Advanced TV advertising stall points and solutions

Yoav Schreiber, Current AnalysisAfter years of promise, it is evident that advanced advertising initiatives on TV platforms--across linear and VoD services--have not yet delivered.  True, there have been some trials and deployments of dynamic on-demand ad insertion (DAI), and interactive requests for information (RFI) capabilities which have been publicly announced--and more that remain "under wraps."  However, the overall momentum has been beneath the expectations of most industry players.

You don't have to take my word for it (or any other analyst/industry observer), although Current Analysis has been tracking industry momentum in this space (more on that below). The major players in the pay-TV industry have pointed this out themselves. Three announcements in particular come to mind.

Canoe Ventures and the Association of National Advertisers announced (in October 2010) their CEE MEE project, which is designed to capture the Connection, Emotion and Experience of interactive television viewers and correlate that with the Measurement, Efficiency and Engagement metrics for advertisers.  The project is intended to validate advanced video advertising solutions, primarily focusing on interactive TV advertising.  In February of this year, Fidelity Investments, GlaxoSmithKline, Honda, Kimberly Clark and State Farm joined the project, demonstrating traction with advertisers/brands.  The project will leverage a proprietary panel of U.S. homes to extrapolate insight on the impact of interactive advertising on consumers and brands.  The goal is to help shape and refine solutions to make 2011 "an inflection point," according to the CEO of Canoe Ventures.  However, it remains to be seen if the CEE MEE project will gain enough traction to impact 2011 advertising deployments.  If not, CEE MEE will be confronted with "show me" demands from the industry.

A comparable initiative was recently announced by BlackArrow and the 4As: the Advanced Advertising Media Project, or AAMP (these initiatives are beginning to sound like Soviet-era hockey teams, though with more vowels than consonants).  AAMP's focus is on measuring advertising effectiveness within free VoD--the poster child for un-monetized video services.  AAMP also benefits from the broad industry participation it has already attained.  The initial list of participating media companies includes: A&E Television Networks, CBS, Comcast, Digitas, Discovery Communications, Horizon Media, and Rainbow Media.  AAMP has an aggressive timeline: extrapolating the perceptions of VoD advertising attained in the completed first phase of the project; testing them in media research labs as part of the second phase which is underway; and then launching in-market trials this summer.  By publishing the results of the various phases, AAMP hopes to impact VoD ad decision-making by the third or fourth quarter of 2011.

While the CEE MEE and AAMP initiatives address industry perception, a separate initiative was launched to specifically address some of the technical and operational obstacles hampering deployments of DAI.  In February, This Technology launched its open source SpotLink solution which connects broadband ad servers with SCTE 130-compliant on-demand ad insertion and campaign management systems.  SpotLink is intended to alleviate some of the integration challenges hampering DAI deployments by enabling existing broadband ad serving equipment to be reused for on-demand ad insertion. It leverages a template-based approach to integrate SCTE-130 metadata from cable MSO ad-serving equipment with IAB formats from the broadband ad-serving equipment of programming networks. SpotLink connects the dots between online advertising and on demand ad insertion, leveraging the commonalities in their ad operations, and making use of the dynamic ad insertion capabilities within broadband ad serving equipment, something traditional on-demand traffic and billing systems are not fully capable of doing.

At Current Analysis, our observation of the advanced advertising market has reached a similar conclusion: progress is in need of a jump-start.  For instance, over the past six months, we've tabulated a 40% decline in announcements from service providers and solution vendors referencing DAI (see chart below).  And of the DAI announcements we recorded, 60% were among vendors demonstrating technical interoperability; no new deployments were announced.  In fairness, public announcements are only the "tip of the iceberg." However, in order for the advanced advertising opportunity to gain traction, it will need to influence industry investment decisions and spark interest from advertisers--all of which should eventually show up as demonstrable evidence in the public domain.

Current Analysis Advanced Advertising

Beyond these initiatives, I'm tracking three trends that have the potential to accelerate the advanced advertising market in 2011.

First, tackling the technical challenge of addressability, there is some early convergence around DVR-based ad insertion into linear streams.  INVIDI's DVR-based insertion technology has been selected for operator trials with Cogeco Cable in Canada and DIRECTV in the U.S., while BlackArrow and NDS are developing a joint solution for DVR-based ad substitution.  Second, tackling the issue of measurability, STB-based metrics tracking is gaining acceptance, with Donovan Data Systems inking partnerships with Rentrak and Canoe Ventures to integrate STB data with its advertising back-office platform.  Finally, tackling scalability, operator partnerships, such as those between Comcast Cable and AT&T, as well as between DIRECTV and DISH Network are broadening the audience for ad insertion, while helping to simplify the process of planning and buying media across multiple cable networks.

There are still nine months left in 2011.  Let's see how the year unfolds.

Yoav Schreiber is Senior Analyst for Digital Media Infrastructure at Current Analysis, and a FierceCable contributor. Follow him on Twitter @yschreiber.

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