The story of advanced advertising has been a bit like the story of the tortoise and the hare. The cable industry has been talking about advanced advertising for a long time and plodding along, ever so tortoise-like, toward its goals. Then all of a sudden Google, aka the hare, raced past and left the poor tortoise in the dust.
Everyone knows how the race ends, though, at least in Aesop’s Fable.
In cable’s defense, it has had to deal with an entrenched technical infrastructure and an entrenched TV advertising business model. In contrast, the Internet was a completely new medium for Google to innovate its brilliant targeted advertising scheme. Instead of plastering content with ads that may or may not reach interested eyeballs, Google uses its powerful search engine to correlate ads to content.
But 2009 may prove to be the year that cable starts picking up some speed. In 2008, Canoe Ventures, originally a collaborative project of six big cable operators, officially became its own company. Canoe’s goal is to make it easy for national advertisers to buy advanced TV ads.
In addition, the digital video subcommittee of the SCTE is making progress on SCTE 130, the cable industry’s emerging technical standard for advanced advertising.
And vendors in the cable industry are busy cooking up new advanced advertising applications.
Historically, the cable industry hasn’t played much of a role in advertising other than having some 30-second spots they could sell, said Doug Ross, Cisco’s VP of business development in the service provider video technology group. But with the advent of digital technology, video on demand (VOD) technology, intelligent set-tops at the edge of the network with memory and powerful processors, "it opens a whole new set of possibilities for different types of advertising," Ross said.
There are three fundamental things that the digital networks and the technologies around those networks are enabling for advertising, collectively known as advanced advertising services: (1) addressability or targeting; (2) interactivity; and (3) measurement.
First step: addressability
Yaron Raz, director of video solutions marketing at BigBand Networks, explained that cable does limited targeting today with zone advertising, where 20,000-100,000 homes in a geographic region are targeted. Ultimately, advanced advertising could give an advertiser the ability to target a specific home. But systems would have to be in place to protect the identity of the people in that home.
"When you have a system that enables you to identify a specific household, that’s profoundly different than the 30-second spot," said Ross.
"There’s a lot of space for an intermediate step, where you go between the 100,000-home zone and one-to-one," Raz said. "MSOs are looking for a short ROI (return on investment). The narrowcast space of something like 500 homes addressed by switched digital or VOD is an interesting interim step."
Canoe’s first product, internally known as Creative Versioning, falls in this category of early-stage addressable advertising, using cable’s existing ad insertion technologies and ZIP Code-based zone targeting. Creative Versioning is slated for rollout in the first half of this year.
"We’ve added a few wrinkles with regard to selling on a demographic or psychographic basis," said Arthur Orduna, Canoe’s CTO. "The key is to be able to leverage MSO capability in terms of ad insertion. We’re not going to debunk an existing model and replace it with another. We’re going to be able to produce new models, incrementally."
BigBand last fall introduced its MSP 2000 personalized media services platform, which includes ad insertion splicing capabilities for linear video. Raz said the product supports cable’s current ad technologies but also can transition to emerging architectures and standards.
At this time, said Raz, you "need to deal with zoned and addressable with the same platform."
Set-tops key to interactivity
There are two platforms being worked on to allow interactivity in cable advertising: tru2way for new set-tops and enhanced binary interface format (EBIF) for legacy set-tops. An example of an interactive ad would be if a subscriber sees an automobile commercial and can press a button to be sent more information, or can press a button and watch an expanded infomercial on demand.
"Research has shown that when you engage the consumer in some kind of dialogue, that kind of advertising is more effective," said Cisco’s Ross.
"The two things we know are incredibly important for Canoe [are] support for the EBIF standard and implementation to enable a national footprint," said Orduna. "We have created initial interfaces in the draft process that are EBIF-based that allow MSOs to communicate on advanced campaigns that are EBIF-based."
As far as set-tops, Orduna said: "We’re talking about a set-top that can support VOD and has an EBIF user agent. That’s sort of the base case. That implies two-way and the ability to add audience measurement data."
