IN THE MIDST OF THE RECESSION, when big advertisers like carmakers were hardly spending and traditional media like television and newspapers were bearing the full brunt of the pullback, I remember a conversation I had with someone I’ll dub a new media “true believer”.
(This month, Cartt.ca INVESTIGATES is analyzing the myriad changes underway in television advertising. Three weeks ago, we found the appetite for new ways to reach consumers via the TV platform is growing rapidly. Two weeks ago we dove into the progress addressable ads are making (or not). Last week we analyzed interactive advertising, online, mobile as well as an old standby which helps brand marketers dodge all this new technology. This week we wrap up our look at the shifting TV advertising sands with a bit of commentary to go along with a look at the dawn of dynamic video on demand ad insertion and the big money driving it.)
It was at a downtown Toronto conference of some sort and this person was utterly convinced that the recession would finally turn those mega-billion-dollar North American advertising budgets irretrievably towards new media and away from the likes of regular TV, radio and newspapers, leading to the deserved death of “old” media.
New media offers watch-when-you-want functionality for the consumer and promises a much better return on investment for advertisers through measurable, guaranteed exposure to the right audience at the right time. Actual metrics can track how actual product sales happened as the result of ad dollars spent. No more simple ratings buys with ads sold against popular TV shows, but real analytics of impressions and ad click throughs. So, given all this great data and seemingly airtight logic, this person asked me how could advertisers and their agencies go anywhere but online or other new media with their ad spend?
I disagreed, reasoning that when the ad budgets returned, the people holding the purse strings would go back to what they know, back to what works and what has always worked – especially TV advertising. Besides, the consumer is notoriously slow at adopting new technology on a mass scale. Most of us still don’t like watching TV on computers.
Now as we all know, since the recession eased and those ad dollars returned to TV. Broadcasters have seen good growth because linear TV is incredibly popular and a hugely robust business. Plus, it still delivers an engaged, mass audience.
That’s not to say agencies aren’t spending on new media because they are, in the billions. They often choose to spend those new media dollars with old media companies, purchasing campaigns from broadcasters on TV and on their video portals online around the same popular shows.
It’s a cozy, lucrative business where everyone knows big changes will always be coming in some form. But, if the mature TV model is still so solid, what’s the rush to alter how business is done? Despite the dire warnings and predictions from my “true believer” acquaintance, media companies, carriers, buyers and advertisers aren’t yet jumping fully on board with addressable advertising or interactive advertising and are still, really, just experimenting. But all of those new options will entrench themselves solidly in the future.
But what about taking an expansive, pre-existing video library, available on TV and creating brand new ad inventory around it? That’s the promise of dynamic video on demand advertising, which is getting pretty close to full rollout.
Given the work Comcast, Time Warner and Rogers is doing in this field, VOD advertising may well be the next ad growth platform.
Led by Arise Communications’ Andrew Rosenman, a strategic, interactive marketing company which specializes in new platforms, and enabled by tech vendor Black Arrow – whose investors include Comcast, Time Warner, Cisco, Motorola, NDS and Intel, the U.S. cable market is leading a charge into dynamic ad insertion into video on demand streams.
Ads have always been possible, but not popular, on VOD as the spots themselves can sit there for weeks, aging, and customers are used to getting to their content unfettered by advertising. VOD, while still considered a new platform, has been around for a decade now.
But using Black Arrow’s Advanced Advertising System, the U.S. cable companies can insert new ads into its customers’ video on demand streams. They can be of any length and targeted to the proper customers.
“The phrase that I’ve used in helping folks wrap their heads around it is we’ve essentially created an entire class of inventory that’s brand new,” Rosenman, who is working closely with Comcast’s testing of the platform, told Cartt.ca in an interview. According to Rentrak’s “State of Video on Demand 2010” report, 38 million set top boxes per month accessed VOD content, averaging a rate of 17.1 VOD “transactions” per month. That’s more than 7.7 billion VOD streams in 2010 in the States. That’s a lot of potential ad inventory.
