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Last Lines: Technology & the Ad Model

(click thumbnail)KANAIYA VASANIargues that targeted digital ad insertion and digital motion graphics overlay will make advertising more relevant.

The evolution to all-digital video networks poses a significant economic paradox to the broadcast TV industry. On one hand the industry is required to spend billions of Euros deploying advanced digital video products and services like HDTV – updating studios and cameras, upgrading distribution networks, and deploying digital set-top boxes and digital video recorders (DVRs). On the other, it is faced with a business model disruption that puts at risk billions of Euros in revenue – ad revenues that have supported the industry for over 50 years.

Increasingly, the broadcast TV industry must examine its current consumer advertising model – the 30 second ad – to determine its ongoing viability and relevance. New technologies like DVRs and on-demand services offer ways for consumers to view programming and avoid traditional broadcast ads. At the same time, new technologies are enabling the creation of entirely new advertising vehicles. The industry now clearly requires a broad rethinking of its advertising model to determine how to use the new technical tools, stem the churn of advertisers to alternate channels like the Internet, and generate new revenue streams.

The television industry needs to work with its sponsor partners to capitalize on new ways to deliver relevant and high quality advertising that retains and interests viewers. New tools including local and targeted digital ad insertion, digital motion graphics overlay, and "localization on demand" enable advertising to be more relevant to a given audience, making viewers more likely not only to watch the ad, but also to transact business with that advertiser.

The first step in this direction requires a rethink in how the network is architected. In order to localize content, there is a need to deploy, at the very edge of the network, a video application platform that enables operators to customize content just before it gets delivered to subscribers. Residing at the local or affiliate stations in broadcast networks, local headends or hubs in cable networks, and video hub offices or central offices in telco video networks, this video platform can be programmed to customize the video streams through insertion and overlay of local content, channel co-branding, commercials, and infomercials relevant to the target audiences. Pushing advertising insertion to the edge of the network allows operators to target viewers with advertising that is more relevant, meaningful and localized.

On-screen graphics within program content present another promising opportunity for broadcasters and advertisers. Using standard character generation devices and digital motion graphics overlay technology, logos, slogans and even calls to action carry messaging beyond the traditional thirty-second spot. Perhaps the best news for this type of ad vehicle is that it is virtually immune to commercial skipping technologies because it is contained within the programming frames, regardless of whether that programming is from a live broadcast, pre-recorded onto a DVR or streaming from a VOD server.

Over time, this can be coupled with advances in interactive television to deliver a more interactive and accountable advertising experience similar to the clickthrough experience of the Internet.

Even as the prospect of in-program graphics are discussed, more advanced concepts are on the way. "Localization on demand," a new type of digital TV architecture that allows a single piece of content to be distributed nationwide, but independently customized within a fraction of a second of delivery to multiple regions simultaneously, offers great potential. Through the marriage of video technology, back office solutions and targeted media solutions companies, the television industry can enable advertisers to more accurately reach the right prospects with the right messages.

Broadcasters can use localization on demand to manage localized content assets, customize content at the edge of the network, and integrate with the ad billing and trafficking systems. For instance, in a nationally broadcast automobile commercial, graphic overlays specific to local car dealers can be inserted 'on-demand' at the final point of distribution immediately before delivery to the viewer. Those same insertion systems will be integrated with the back-office systems that track, traffic and bill advertisers, so all parties have clear records of the reach and return from the localized spots.

While localization on demand presents the technical challenges of integrating multiple systems, partnerships already have been forged to provide the industry and its sponsors with turnkey solutions. More important, the considerable benefits far outweigh the costs of implementation, including: new and greater revenues from local advertising; elimination of the current repetitive and costly off-line post production to achieve this level of customization; and "evergreen" programming and advertising as changes are made easily without affecting the basic content.

The biggest challenges will not be technical, but will be in the need for the industry to find ways to come to grips with the changes that the technology will bring. How will programmers react to advertising within their shows? What kind of ground rules must be created? How many in-show ads are okay? A cooperative spirit to create the models that will sustain the industry in the future is needed.

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Copyright 2005 IMAS Publishing (USA), Inc. Reprinted with permission. Reprinted from TV Technology Europe