Why Aren’t More Advertisers Using VOD Ad Insertion?

Email This Post Email This Post
February 21, 2012 – 12:48 pm

VOD-reactionYou 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

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.

Steve Farella, founder/CEO Targetcast

The biggest challenge with STB VOD right now is that for the most part, the networks only update their programs and the embedded commercial inventory every 4 weeks or so. Therefore your creative needs to be able to live out there with the ability to change it for an extended period.

It prevents retail sales, movie launches or any time sensitive creative from being able to live in the VOD space.  If a new creative launch gets pushed back and you miss the integration date the advertiser is stuck with the inventory and no creative to traffic or the old creative which may have expiring talent rights.

If a particular creative isn’t performing well or is testing poorly the advertiser is literally stuck with it embedded in the VOD until the month long window is up.  Dynamic ad insertion would in theory solve these issues and open the STB VOD market to untapped categories (i.e. movies, etc).

The inventory is very attractive.  Maybe the most attractive of all available video inventory today.  In theory an advertiser would get a lift in all the metrics (message/brand recall, brand favorability, intent to purchase) that we see lifted across the many industry wide digital video studies.

I have not seen a study on STB VOD ad effectiveness but one can imagine the metrics may be even greater than digital VOD because the viewer is watching a low clutter program in their most optimal viewing environment, their living/bedroom on their big HDTV.

Richard Forester, VP, New Business Development, National Ad Sales for DirecTV

[Forester prefaced his remarks noting that  DirecTV doesn’t sell VOD ads. But as someone with deep experience in selling addressable ads through the satellite giant, we thought his views as an industry veteran were worth exploring. -- TVExchanger]

My general impression is that from an advertiser standpoint, the actual delivery of the ad is too random. You only have control over what content it runs in and no control over who watches it or more importantly when they watch it – or if either of those things happen at all.

It’s actually a little messier than traditional linear advertising. Most advertising today seems to be moving toward a more targeted “just in time” kind of model – serve the right ad to the right person at the right time. I’m not sure in the long run if the traditional VOD model, as most understand it today, accomplishes that.

When the industry can start to dynamically insert an addressable ad into the content and properly measure it, that should pull offerings like VOD into more of the mainstream of video advertising opportunities.

Bob Kraut, SVP, Marketing and Advertising, Arby's Restaurant Group, Inc.

I think there are a lot of valuable and emerging tools out there right now. And VOD ad insertion is certainly something we’re constantly looking at. But for Arby’s, it comes down to picking a couple of things and doing them well. Following through with that, it also comes down to trying to determine what’s going to give us the greatest precision and impact in the marketplace. With VOD ad insertion, it’s really more a matter of having so many priorities and getting to them.

Dave Poltrack, Chief Research Officer, CBS Corp., President of CBS VISION

What happened is, when VOD was first born, the cable MSOs were seeing it more as a paid content, additional subscription-based service. They did not see it as an advertise-based service. We have from the beginning to look at this more as something that can benefit from ad support. You could build different pay models and subscription models into it. The consumer was telling us, ‘We love VOD, but we’re already paying too much for television.’ So our sense was that consumers would embrace VOD even more if advertising subsidized part of the cost.

We’re a member of AMP and that was a first step to showing how effective VOD can be as an advertising platform. In 2002, I said the DVR is going to be replaced by VOD and it took awhile for the cable industry to get the message. I think AMP really helped to demonstrate that VOD with a significant advertising content level is embraced by the public. Now, there will be a live test of part three of the AMP program.

The value of VOD advertising is that the ads can be more targeted and more interactive. These are all done in a two-way environment.

There are two things that continue to hold advertisers back, despite the clear value VOD ad insertion presents. One is the problem of measuring it in a way that’s acceptable.

The other issue for advertisers with regard to VOD ad insertion is how to control. Once you put something on VOD, you have to maintain the advertising content, constantly making sure its precisely up-to-date and fresh, since you’re not certain when it’s going to be seen. So that takes a lot of work. But it is evolving and the idea is picking up a good deal of momentum.

By David Kaplan

Email This Post Email This Post
February 21, 2012 – 12:48 pm

Post a Comment

Sign Up for the TVexchanger.com
Daily Newsletter