“Prior to enabling these methods, you literally had to take your ad into the stream and live with it for as long as that ad was up on the VOD service, and not only are agencies bad at getting their stuff to you in advance of air, the idea of 45 days in advance of air, that just wasn’t going to happen,” added Rosenman.
“And it precluded a lot of categories because a lot of advertisers… simply don’t want four-week or six-week campaigns. A great example is feature film releases. These campaigns are highly concentrated in the two to three weeks prior to the theatrical release. It’s a lot of GRP (gross ratings points) it’s a lot of impressions. But you’re not going to be able to run a campaign that says, ‘In theatres July 1st,’ and then that campaign, in the old way, would still be running through the month of July. That’s not particularly helpful.”
With the new way of dynamically inserting new ads into VOD, carriers and broadcasters can do a better job in bringing together their advertising clients with the right viewers. “If you’re Paramount Pictures and you have your summer blockbuster coming out and somebody sits down on a Saturday evening to watch an action film, you now have the opportunity to promote your upcoming action film against content in the same genre or against an audience that you believe would be receptive to that message,” says Rosenman.
And in the VOD space, there are no time limits, so some can be five second hits. Others, full five-minute movie trailers. “And when you think about the post-roll position, that’s a huge opportunity for those same film distributors to then be able to sell DVDs. You can almost have this direct response opportunity at the end of the film.”
In Canada though, it’s a different story thanks to our regulations. While Rogers is using both the Black Arrow technology as well as Rosenman to launch dynamic VOD ad insertion likely this year, it is prevented by CRTC regs governing VOD from selling ads on its own within the platform. Here, in order for ads to be sold on VOD, the program rights must be owned and the ad sales done, buy a linear Canadian broadcaster.
So matching feature film ads with Canadian VOD users like the example cited above can’t happen here. Rogers isn’t allowed to sell against the films in its VOD library the same way as Time Warner Cable can, for example.
“Ours is a slightly different model than in the U.S. so… we’ll just enable it on behalf of the broadcasters, and there’ll be some sort of serving fee,” says Rogers’ director of video product management Mark Freedman. “We don’t sell the inventory. CTV does, Shaw does, Corus does.”
But with carriers now owning the four largest private broadcasters (Bell/CTV, Shaw/Global, Videotron/TVA and Rogers/Citytv), dynamic VOD would look to become a new revenue opportunity for the vertically integrated companies. Dynamic VOD ads will also be a prime cross-selling opportunity for digital cable, broadband, home phone and wireless.
“It may not be this huge revenue gusher for operators like Rogers… but the reality is that it is a strategic, over-the-top fighter for those operators so the compelling argument that they give Turner and Viacom and Discovery is that it’s monetization for your content which is beyond linear… and by the way, those views are to the living room, and there are zillions of them going to the big screen in the household. Now go, sales team, and connect that to everything else you’re selling,” explains Rosenman, who adds the business model will be up to each programmer and carrier to decide.
“The argument then, when push comes to shove with the programmers – is… why are you making your content available via IP for free when… we’ve given you a way to make money on your content on our platform that – by the way, the CPMs we’re talking about is dollars compared to pennies for online advertising.
“And when I say dollars, I mean really rich CPMs. Like, make your eyes bulge out. In fact, a couple have already been booked in the trial market, and some of those metrics were shared with me… was the validation of many years of work to know that this inventory was that valuable.”
Rosenman says dynamic VOD advertising will be enabled for 20 million U.S. households by the end of 2011, rising to 40 or 50 million in 2012.
“I can actually tell you what ad played in what household against what content at what time, and I can limit my campaigns by total number of impressions, how long a campaign should be out. All sorts of parameters. So I actually have hard data coming back in real time that says, ;I delivered this many messages to this many households,’ which is kind of a quantum leap.”
A quantum leap. That’s what the “true believers” have said should have happened by now to the world of TV advertising. We’re not there yet, but it is on its way.
Questions, kudos, criticisms or comments? Please send them our way at editorial@cartt.ca.
