Cable's Search for Advanced Advertising Treasure

Craig Leddy
Heavy Lifting Analyst Notes
Craig Leddy
12/20/2013



For more than 20 years, the cable industry has been on a quest to discover new wealth from digital technologies that promote advanced forms of television advertising. Like scavengers following a bygone treasure map, cable's searchers have wandered this way and that, only to dig holes that come up empty.

Now, with less fanfare than previously hyped efforts, the cable industry has been rolling out dynamic advertising insertion (DAI) technology, which by the industry's count is available in about 30 million cable homes. DAI enables TV network programmers to insert advertising into the increasing number of free video-on-demand (VoD) programs on cable, from Modern Family to NCIS.

Moreover, DAI could be a stepping stone to a potentially bigger prize: ad insertion across multiple video screen platforms, according to a new Heavy Reading Cable Industry Insider, "Cable's New Quest for Advanced Advertising Treasure." The report discusses the state of DAI, the opportunities and challenges ahead, and the prospects for dynamic ad insertion across broadband-connected devices, including laptops, tablets, smartphones, and other devices.

Canoe Ventures, the cross-MSO venture that nearly sank into oblivion after the 2012 shutdown of an industry effort to establish interactive TV advertising, is spearheading DAI, giving programmers a way to monetize shows when they run on free video on demand (VoD), or provide tune-in promotion.

Advertisers can place fresh commercials into those shows and receive ratings credit beyond the Nielsen C3 ratings window, which measures time-shifted viewing during the first three days after broadcast. A related effort would create On Demand Commercial Ratings (ODCR) to provide measurement credit when viewers go on a binge of catch-up viewing on-demand.

DAI is expected to be in more than 40 million homes by the end of 2014, the Heavy Reading report says. While revenue projections are hard to determine at this stage, proponents expect DAI to generate a couple hundred million dollars in 2014. DAI has been described as a $1 billion annual market opportunity, but there are many steps to go before it can reach that level.

As DAI gathers momentum, technology suppliers are poised with solutions to provide ad insertion across multiple video screens, which eventually could fulfill the long-held promise of delivering personalized ads, according to Heavy Reading. The report includes profiles of eight key suppliers that support cable's advanced advertising aspirations.

DAI poses complexities with ad insertion, fulfillment and audience measurement. Those challenges are magnified with cross-platform distribution, the report notes. But once DAI systems are used on a large scale, they can serve as a proving ground for multi-screen ad distribution.

VoD and DAI still face challenges. Will viewers want -- or at least tolerate -- commercials during cable VoD airings, especially if they cannot fast-forward through them? Netflix and other providers do not run ads during on-demand airings -- at least not yet. Traditional VoD itself faces competitive challenges amid the growing number of over-the-top (OTT) options.

Yet cable and telco service providers are better positioned than anyone to enable addressable advertising across multiple delivery platforms, according to the report. While it's too early to rev up the hype that has accompanied (and doomed) addressable advertising in the past, DAI may provide the baby steps toward delivering targeted and personalized ads on preferred devices, offering greater value for advertisers and consumers alike.

Craig Leddy, Contributing Analyst, Heavy Reading Insider


Cable's New Quest for Advanced Advertising Treasure, a 15-page report, is available as part of an annual single-user subscription (six issues) to Heavy Reading Cable Industry Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/cable.

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