Advertising 2.0

The cable industry has long sought to expand its reach and market share of the nation’s advertising dollar, and the topic is a live one at this year’s Cable Show.

Although advertising on cable TV is projected to reach $5 billion in 2008, this is but a fraction of the $35 billion that the U.S. broadcast TV industry expects this year. With projects like Canoe, tru2way interactivity, VOD advertising, and switched digital video (SDV), the cable industry is looking to further expand its advertising opportunities and capabilities.

Besides increasing its number of avails, one of the more interesting areas common to all the new advertising media available to today’s cable operator is that of targeting and measurement. Technology and metrics While one could argue that sufficient advertising opportunities do exist today – to the tune of about 4,000 insertion opportunities per day – only half of those are usable, and the top 10 networks amount to 80 percent of the advertising revenue. Cable sees opportunities to make the remaining half of today’s insertion opportunities addressable, which it believes could bring in well over $5 billion in additional advertising revenue – effectively doubling its current slice of the U.S. advertising market.

Four panelists at a Monday technology session from media and cable engineering disciplines offered perspectives on the challenges, examples, and opportunities of marrying TV distribution with targeting and measuring.

Some of the challenges included video ad insertion over the advanced video codec (AVC) as described in a paper by Mukta Kar of CableLabs and Sam Narasimhan of Motorola, and SDV capacity planning as well as switched group sizing as discussed in a paper by Steve Riedl of Time Warner Cable and Doug Jones of BigBand Networks.

Opportunities were discussed in a John Chandler-Pepelnjak and Brent Roraback of Microsoft presentation of dynamic insertion for short-form VOD advertising, which requires active program management. Results of their study indicated that VOD subscribers were more receptive to ads of greater length than non-addressable subscribers.

Especially interesting about this session were some of the questions that surfaced. These questions focused around the measurement aspects and how it impacts CPM (cost per thousand). While responses to these questions lacked data necessary to provide definitive answers, it was projected that CPMs would be multiples of that of traditional banner ads.

Other questions concerned Canoe and how that project would be phased-in. Session moderator and Comcast CTO Tony Werner responded that Canoe would initially address combined ads and then eventually begin introducing subtle interactive aspects, which would build over time.

There was also a question about storing ads on subscriber DVRs. Early results seem to indicate that this would be difficult to do and that use of network PVRs to achieve similar results would be much easier.

While there is a noticeable lack of hard data surrounding the effectiveness of interactive TV ads, considerable effort and expense is going into trying to develop this area as a way for cable to differentiate and capitalize on its growing advertising inventory.

– Bruce Bahlmann, Contributing Analyst Read more news and analysis on Communications Technology‘s Web site at http://www.cable360.net/ct/news/.