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Web Holding the VoD Ad Advantage

NEW YORK -- When it comes to distributing content on-demand, network execs appear to be much more more bullish about the ad revenue prospects for online distribution than they are for more traditional cable video-on-demand (VoD) services.

Blame cable's dynamic ad insertion technology, or at least its lack of broad deployment.

"We couldn’t dynamically serve ads into those VoD streams. We couldn’t monetize that content through [VoD] advertising; therefore we went to online as the obvious alternative to that," Disney/ABC Digital Media Group vice president of digital media advertising Rick Mandler said here at this week's National Association for Multi-Ethnicity in Communications (NAMIC) Conference.

ABC has begun to distribute Castle, Cougar Town, and other prime-time series through free VoD channels available on systems owned by Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC), and other cable MSOs. But online, it distributes nearly its entire library of entertainment and news programming, Mandler said.

Mandler said that dynamic ad insertion technology is available that could help ABC and other programmers generate more ad revenue through VoD distribution, but he noted that cable operators haven't widely deployed it.

Placing advertising in cable VoD programs “has been a struggle,” Scripps Networks SVP for affiliate strategy and business development Tamara Franklin said. Franklin noted that that cable VoD platforms typically require long lead times for advertisers, and the limited availability of dynamic ad insertion technology has also thwarted the sector.

"The business isn’t there yet. I think authentication presents an interesting opportunity -- a lot that that VoD can’t keep up with," Franklin said, touting the potential of TV Everywhere sites such as Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s Fancast Xfinity TV. The advertising community has embraced online video, she added.

Joe Matarese, vice president and GM of the on-demand division at Arris Group Inc. (Nasdaq: ARRS), said his company began selling dynamic ad insertion gear about five years ago. "I cringe when people say we don’t have this capability," he said. (See Arris VoD Back Office Gets Smarter, Cox, NBC Test Dynamic VoD Ads and Bresnan Tests Dynamic VoD Ads.)

BET EVP Martez Moore said that BET is more selective about the content that distributes online, noting that while more viewers are consuming content online, the revenue hasn’t followed.

"We make billions of dollars with our content through our linear platforms, but in terms of where the digital platform[s] are, they're so nascent. The dollars we make in the digital sphere -- it's more like tens of millions, perhaps hundreds of millions. But it's certainly not billions," Moore said.

The panelists were also bullish on the prospects of distributing content to the iPad and other mobile devices. "I think there will be a very healthy and vibrant tablet market," Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK) SVP of digital media operations Douglas Craig said.

Mandler said about 300,000 iPad owners have downloaded the ABC News iPad application.

The panel was split on whether Google (Nasdaq: GOOG) will be successful with its Google TV venture. "History is replete with failed companies that have tried to get consumers to adopt another set-top box," Mandler said.

Craig said it would be difficult for Google to succeed with a standalone set-top box, but that the company could perform well with Google TV if it can team up with cable MSOs, satellite-TV firms (Dish Network LLC (Nasdaq: DISH) is already on board), or over-the-top programming companies. “If anyone can pull it off, it's probably going to be [Google]," Craig said. (See Google TV Comes Out, the World Tunes In and Google TV to Launch Oct. 17?)

— Steve Donohue, Special to Light Reading Cable

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