deployed in Richmond Pompano FL Jacksonville and other markets Black Arrow President Nick Troiano calls 2011 quota tipping point The focus is no longer on trials agencies and advertisers want to know what capabilities are available MSO39s want to know how to monetize VODquotquotTelevision ads in prime time are very expensive VOD can give brands a primetime experience in a timeshifted environment One question is whether this is a TV ad sale a digital buy or bothquotBlack Arrow recently added dynamic midroll ad insertion ads in the middle of the program Ad sales teams can now control when and where ads appear number of quotavailsquot enable disable functions etc quotFormats should be whatever the operator wants in a commercial environment To make the market work the sector will need marketing packaging positioning and communications across the different constituenciesquotWhile the trend of growing VOD usage is helpful it is not enough to change entrenched industry practices Consider the experience of TiVO wwwtivocom which introduced a variety of innovative ad units Although DVR penetration will reach 40 of US households this year the company has less than half the number of subscribers it had in 2007 Moreover operators like Cablevision are deploying their own substitute products There is still much work to be done before ad dollars begin flowing toward solutions like addressable advertising and dynamic ad insertionLevi Shapiro is a Partner at TMT Strategic Advisors a research and strategy firm focusing on the technology media and telecom sectors He can be reached at levitmtstratcom or via twitter levshapiroRead all Levi39s MediaBizBloggers commentaries at Unleavened MediaCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerMediaBizBloggers is an openthought leadership blog platform for media marketing and advertising professionals companies and organizations To contribute contact Jackmediadvisorygroupcom The opinions expressed in MediaBizBloggerscom are not those of Media Advisory Group its employees or other MediaBizBloggerscom contributors Media Advisory Group accepts no responsibility for the views of MediaBizBloggers authors

Become a Thought Leader.
Share your thought leadership article with industry professionals & have them archived in Thought Leadership

Interactive Advertising: In Search of a Business Model - Levi Shapiro

Author

Publish date

Channel

Archived in

Levi Shapiro

Hispanic Leadership Roundtable: Inclusion, Mentorship, and Building the Next Generation (Video) - By Juan Ayala

More Videos:

Become a Thought Leader. Share your thought leadership article with industry professionals & have them archived in Thought Leadership

Interactive Advertising: In Search of a Business Model - Levi Shapiro

Enjoying This Commentary? There's More to Love

Levi Shapiro

Hispanic Leadership Roundtable: Inclusion, Mentorship, and Building the Next Generation (Video) - By Juan Ayala

The payment was successful

Cookies

Become a Thought Leader.
Share your thought leadership article with industry professionals & have them archived in Thought Leadership