Ad Zones
Today’s ad zones are fixed geographies with 50,000 to 150,000 households. While ad zones provide a decent mechanism for segmenting geography between multiple local advertisers, and for customizing ads with specific geographic information (e.g. dealership address for automotive ads) they include too many households over too large an area for demographic targeting. As a result, the ability to provide higher revenue-generating ads based on zones is limited, and any premium associated with the ad is low. MSOs need to be able to get finer granularity that can provide better targeting, while keeping any incremental Capital Expenditures (CAPEX) and Operational Expenditures (OPEX) as low as possible.
There are some targeting solutions based upon sending multiple ad versions to the household within each zone. These solutions are bandwidth hogs, especially for High Definition (HD) channels, as each version places additional Quadrature Amplitude Modulation (QAM) demands on the Radio Frequency (RF) plant.
Ad Sales Management and Tools
The advertising ecosystem includes sales tools and platforms that are built around populating a schedule and managing the inventory. The schedules are gradually populated as campaigns are loaded into the T&B System. Generally, schedules are finalized 24 hours in advance, and then loaded into the ad servers. Once they are loaded in, their delivery is set.
After the splicing system inserts the ads, an “as-run” completion file is generated at the end of the 24-hour schedule. This “as-run” data is passed back to the T&B System. However, this merely indicates that the ad was inserted and played properly. Once the ratings are in from the statistical systems, the operator is finally paid by the advertiser or advertising agency.
Dynamic Ad Selection: An Enormous Opportunity in Linear TV
As opposed to a schedule-based “batch” process, SCTE 130 standard provides for dynamic, transaction based processes. On a per-subscriber basis, whenever there is an advertising placement opportunity, the system can select an advertisement in real-time, deliver the ad, and then report on the ad impression. The opportunity to apply this to linear cable-delivered TV is enormous, much larger than Video on Demand (VOD). Both subscriber viewing time and advertising spending are substantially larger in linear TV than in VOD.
Implementation via A Media Services Platform, ADM, and ADS
Switched Digital Video (SDV) is deployed today by most MSOs mainly for reclaiming Hybrid Fiber/Coax (HFC) spectrum and introducing additional HD contents and niche channels. But SDV offers additional benefits on top of spectrum efficiency that make it a valuable tool for next generation advertising. In an SDV system, when subscribers tune to linear channels, the Set-Top Box (STB) sends a request for that channel to a network-operated SDV server. SDV servers fulfill these requests by putting the corresponding streams on the plant and providing STBs with tuning information for the requested channels. The SDV server logs all tuning activities and ‘anonymizes’ the data while correlating real-time demographics information about actual viewership. SDV therefore adds the ability for the network to have insight to the viewership across different service groups. SDV also allows for the delivery of different video streams with different ads to STBs that request the same channel, based on demographic information or other criteria -offering addressable advertising while being completely transparent to the STB.
The flexibility provided by SDV as described above is further enhanced by employing dynamic splicing. Linear channel content is coming into a media services platform-an evolution of today’s splicer-which processes the streams and detects the cues. With ADM functionality, it leverages the correlated demographics information and queries the ADS. The media services platform can then create multiple output streams, and through the SDV system, direct STBs to the appropriate stream corresponding to their demographic. Immediately after delivery, the media services platform and ADM can report on the Placement Status to the ADS.
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 ADS.
This is an inspiring vision, with real-time decisions and feedback. It affords an opportunity for auctioning and interactivity, with an unprecedented immediacy between advertiser and subscriber, all on the massive scale of linear TV delivery.
Challenges in Advertising Migration: Too Much Change
The SCTE 130 specification promises to help cable advertising become more Internet-like, by delivering different ads to different viewers based on demographic and viewing behaviors. The standard is important because it allows advertising systems across multiple cable systems talk to each other and provide more flexibility in deploying a multiple-vendor solution.
However, this represents a significant change in the manner that linear TV ads are sold, placed, and measured. The systems that advertisers, ad agencies, and operators use to manage advertising and measure its effectiveness will need to be changed, and the processes and people involved will need to accommodate as well.
There is also a scale challenge. With potentially thousands of viewers watching a linear program in each Designated Market Area (DMA), there would be many thousands of simultaneous transaction requests for ad selection and delivery. There is also a creative challenge in developing all the different ad versions associated with all the different individual impressions. Instead of an audience of millions, we are now thinking in terms of “a million audiences of one.”
This level of change is disruptive to an ongoing multi-billion dollar business. In addition, today’s economic climate requires any new initiatives to keep CAPEX and OPEX low, while having short payback periods. Such enormous change requires a multi-year investment in systems, people, and processes. Clearly, interim steps need to be identified.
NEXT: Pragmatic, Evolutionary Steps
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