Searching for ways to make some money off their growing multiscreen video services, cable operators and other service providers are increasingly looking for help from their old friends in the advertising business.

With the first big wave of TV Everywhere product launches now coming to an end, cable and other video providers are starting to focus on how they can support these expensive new multiplatform offerings. Understandably uncertain about the willingness of video subscribers to pay special or higher fees for multiscreen access, MSOs and telcos are turning to targeted advertising with fresh hope because of advances in dynamic ad insertion (DAI) technology.

Case in Point: Comcast Corp. (Nasdaq: CMCSA, CMCSK) picked This Technology LLC last month to help the MSO deliver targeted ads to subscribers watching video programming on devices other than traditional cable set-top boxes, including IP-enabled set-tops, connected TVs, gaming consoles, tablets, and smartphones. Under the multiyear agreement, This Technology will supply its DAI service to Comcast so that the MSO can splice targeted commercials into both live TV channels and on-demand programming streamed to multiple video devices.

The vendor's DAI system works by linking the different video platforms for real-time communication about ad placement opportunities on the various video streams. The system then steers the spots to the proper places in the video feeds, enabling service providers to target the spots at the viewers they want to reach.

In adopting the This Technology DAI system, Comcast will thus join Verizon Communications Inc. (NYSE: VZ) in inserting ads into programming delivered to subscribers using multiple devices. As Comcast plans to do now, Verizon has begun using the system to put targeted spots in front of its FiOS TV subscribers using devices other than legacy set-tops.

Thanks in part to deals like the one between Comcast and This Technology, DAI proponents expect the technology to produce about $200 million in revenue for vendors during 2014. With Heavy Reading projecting in a new report that DAI will be in more than 40 million North American homes by the end of the year, proponents see the potential for a $1 billion market in the near future. (See Cable's Search for Advanced Advertising Treasure.)

For This Technology, the landmark pact with Comcast came just weeks after the vendor unveiled a new key component of its DAI technology at the SCTE Cable-Tec Expo show in Atlanta in late October. The company said this component, known as VEX, makes it easier for service providers to insert ads and "alternate content" into multiple video streams in "even the most demanding IP deployments."

Specifically, VEX is "manifest manipulator" software that can dynamically alter adaptive bitrate (ABR) video streams, which is what cable operators and other service providers are increasingly using to deliver multiscreen video. This Technology executives argue that VEX is unique because it can easily scale to meet deployments of any size and can enable both zone-based and individual targeting of ads.

Of course, several major challenges still remain for DAI. As the new Heavy Reading report points out, the technology is quite complex and may not scale as expected. Plus, it's far from certain that cable and telco video customers will tolerate commercials on multiscreen programming, especially when such leading over-the-top (OTT) rivals as Netflix Inc. (Nasdaq: NFLX) don't run spots in their content, at least not yet.

But, with fresh market momentum behind DAI technology, look for more deals like the one between This Technology and Comcast to be inked in the new year. Who knows? Maybe this will finally be the year that targeted advertising takes off and realizes its long-awaited potential.

— Alan Breznick, Cable/Video Practice Leader, Light Reading