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Why Aren’t More Advertisers Using VOD Ad Insertion?

You don’t need an industry study to tell you that more consumers are embracing video on demand. But what you don’t hear a lot of is that advertisers are following those consumers. Even at this late date, there are so many hurdles in marketers’ way, even as a number of advancements designed to make VOD ad insertion smoother for buyers continue to be tested and released.

For example, about two weeks ago, CableLabs, the R&D consortium formed over 20 years ago and backed by the major MSOs, held a targeted ad industry conclave to provide an update of what it and its tech vendor partners have achieved lately. There appeared to be progress in the area of dynamic ad insertion, which lets marketers swap ads in and out at will during a TV program as it's delivered to viewers homes.

That’s certainly a big step in terms of making VOD ads more attractive to advertisers. But to get a sense of what is ultimately holding back adoption of VOD ad insertion from marketers, TVExchanger asked several industry executives who have been watching the development of this platform for some time.

Click below or scroll down for more:

• Lynda Clarizio, CEO, INVISION
• Steve Farella, founder/CEO Targetcast
• Richard Forester, VP, New Business Development, National Ad Sales for DirecTV
• Bob Kraut, SVP, Marketing and Advertising, Arby's Restaurant Group, Inc.
• Dave Poltrack, Chief Research Officer, CBS Corp., President of CBS VISION

Lynda Clarizio, CEO INVISION

Advertising on VOD is a tiny business right now – it’s hard to sell VOD advertising like traditional television advertising. Part of the reason is that scale is small since VOD networks aren’t attracting large audiences and VOD providers can’t deliver viewer and research metrics comparable to television.

To make this a bigger business, VOD advertising needs to be sold on a more dynamic basis – by targeting audiences based on geography, content and/or demos across VOD programming.

Of course, there are some technological challenges to doing this since VOD ads are inserted at the set-top box level, so a constraint to dynamic VOD advertising has been the need for standardization across set-top-boxes. Also, in the case of cable, VOD ad delivery is in the hands of the cable MSOs. Canoe Ventures is currently trying to standardize and facilitate VOD ad delivery within the cable industry.

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Unilever’s Wakeling: Collaboration Needed To Cure Cross-Platform Measurement ‘Crisis’

All the social media check-ins and video views that accompanied broadcasts for The EMMY’s, Super Bowl XLVI, The Grammy’s all served as showcases for the evolution of cross-platform media.  (And get ready for this Sunday’s upcoming Oscar’s for even more second- and third screen activity). But a time when more TV viewers make little distinction between screens they consume video on, there is comensurate pressure on marketers, agencies and media companies to be able to track the connections and pathways that advertising travels.

The various industry organizations have been calling for tearing down the “silos” between digital and other media disciplines for years. For the most part, the industry has responded, as the major ad holding companies have created “digital hubs” that can direct TV and print campaigns to the right interactive extensions.

But the one area that continues to frustrate media executives across the spectrum is the lack of a single measurement that would seamlessly provide a 360 degree picture of those who have been exposed to a particular piece of content and the advertising supporting it.

Over the years, the major changes in advertising – whether it was to “unbundle” media buying and planning from the creative agencies or “integrate” those functions together again – were usually driven by the client side. After that, it was their ad budgets that directed the process from the beginning. Speaking to TVExchanger at last week’s Cross-Platform Video Measurement Summit in New York, Patti Wakeling, Unilever’s Global Media Insights Director, said that achieving greater progress in measurement will require an equal effort from all quarters of the industry, not just marketers.

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The Week-In-Review: DirecTV CEO Says Targeted Ads ‘Back On Track’ In 2012

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DirecTV On Targeted Ads In 2012

DirecTV reported a solid Q4 earnings and revenues last week, but Mike White, the satellite company's chairman and CEO Mike White conceded that last year, ad sales was one area things fell "a bit short."

However, White sought to reassure investors that the problems were due to the challenge of local targeted ad sales and that the system is now in place to address those disadvantages, he told analysts during the company's earnings call. The transcript is available via SeekingAlpha.

Among media buyers, DirecTV is viewed as a leader in targeted ad sales among cable and satellite providers. Unlike most cable systems, which are largely patched together through very different local systems that are hard to connect on to a single ad platform, satellite doesn't have the problems associated with physical wires. But that doesn't mean it doesn't have hurdles to overcome.

In speaking about the difficulties of local targeted ad sales, White told analysts during the earnings call that "We had a new technology. That technology got delayed a bit. But we now have it fully operating."

The company claims its already generating some revenues this year for HD DVR boxes, which is the platform it uses to deliver targeted ads. It's also working on expanding standard definition DVR boxes in the latter half of the year, which will also broaden the audience to whom it can serve targeted ads to.

"So we're probably, I would say, a good six to nine months delayed on that piece of the total for 2013," White said. "We're going to try and see if we can make it up. We're going to have, I think, a good year. We're planning a significant amount of ad revenues from the targeted advertising initiative this year."

In general, DirecTV expects to benefit mightily from political ad spending this year, just like ever other media company in the TV space. "So I think we'll get that one back on track, but we might have lost 6 months or something in trying to get to the total numbers. So I would say directionally, I however, feel very good about it. And all three of the initiatives in terms of today are kind of clicking and doing what we would've hoped. We just kind of had a little bit of a delay because of the Connected Home and the delivery of the HD DVR capability on targeted ads. But we're back on track now."

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In Battle For ‘The Second Screen’ Viggle Bets On Women And ‘Loyalty’

There's no question that social media activity around television viewing and discovery have hit a fever pitch the past few weeks, with hundreds of thousands of Grammys and Super Bowl watchers tweeting, commenting on Facebook and "checking-in" via mobile apps like GetGlue, Yahoo's IntoNow and about a dozen others.

