An Out-of-the-Box Approach to the On-Demand Ad Game

Local advertisers are warming to on-demand advertising channels in the Lone Star State. By Mavis Scanlon Making money with VOD is one of cable’s Holy Grails these days, and Pamela Power seems hot on its trail. The GM of Time Warner Cable Media Sales in Austin has changed the rules of the game, jettisoning the idea that VOD advertising is only about inserting ads into on-demand programs. Instead, she’s created on-demand channels for advertisers, allowing them to showcase their wares in long-form VOD commercials. Although ensconced high in the digital tier, Power’s VOD ad channels cleverly reside near similar on-demand channels. For example, viewers surfing for HGTV On Demand or DIY On Demand are bound to come across the Homes@Home channel, which highlights builders and home services, since it’s sandwiched between the two. "Content is king," Power says. "We try to impress upon advertisers that we don’t want to see a five-minute commercial—we really want to see something that’s educational and informative." Power even gives advertisers a choice: Submit your own ad or her three-person production team will produce it for you. Just like the system’s content-based VOD channels, the ad-filled VOD channels feature a static text screen with a barker window in the upper right-hand corner. Viewers then use their remote to surf that channel’s content. New Medium, New Advertisers Power admits "it’s still [the] early days" and declines to disclose revenue of her four ad channels, although she says Homes@Home, launched in September 2003, garners the most cash (see pie chart). The other ad channels feature autos, health and arts & entertainment. In addition the ad channels have lured new advertisers in the commercial real estate, summer camp and religious organization categories, to name a few, while existing advertisers have increased buys to get into the on-demand arena. The number of long-form ads underscores the traction the ad channels have gained in Austin’s advertising community. In August there were 50, double the number carried in August 2004. To help open more doors, the advanced media specialist on Power’s team will focus on researching and prospecting new categories. The next target? Local broadcasters, for one. Networks could promote their new shows—"but they’re not bound to a 30-second spot," Power says. Neither are the cultural, dining and entertainment advertisers on Austin On Demand, a channel that’s been bolstered by a partnership with the Downtown Austin Alliance. Power knows on-demand ads can’t exist in a vacuum, so the VOD ad channels get plenty of promo play on linear channels. "I never sell an on-demand package that doesn’t include promo messages" on the linear tier, she says. In fact, pricing for on-demand packages for the most part is determined by the value of the 30-second linear spots that are included in on-demand packages. Using that as a starting point, a premium is added to cover the longer-form "spots." "The 30-second [linear] units are what is really of tangible value to me," Power notes. Industry-wide, a lack of timely measurement data is delaying a wider deployment of on-demand advertising, says Adi Kishore, Yankee Group’s director of media and entertainment strategies. "There is immense interest from agencies and advertisers in new media," he says, "but they’re not sure of the value—they’re not sure how to price it right." In time, those measurement and pricing issues will be sorted out. And when the on-demand advertising land rush accelerates, Power will already have her ground firmly staked out.