TV Commercial Insertion with Virtual Zoning and SCTE 130

Transitioning television to Internet-style one-to-one addressable advertising can be done gradually in cable television, while implementing the SCTE 130 standard from the Society of Cable Telecommunications Engineers, by utilizing a virtual zoning approach.

By Yaron Raz and John Reister, BigBand Networks

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Video/Imaging DesignWire
(2/9/2010 3:15:28 AM)

TV advertising has been a valuable source of income for cable operators with a steady annual growth. However, as Internet advertising continues to net a larger share of the advertising market, operators are eager to enhance their advertising offering.

This article analyzes the various tools and technical considerations for advanced TV advertising as well as the migration path from zoned-based advertising currently deployed by service providers to the ultimate goal of TV advertising – one-to-one addressable advertising which entails interactivity, accurate measurement and national coverage. It will also discuss the role of the SCTE 130 standard in helping make cable advertising become more Internet-like, by delivering different ads to different viewers based on demographic and viewing behaviors.

The SCTE 130 standard describes a model wherein the ad selection and ad placement is completely dynamic.  Today’s ad server and traffic and billing systems-all schedule based-are eliminated and replaced with a dynamic ad decision server.

Instead of this radical change, a migration is proposed here, with geographic zones migrating to virtual zones.  Groups of households with similar demographics are combined into virtual zones.  This allows Multiple Systems Operators (MSOs) to send each narrowcast group of households a dedicated feed from the splicer – combining small geography with demographic profiling while keeping the number of ad permutations low and cost-effective.  This spectrum-efficient approach enables targeting with minimum change and investment.

The back office also migrates gradually.  Existing ad servers and trafficking and billing systems (T&B Systems) can be utilized. With a hybrid approach, an Ad Delivery Manager (ADM) can be introduced, receiving and reporting on ad placement via a schedule- T&B System.  Reporting is augmented with actual viewership feedback.  Traffic schedules can apply to geographic zones, as they do today, or apply to virtual demographic zones.  Addressable ad placement via Ad Decision Service (ADS) can be gradually folded in, such that initially only a subset of subscribers, channels, or ad slots are delivered with addressable ad campaigns.

Today’s Linear Advertising: Scheduled-Based

As competition among paid TV services increases, new players enter the market and business models shift, service providers are looking to offset churn with an increase in Average Revenue Per User (ARPU) while keeping subscription rates unchanged.

For years, TV advertising has been a valuable source of income for cable operators with a small yet steady annual growth. However, Internet advertising continues to get a larger share of the advertising market due to its increased value-add to advertisers. The past 12 months have been even more challenging as advertising spending went down across all media types and  cable operators are looking into advanced advertising to attract advertisers and to make up for some of the lost revenues as well as increase premiums.

Traditional linear television advertisements are sold and placed via scheduled based T&B systems. Advertisers today manage their inventory by the channel or zone and timeslot, and set the price by ratings.  As shown in Figure 1, operators capture approximately $5-$6 per household per month by providing geographically zoned advertising.  (Data derived from the July 2008 In-Stat study: “US Addressable TV Advertising” and a 2006 Universal McCann report.)

TOTAL AD SPENDING = $US 188 PER MONTH PER HOUSEHOLD

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Figure 1: Advertising Spending

Advertisers base their TV spot selection on statistical measurements, which are not always accurate at the zone level and cannot provide actual delivery information. On the other hand, online advertising provides accurate and real-time measurement of ad delivery, click-through, and viewing impressions, which is one of the main reasons advertisers are drawn to the Internet as a medium.

NEXT: Ad Zones

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