Individual MSOs report similar numbers. Comcast, for example, has deployed two interactive products – RFI and Telescoping (which allows viewers to click through to longer-form VoD content from a 30-second spot) — in 14 million homes, and it expects to complete rollout to all 18 million of its digital customers by the end of the year. As for addressable advertising — dubbed the Holy Grail that will allow television to compete with the targeted advertising capabilities of the Internet – Cablevision announced in March that it successfully delivered five distinct advertisements across its New York metropolitan market during the same 30-second spot.
So if the path to advanced advertising is compared to building a skyscraper, during which 70 percent of the work is done before the building emerges from the ground, it can be said that the foundation has been dug.
"Everything is tested. We know how it will work. The question is: How fast will the skyscraper go up?" says Aslam Khader, chief technology and product officer at Ensequence.
The answer depends in part on the advertisers. They must understand how to buy the capabilities, how to determine the value of advanced advertising and how it should fit into the overall marketing mix. "Television is an efficient way to reach large numbers, and it is engaging. If buyers start seeing how it improves overall yields, I think we will see a big stream take place rapidly. The skyscraper will come up quickly," Khader adds.
The ability for consumers to watch content when and where they want to will serve as a catalyst in the advertising community. "For the advertiser, the challenge used to be a simple one: Reach the target audience by putting up a flag post in prime time,” notes Andrew Ward, eastern regional vice president/Comcast Spotlight, the advertising arm of Comcast. “But in the fragmented digital landscape, advertisers need to go where the customers are — the living room, portable device, online, on demand,"
In this environment, human attention is a scarce resource. Consumers who like the interactive capabilities of the Internet will respond well to the same on television. "You have to give them what they want; otherwise, you will lose the audience," says Ellen Dudar, chief product officer at FourthWall Media, which recently released an application that will connect handheld devices and set-top boxes so that subscribers can utilize applications on their TVs without needing a dedicated Internet connection.
According to Ward, four themes come into play when it comes to advertisers embracing these new capabilities:
• Increased precision,
• Increased portability and
• Increased accountability.
"Marketers are looking to harness the power of all of them,” he explains. “Those are the themes we are driving toward."
As evidenced by the numbers cited earlier, using Enhanced TV Binary Interchange Format (EBIF) as a common platform has allowed MSOs, both on an individual and a national level (through Canoe), to build a large-enough interactive footprint to begin attracting advertisers. The issues now are more operational than technical, for example creating templates to easily input information about the type of interactivity they would like to add to their spots.
Traditionally, ad buys have been made based on panel-based ratings determined by the Nielson Company. A select group of people either wears meters or record what they are watching in diaries. The information gathered is translated into rating points, each of which means “x” number of people in a certain demographic watched a show as it aired live or as many as three days later.
On the other hand, in Internet advertising, the marketer knows exactly how many people clicked through an ad and who they were. "That is the type of measurability that we are going to see as we move into addressable and interactive space (on TV). That is one of the principle changes that will alter the whole dynamic of what TV advertising will be,” says Paul Woidke, senior vice president and general manager/advanced advertising for OpenTV. “It reaches more people. It is more attractive than an Internet banner, but it will have to demonstrate the ability to monitor and measure itself in the same way that Internet advertising does,"
This will occur, in part, through the use of set-top box data but, as with anything, there are challenges. "For starters, everyone in the ecosystem needs to understand there is a need for a certain amount of transparency," Ensequence’s Khader points out.
There has been a kind of church-and-state relationship between advertising sales divisions and the parent cable company, which owns the set-top box data. Notes Comcast Spotlight’s Ward, "The catalyst for drawing down that separation of church and state is free cash flow."
In other words, in the past and even with $2 billion in revenue contribution, Comcast Spotlight represented less than 10 percent of Comcast’s overall revenue. "However, the economic impact is no longer insignificant. The cable subscriber model is realizing the need to work with the advertising industry to take advantage of opportunities," Ward says, noting that ad revenue could grow to more than 20 percent of the free cash flow of the organization.
Before set-top box data can be considered to be a reliable metric for ad buys, there needs to be a foundational data standard, currently under development by the Media Rating Council (MRC), a watchdog group that audits media metrics. The standard, which deals with how data is extracted and defined, should be released within the next six months, according to Jane Clarke, managing director of the Coalition for Innovative Media Measurement (CIMM).
The upcoming standard will address such issues as the length of wait time before identifying something as a “tuning event” and how frequently data should be reported back. "These are all questions that are very technical but, in measurement, they are very important. It makes a difference whether someone watched a show for 10 minutes or 15 minutes," Clarke says.
Once the industry agrees on foundational data standards, the operators have to finish incorporating all of the nuances into their networks. "The day they finish the guidelines, I doubt that all will have the data to document. There will be a couple-year period to do that," she predicts.
Even then, set-top-box metrics would not be ready for use on a national level. For that, the industry needs to figure out how to get an accurate representative sample based on demographics. MRC has said it will do this, but hasn’t yet formally announced the initiative. In the meantime, companies like Simulmedia and TRA are using the data in combination with predictive technologies and household purchase data from loyalty cards to determine things like purchasing data. "This is a step to addressable advertising," Clarke comments.
