Plugging the Ad Drain
But there's a good reason why advanced advertising was the subject of so much discussion here this week. The cable TV industry is losing ad money hand over fist to the Internet, which, for now, allows for better targeting and more measurable results.
That's moved advanced advertising to cable's front burner, and the topic is now on full boil. Cable is making a big bet that a new, more standardized platform that injects interactivity, more precise targeting and addressability, and better campaign management and reporting systems, could reverse the momentum back to the TV screen.
In fact, an industry-wide effort code-named "Canoe" is already well downstream. CableLabs issued a request for information for an advanced ad platform last year, drawing more than 60 responses. People familiar with it say the shortlist candidates have been picked, with final selections likely to come soon. (See Cable's 'Canoe' RFI Paddles Toward Deadline.)
The SCTE, meanwhile, is making progress on DVS 629, a standard that defines protocols that aim to create a multi-vendor and, ultimately, a multi-MSO environment for the management of ads tagged for a range of delivery methods, including video-on-demand (VOD), linear programming, switched digital video, and even the digital video recorder.
Ben Hollin, the advanced video advertising architect at Cisco Systems Inc. (Nasdaq: CSCO), likened DVS 629 to a "box of tinker toys," rather than a defined architecture. That's because it lets service providers and their vendors decide how to connect all of the components.
Getting these efforts off and running can't come too soon, based on how much ad revenue is slipping through cable's fingers.
Ad dollars are leaving the trio of cable, broadcast TV, and the newspaper business at a rate of roughly $5 million per day, according to Paul Woidke, the VP of technology at Comcast Spotlight. Speaking at the PK Worldmedia Inc. "QAM Before the Storm" pre-show session on Monday, Woidke cited projections from ad agencies saying that number could balloon to $12 million per day during the next two years.
Developing and installing a platform that does the job correctly is paramount, if the cable industry hopes to recover what's being lost.
"At the end of the day, if you can't put the right message in front of the right eyeballs at the right time, all the interactivity in the world won't save the industry and the revenues we need to generate," Woidke said.
At this point, different architectures are emerging, including those that switch ads at the cable set-top level, are pre-stored in the set-top hard drive, or are delivered on the network using switched digital video (SDV).
SDV programming is multicast to a well-defined service group (typically about 500 homes or set-top tuners these days), setting the stage for some ad targeting based on demographic data. But that targeting will become more precise as the industry reduces service group sizes and eventually moves to an SDV unicast model, which will enable the operator to deliver individual streams with embedded advertising.
The unicast approach appears to be preferable because it reduces the complexity of dealing with myriad types of set-tops and places most of the intelligence at the headend. But it also requires a substantial amount of bandwidth, and that situation will be amplified when operators are required to transmit multiple ad streams in HD.
Despite those challenges, "I believe we need to be in a switched digital video unicast environment," Woidke said.
Although SDV unicast is technically feasible, it's also expensive to implement. Operators will have to weigh the trade-offs and determine whether the promise of more ad dollars can justify it, noted Greg Hardy, vice president of business development at the Scientific Atlanta division of Cisco, during an earlier panel.
"Switched unicast is a nice technology, but let's understand what it takes to pay for it," said Doug Jones, the chief architect for BigBand Networks Inc. (Nasdaq: BBND).
Woidke suggested that the cable industry is feeling pressure from the ad community to get the cable plant and the set-tops in shape to deliver addressable ads within the next 12 to 18 months, or expect to see even more ad dollars head elsewhere.
That pressure has had an effect on an industry not known for its adroitness. Woidke said the cable industry has moved ahead faster in the last 12 months than he can ever remember.
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