Advertisers want measurement
Measurement is probably the biggest concern of the end-users – the advertisers and the ad agencies. They want to know how many eyeballs they’re reaching, whether those targets are bona-fide prospects, and how much the impressions are going to cost.
Howard Rubin, senior product marketing manager at SeaChange International, said there are some hurdles to overcome in terms of measurement of advanced advertising. First, advertisers are accustomed to buying media fairly far in advance, using familiar ad management programs, not a VOD model. Second, they are accustomed to measuring eyeballs based on Nielson data, not on dynamic, fine granular data.
Another big hurdle: Advanced advertising costs more. According to data gathered by SNL Kagan for SeaChange in 2008, linear ad cost per thousand (CPM) averaged $10, while VOD ad CPM averaged $57.
"(Cost) is definitely part of why we were created," said Canoe’s Orduna. "Whether impression-based or performance-based, we need to create a platform that the buy side is going to see makes sense. We’ve got to be able to provide that kind of flexibility."
Canoe is providing a service to the broadcasters as well as the cable industry, said Ross. It’s a set of technologies that can be deployed locally, but aggregated centrally. The buyers don’t want to deal with lots of small sellers. They want to buy big chunks of aggregated inventory on a national level.
Fitting the pieces together
"If you look at it all collectively, you can see that you have to precisely target and engage and measure," said Ross. "You have a much more complex thing going on. You have to have sophisticated campaign managers, databases of metadata about content, subscribers, advertisers and advertisements. All of those things have to be engineered as a system to work together."
Paul Woidke, SVP and general manager of advanced advertising at Open TV – and chair of SCTE Digital Video Subcommittee (DVS) Working Group 5 – explained that SCTE 130 is being developed as a standard to define the specific ways that specific sets of information are passed between different components of an advanced advertising system.
Woidke said if advanced advertising is thought of as a flow chart, the various devices and software programs created by manufacturers – such as encoders, ad management systems, ad decision servers and VOD systems – would be represented as boxes on the chart. All of those boxes would be connected by lines.
"SCTE 130 is the lines," said Woidke. "Data is the stuff that moves over the lines between the boxes.
"SCTE 130 does not talk about how you send clicks from a set-top box back to a cable headend," added Woidke. "But if you have that data in a headend, SCTE 130 talks about how it might get sent to other devices so that they can make decisions. There are a lot of software and hardware developers who have contributed to SCTE who will build products that do those things."
"They (the SCTE 130 working group) have kept a lot of place for innovation among vendors, but how they connect will be standards," said BigBand’s Raz.
Data is critical
"There’s a lot of technology in place for data collection," said Ross. "We can collect almost an unimaginable amount of data at a granular level. The industry grapples with what’s the right architecture that would make this enormous fire-hose of data more useful."
"The challenge is the enormity of that whole set of data," agreed Woidke. "Eighty-five percent of homes in the U.S. have some kind of satellite or wired connection with a potential return path."
Instead of just getting Nielson data for a selected sample of homes, a cable operator could gather data from all its subs and know what people watched, when they watched it, and how they behaved in terms of pausing, rewinding and fast- forwarding.
Interestingly, in January Canoe hired Mike Eason as its senior vice president and chief data officer. Eason was previously with credit-card company Capital One, where he specialized in data warehousing. He is expected to lead efforts at Canoe to build a centralized database of set-top box data from its member MSOs.
Linda Hardesty is associate editor of Communications Technology.
Sidebar: Interactive Infomercial
Cablevision is running interactive ads for some of its branded VOD channels, including Disney Travel on Demand.
Cablevision’s Advanced Platforms can deliver measured VOD infomercials. For example, if viewers wish to get more information about Disney Vacations, they can use their set-top box’s remote control to watch a variety of vacation videos. They can also request more information via a drop-down menu. The technology includes Cablevision’s proprietary "Talk To Agent" feature, which will connect consumers to a Disney travel agent via a phone call, minutes after they click their remote control.
As of early this year, 23 percent of viewers that enacted the "Talk To Agent" feature booked a vacation.