It is no longer enough to bring eyes and/or ears to advertisers — they are demanding qualified and clearly segmented audiences.
At this year's NAB, it was hard to see people who only last year were talking about retiring to a beautiful home on the beach in some exotic location. Stock options were the talk of NAB2000, but here we were, only a year later and the bubble had burst for most, especially those in the world of Internet streaming media. In today's streaming media environment, revenue is king and near-term profitability is the Holy Grail.
Almost every Internet business model, especially those that did not make sense, based their entire revenue stream on money from the hundreds of advertisers that were going to flock to their site. While reading through many business plans, I often wondered about the sheer quantity of businesses that staked their livelihoods on the few advertising dollars spent on the Internet. Especially because a vast majority of those dollars went to relatively few companies.
Some basic assumptions about advertising in the Internet age have changed over the past few months. It is no longer enough just to bring advertisers eyes and/or ears. They are demanding qualified and clearly segmented audiences. Given the current market economics, commercial insertion and profiling technologies are on the rise in the streaming media world.
Unlike in broadcast, the cost of providing Internet content increases based on the number of people who tune in to your stream and how long they stay with it. To increase revenue, a few companies have begun to see the value of offering systems that support real-time dynamic ad insertion. Targeted ad-insertion systems allow ads to be inserted over local spots based on user profiles. These systems increase advertising effectiveness via one-to-one marketing and give advertisers a built-in value add. Because these systems enable advertisers to better target audiences, for the first time what they pay for is actually what they get. The stations themselves are able to generate non-traditional revenue using their existing streaming infrastructure.
The iM IT system with IM tuning from IM Networks (formerly Sonicbox) is an example of a targeted ad-insertion system. The technology makes it easy to track revenue, gauge marketing effectiveness and adjust campaigns as needed.
When you install the iM IT software system at your encoder, it inserts flags within the stream that are controlled by the broadcaster and have a number of variables associated with them. They request specific content from the IM Networks streaming advertising insertion server. These targeted streaming ads are inserted in real time within your stream and delivered as a normal part of your online content.
The system also makes additional information such as part numbers available to allow easy integration within an e-commerce system. Currently most streams have an advertisement at the beginning, and sometimes at the end, but I have seen very few with real-time messages inserted within the stream. Just like TV ads, there is value in offering your message in the middle of desirable content.
Recently, Coollink Broadcast Network (CLBN) signed an advertising insertion and streaming agreement with Beethoven.com. CLBN will be providing targeted ad-insertion technology and Internet broadcast solutions. Through their DemoTrak system, they provide broadcasters and advertisers with a real-time audience profiling system. More importantly, the integrated system allows for on the fly update/insertion of content. That way, a marketing department can try various types of incentives and concepts and see immediately if they are working.
In numerous past articles I have written about the value of content indexing and real-time retrieval. Now let's take this idea of real-time content insertion a step further. We have always been able to set up a playlist and then have those assets play out in a pre-specified order — similar to how it is done in the non-streaming world. However, the current playlist-type systems are at a fundamental disadvantage in that they are not dynamic. Streaming, unlike broadcasting, lends itself to real-time, dynamic content. The strength of streaming is its ability to offer multiple instantiations of the same content. Advanced technologies — both hardware and software based on the new MPEG-7 standards and products and services from companies like Convera and Virage — are likely to make standardized contextual indexing and retrieval a reality in the near future.
When we, the broadcasters, have the ability to profile our customers in real time, find specific content and insert it based on those profiles into real-time streams, we will undoubtedly be changing the face of streaming advertising.
As we are able to give users more of what they want, they will enjoy the experience more and return more often for longer periods of time. Thus driving up those stock prices and making NAB2002 even more enjoyable.
Steven M. Blumenfeld is currently the GM/CTO of AOL - Nullsoft, the creators of Winamp and SHOUTcast.