Overall, addressability has proved to be more difficult than originally imagined. Cablevision appears to be the MSO farthest ahead with deployment of addressability at the household level. The announcement it made in March (see Cutting The Cable: MSOs Flirt With Mobile Broadband) marked the first time it delivered an addressable ad campaign across its full footprint, featuring brands represented by GroupM.
Still, other MSOs are getting their feet wet. Comcast Spotlight, for example, has run two addressable trials, in Baltimore and in Huntsville, Ala., which proved to the company that a) the technology works and b) that targeting households does improve the effectiveness and efficiency of advertising, Ward says. Statistics showed that households receiving targeted ads tuned away 32 percent less of the time.
Outside of these trials, Comcast Spotlight offers geographic targeting based on zip codes. "This sidesteps the issues around household targeting — not the least of which is privacy. The regulatory environment around privacy is going to get more onerous than less so that topic alone along with business infrastructure and technology will cause the household product to take time to deploy at scale in the marketplace," Ward says. The “one to a few” approach (still 10 times more targeted than broadcast) provides learning opportunities and insight into how granular the company will go.
Dynamic Ad Insertion
The industry also is thinking about the many VoD streams that are going unmonetized. Current VoD consumption is "not insignificant," with upwards of 7 billion streams viewed in 2010, cites BlackArrow President Nick Troiano, pointing out that the largest portion was TV entertainment. "But there have been limited ways for programmers to insert relative advertising," he adds.
Typically, ads have been bound to content as a pre-roll or post-roll, meaning they are static. Every consumer sees the same advertisement. The goal is dynamic insertion of targeted ads as mid-rolls, where the content is broken up and inserted in the middle of a VoD program. The challenges are many, starting from the business side, with questions about which content is authorized to be enabled.
"Most is heavily regulated through agreements MSOs have with content providers," says Craig Schwabl, vice president/solutions architecture for media data and advertising solutions at Concurrent.
Various models for ad splits — or who gets the revenue from advertisements — still are being debated. For example, certain spots during a selection of VoD content could be reserved for national ads, while others would be local only.
From the technical perspective, servers are able to splice and dice VoD content and insert ads mid-session, explains Guy Cherry, principal software architect/media communications systems at ARRIS. The process becomes trickier in the ad decision arena because VoD sessions from different content providers are managed by equipment from different vendors. "You need to be able to direct the decision messaging to any one of a number of decision services," he says.
Going national is even more difficult. Canoe, which considers VoD its next advertising platform and wants to trial it this year, faces issues similar to those it experienced with interactivity. According to Lydia Loizides, vice president/business planning and development at Canoe, "There are different VoD vendors across different footprints. Different companies pitch and catch content. A lot of the architecture is disparate. One of the first challenges is developing a solution that is national and sits on top of the disparity."
The scene is similar from the perspective of a smaller MSO. SureWest Communications uses Cisco in Kansas and Microsoft Media in California, for example. "There is not a common solution to sell enhanced ads across our platform and measure on an apples-to-apples basis," notes Eric Freund, the operator’s director of business innovation and development.
Return To Metrics
On the measurement side, Nielson again comes into play because it excludes VoD and content viewed on handheld devices or on PCs. This raises questions like: Will that which is watched on these devices be in addition to or will it cannibalize that which is watched on TV?
"Will Nielson track consumption across other devices? If not, what will be the currency for advertisers?" BlackArrow’s Troiano asks.
In February, the CIMM announced two proof-of-concept pilot tests to measure how "three-screen" users watch content and advertising on TV, on the Internet and on handheld devices. The group is working in conjunction with Arbitron and CommScope, using Portable People Meter devices, software meters and set-top-box data.
The idea, Clarke says, is to link data from all of these platforms, either in a single-source fashion, where all the information used is gathered from the same individuals; or via hub-and-fusion, where data from people who are alike is combined statistically. "This has privacy issues, and has to be done carefully and cautiously," Clarke cautions.
Behind The Scenes
What is known already is that to make cross-platform campaigns easier for advertisers, they need to see an integrated front. "At the end of the day, they want to be able to touch all those different platforms but have one contract with (the MSO) that covers all the different platforms,” OpenTV’s Woidke says. “One invoice that shows this is what the interaction and click-throughs were in the broadband space."
And what about using some of the same technology that drives advanced advertising to dynamically manage and broker ads, in a way that is similar to how airlines sell tickets? "If our broker is making ad decisions, it could be making decisions about what the most valuable use of the time slice is,” posits John Boland, vice president/product line management, advertising systems and solutions at ARRIS. “Is someone going to offer in certain part of Chicago a higher value for that particular spot? Then we’ll insert that."
A type of virtual marketplace would help create consistency for Tier Two and Tier Three providers. "You’d get a better understanding of individual market opportunities," SureWest’s Freund believes.
Monta Monaco Hernon is a frequent contributor to Communications Technology. Contact her at firstname.lastname@example.org.