Last week’s news that Charter Communications is piloting the dynamic insertion of ads in its headquarters market of St. Louis was a harbinger of good news for both operators and advertisers.

For cable operators, on-demand advertising will bring a much-needed revenue model to VOD offerings while advertisers will be able to track the results of their ads and shorten the time it takes to insert them into content.

The trial, which is being billed as the largest of its kind and follows on the heels of a smaller rollout of dynamic ad insertion by Sunflower Broadband this past summer, started inserting ads into Charter’s 250,000-subscribr St. Louis system on Oct. 30. Todd Stewart, Charter’s vice president of national advertising sales and development, said the genesis of the pilot trial was back in first quarter of this year, followed by lab work in the second and third quarters. Coming out "At the end of August we came out the lab, and we felt like the system was fully cooked and ready to go into a field deployment," Stewart said. "We had an I guide launch that was unrelated to the on-demand insertion pilot, so we had about six weeks there were we let the system get other projects and parties out of the way so we didn’t have any interruptions during our installation field schedule. That’s why we waited until the fourth quarter of 2006."

The trial pairs C-COR‘s nABLE on-demand ad insertion solution – Charter uses C-COR for both on-demand and digital management solutions in St. Louis – with Atlas On Demand‘s automated campaign management, ad decision logic optimatization and reporting tools along with TVN Entertainment‘s ad distribution system. The trial includes national clients from OlgilvyInteractve and Mediaedge:cia.

"Everything we’re doing is within the CableLabs spec (the SCTE‘s proposed DVS 629 specification)," Stewart said. "We’re looking at specific bit rate for this pilot, so it’s not a variable bit rate at this point. We basically ran it through the lab several times to make sure that when we would see a video tear or a (set-top) box trying to sink, especially a low-end box, we went back and evaluated why it happened and make tweaks to the hardware and software to make sure it didn’t happen again. What we didn’t want to do in this pilot is do something that was so out of the CableLabs spec that it couldn’t be replicated or scaled." How it works The trial takes ad content and converts it into playlists that can be added either before or after the VOD content in pre-roll or post-roll positions. One of the benefits of dynamic ad insertion is that the ads can be re-configured without re-encoding the other VOD content.

"The biggest benefit to the networks using the system is that they would cut their lead times down from 60 or 70 days in advance for on-demand ad insertion to mere weeks or days," Stewart said. "Before, if you wanted to update your ads, everything would need to be re-encoded, so there is obviously a cost for that going through TVN or CMC (Comcast Media Center).

"The second piece is that allows them to change the creative in the middle of a campaign. They can update ads without updating the content to make the ads more relevant."

Joe Matarese, C-COR’s senior vice president of advanced global technology, said a lot of integration work needed to be done between C-COR’s nABLE platform, Harmonic‘s encoders and the Motorola boxes that Charter uses in St. Louis to get the platform to work.

"The nature of MPEG is such that there are very, very tight timing characteristics around how the video is delivered down through the network and how the decoder buffer on the set-top boxes is able to buffer that video data such that it can be decoded and played out properly," Matarese said. "On the video server side, the server has to be told to put together those MPEG clips and play them out as a playlist.

"The other piece that is important is having the ability to receive the play instructions and potentially receive them every hour. Being able to get a new set of instructions that say ‘I know I told you to play these particular ads with this particular content last, but now I’m telling you to play different ads with that content’ is a capability that took us a long time get in place." Tolerance The trial will also help Charter’s clients gauge consumers’ tolerances for the length of the pre-roll and post-roll ads.

"We really don’t know what that tolerance is," Stewart said. "We hope to go in with a very systematic way that allows our advertisers to test 15-second pre-rolls, 5-second pre-rolls compared with 30- and 60-second pre-rolls to see where the tune-outs are and when the fast forward button is hit. They (advertisers) can learn what is most effective and tailor their campaigns to be best of class even if it’s with the old technology."

Stewart said the Charter created a "straw man" with its current pilot trial in St. Louis, but future plans include "giving the straw man a brain" by possibly including zip codes or demographic profiling when the current trial ends in January.

"Let’s say one of our advertisers wants to reach adults that are 35 plus; we could say that this genre-based program does a good job of reaching that audience, and here are some 15-second pre-rolls to run with that genre of programming, and here are the zip codes where they’re most likely to live," Stewart said. "We’ll make a decision with our partners, but we hope that phase two with the addressable brain will occur some time in the second half of 2007." – Mike Robuck

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