No other social TV app has had the kind of instant reception of advertisers and user interest that "second screen" mobile app Viggle has had. Though similar to IntoNow and Miso in terms of the "listening feature" that can identify a TV program through some sort of audio watermark, Viggle's big proposition is that viewers can get "loyalty rewards" from an array of blue chip marketing partners like The Gap, Pepsi, Burger King, Foot Locker, Starbuck's, Fandango, Lowe's, Target and others.

Though it launched less than two months ago and is only available in the Apple iPhone format, Viggle has also attracted advertisers like movie studio Universal Pictures.

On top of that, the company just announced its first acquisition: Loyalize, a software company that powers quizzes, games and other "audience participation" features on websites and apps.

So what's Viggle got that others don't? To begin with, the head start in striking ad and marketing deals before the launch was entirely due to the connections of Robert F. X. Sillerman. Best known as the backer of Fox Broadcasting's American Idol, Sillerman set up Function(x), Viggle's parent, last fall -- hence the instant ad support.

But going forward, Viggle will have to rely on more than Sillerman's ability to get marketers' calls returned. In a conversation with TVExchanger, Viggle CEO Janet Scardino says that over the next quarter, the differences between the company's app and others trying to leverage the "second screen experience" will become much more defined -- particularly when it comes to connecting women to advertisers through social TV.

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Disconnect: Marketers Say TV Ads More Effective In General, Yet Traditional Spots ‘Dissatisfy’

About 21 percent of marketers say that TV ads have become more effective over the last two years,  according to a survey of 124 national advertisers conducted by Forrester for the Association of National Advertisers and released for the trade group's conference in New York today.

While that also means that about 80 percent of the respondents don't perceive an improvement in the impact TV advertising is capable of, Forrester analyst David Cooperstein points out that the 21 percent figure is three times higher than what it was two years ago. The study also shows that 38 percent say TV spots are "less effective," whereas two years ago, 62 percent of the marketers said the same thing.

As further proof of marketers' higher approval of TV advertising, 76% of the respondents said their media budgets will remain the same or higher this year, with TV ad dollars accounting for 47 percent of media budgets.

What accounts for the good feelings? Part of it could be attributed to the gradual improvement of the economy, which tends to lift marketers' moods generally. But the brighter view appears to be tied to the extensions of traditional TV ads, as dissatisfaction with the basic 30-second spot is getting higher.

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Cross-Platform Agonistes: Measurement’s Still A Problem, But Blame Content Too

One main thing continues to hold back the mutual desire on the part of advertisers, agencies and media companies for more cross-platform deals between TV and online video: the lack of a standard metric that will allow for easy comparisons for ad effectiveness.

That was the consensus of a panel at the multi-industry trad gathering (the ANA, 4A's, CIMM, ARF) called the Cross Platform Media Summit in New York. Of course, given the focus on research, the conversation was naturally skewed toward the pressing the apples-to-oranges measurement situation, as opposed to say the obdurate silos that still exist between digital and traditional, though those walls have become thinner and more porous the last few years.

Still, as one panelist, Ed Erhardt, president of ESPN Global Customer Marketing and Sales, noted, “We shouldn’t be thinking along the lines of mobile/tablet/PC. It’s all just video, no matter where you use it. But whether it’s worth the same, that’s a different story.”

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Ooyala: The Bigger The Screen, The Bigger The Engagement

Given that TV advertising is by far the biggest advertising category, it stands to reason that transferring digital video content and advertising from the PC and mobile devices to connected TVs and game consoles would lead to similar levels of engagement.

That's one of the data points outlined and explored in digital video analytics provider Ooyala's Q4 report. For one thing long-form videos -- which can be defined as anything longer than 10 minutes -- accounted for 57 percent of the hours watched on a connected. TV device or game console -- double the amount that was recorded the year before. Meanwhile, short videos, while remaining a staple of the web and mobile, accounted for 19 percent of the plays Ooyala counted in Q4.

In essence, the report showed consumers' increasing interest in experiencing digital video through through the wifi-enabled TVs. That embrace even translated into higher views for Google TV, which saw its share of video plays grow an impressive-sounding 91 percent during the quarter, that was largely due to the law of low numbers, as the over-the-top system was only introduced late last year. Still, the numbers for connected TVs do offer some hope for advertisers and agencies looking to run seamless cross-platform campaigns -- as long as they remain patient a little while longer.

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Are The Olympics The Best Prism For Understanding Cross-Platform Viewing And Ad Effectiveness?

NBC Universal is bringing in Google and comScore to help it get a fuller picture of its audience for the London Summer Olympics. This is the third time the network would be rolling out its "The Billion Dollar Lab," a reference to both the billions of dollars in advertising  the network expects to reel in and the billions more it has spent to acquire the programming rights to air the global sports event through 2020.

The company announced that it is working with Google and comScore to develop a range of initiatives designed to provide a single-source measurement of video content across TV, PCs, smartphones and tablets.

Alan Wurtzel, president of research at NBCU, also told Variety's Andrew Wallenstein that additional partners will be revealed to help it cover the social media and out-of-home audience in the next few weeks.

The network has said that it will stream some live video of the London games, but hasn't offered specifics. The network had previously been reluctant in past years to offer live digital options to Olympics viewers, but the relative success of last month's real-time video offerings around NBCU's broadcast of the Super Bowl -- a first, in fact -- may inspire the network to relax those previous restrictions even more. But NBCU has good reasons for proceeding cautiously -- mainly because the value of digital video viewers remains woefully unclear.

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