VOD commercials promise powerful results, require new tools

As television viewers continue to use their DVRs to zap commercials, advertisers are scrambling for ways to reach audiences.

However, even as one technology threatens to upset the advertising apple cart, another holds out the potential for unprecedented control over targeting commercials to specific desired audiences. That technology, IPTV, also offers marketers the promise of giving them the tools to create an interactive dialogue with specific viewers by serving up longer form ads on request, collecting consumer information and sharing it with specific retailers if viewers grant permission.

Doing so requires technology to insert highly targeted ads into program streams and provide the mechanism to automatically create databases that will drive the fulfillment requirements spilling out of this new interactive capability.

At NAB2006, TANDBERG Television rolled out the latest version of its AdPoint video-on-demand advertising solution, which targets cable, satellite and IPTV. “IPTV Update” turned to Braxton Jarratt, senior vice president of marketing and business development for TANDBERG Television, for a richer perspective on this new approach to advertising.

IPTV Update: While video on demand (VOD) coexists with linear programming, it offers some unique opportunities in terms of targeted commercials. Could you compare the potential of VOD to traditional linear presentation of content?

Braxton Jarratt: With linear content when you do ad placement, you are able to do ad placement in any specific ad pod at any given point in time for a relatively large audience that’s watching any given channel. You may have hundreds or hundreds of thousands of people watching a particular channel at any given time on a linear network all at the same time.

On the VOD network, the problem is everybody is starting the program at a slightly different point in time and because of the choice of content that’s available at any given time, the likelihood of a lot of people watching the same program at the same time is very low. So you have a bit of a scale problem with advertising where you may have 100,000 people watching 100,000 different programs at any given point in time so the traditional model of doing linear insertion of ads into the VOD just didn’t work.

So, what was happening was the program owners were generally encoding an ad to the VOD stream as they were getting ready to pitch that program to the cable networks from their operations center, and the big problem was that one ad would stick with the program the entire time that program would be available on the VOD system.

So, typically a VOD program will last anywhere from weeks to months on a VOD offering for the consumer, and prior to this technology, the best you could do as an advertiser was sponsor that one program and have that same ad with that same message appear to everybody. So that’s a real limitation on things like time sensitive advertising.

As you can imagine, it really limits the ability of an advertiser to reach an audience in a targeted way in something that’s very valuable to them.

IPTVU: So could you describe how the latest version of AdPoint solves this problem?

BJ: The latest release that we announced essentially is technology that allows the program or the cable operator to decide what ad is placed into each of the individual VOD streams as that consumer is choosing to watch the program. So what it does is essentially intercept the request to watch a particular VOD program, it then goes to the AdPoint system and says, “Hey I’ve got a viewer who has chosen to watch the latest episode of ‘Survivor’ and I need to know what ads to place in there.” Then within milliseconds, it looks through all of the demographic data, all the different information about who’s agreed to buy what sort of ad and then instantly sends the information back to the VOD server about which ads it should play, and it seamlessly inserts those ads into that specific stream that’s going to the consumer who just hit play for that VOD program.

It’s very powerful obviously. It’s kind of the best of Internet advertising and the best of television advertising because you can target those ads down to the set-top box if you like, and they are very measurable ads so you can get instant feedback on what ads have been seen. As an advertiser, that’s very valuable. You can even, depending on what ads are shown, allow the consumer to interact with the ad and close the loop and allow them to ask for more information. Have that RFI (request for information) sent to an advertiser who can send a brochure or take a lead.

IPTVU: Please give me a little more detail on the two-way nature of this approach and how the viewer requests further information.

BJ: Well, it can be very simple. One of the things shown recently at NCTA and NAB was the capability to request more information for credit card offers. Chase, as you may know, has been pretty aggressive in its VOD advertising efforts and has been public with some of those results. We showed a demo of something where Chase could offer a couple of different financial planning products or credit card products, and at the end of a 30-second commercial, it can say “Would you like more information about this particular product?”

You click on OK, and then it pauses your DVR and goes into the VOD network and gives the viewer the opportunity to view a two- to five-minute infomercial about those particular offerings and at the end of that it says, “Would you like to have a sales representative contact you for more information?” They say OK, and then that information is sent to the advertiser who can follow up on it, and the viewer can go right back to the program where he left off.

IPTVU: How are reports generated in this scenario?

BJ: The beauty of this two-way network and some of these high-powered set-top boxes is you can log every keystroke and every transaction that happens so what our system does is collect all of those keystrokes and then analyzes them and gives all sorts of reports on who’s watching and who’s gone to the next level of interactivity, who’s requested additional information and then send that to third party databases. Most operators don’t want to — and can’t legally — give the full information about their consumers, so there may be a fulfillment house that gets the data and delivers a brochure or follow up to that consumer. So what we built is a system that is a very high end database that collects all of this information and then allows the cable operator to control what information goes to whom.

IPTVU: So far, how many AdPoint systems have been deployed?

BJ: There has been a public announcement that Comcast has purchased an AdPoint and it is rolling it out to all of its customer base.

IPTVU: So where is AdPoint now?

BJ: It’s in the earliest stages in a few markets where you have to do this VOD advertising and they are rolling it out in stages. So some of the capabilities I’ve talked about of interactivity and targeting are the full capabilities of the system, and operators are choosing to use different pieces of that and roll it out in phases. So initially, they may just target 30-second spots and advertising and over time, rollout some of the more advanced functionality.

So we are at the early stages of deployment right about now and the selling process at the MSOs is underway right now, with some of these ads starting to be targeted and deployed in this quarter and the next.

IPTVU: This seems to be a much bigger task than integrating a new technology into a workflow. Doesn’t it require you to educate ad agencies to the possibilities and their clients to the capabilities of this type of system?

BJ: It is in our interest as a vendor to make that happen, so we do regularly attend industry events, and there are quite a few who are advocating for some of these new technologies in VOD and in linear advertising. So we participate in those.

I think that there has been some good progress in even the last six months in sharing some real world progress and getting ad agencies and advertisers interested in this. So if I’ve seen anything, it’s a pent-up demand for some of these capabilities. I think people are now pretty familiar with VOD as a product for a consumer. A couple of years ago not everyone had heard of it or had access to it, now at this point it is pretty mainstream, and I think the advertisers get that it could be a very powerful medium. And they are spending money on broadband advertising on the Internet already, and I think that’s kind of taught them how valuable targeted video can be. At this point, it is just a matter of getting the technologies rolled out and figuring out the business deals between the programmers and the operators and the advertisers.

IPTVU: So was NAB the initial AdPoint rollout?

BJ: No, the initial roll-out was probably a year ago, and then we announced three or four months ago the Comcast deployment and then announced the second version of the product, which enhances the capabilities of the core product with highly targeted advertising and the interactive capabilities.

IPTVU: What’s the history of this product?

BJ: This was initially built for VOD, and what it does is solve some of the scale problems where you may have 1 million people watching 1 million things at any one given time.

We’ve had interest from some of the IPTV providers who because of the nature of IPTV are often times actually sending an individual stream of live television to every viewer who is watching it. And obviously they see the power of targeted advertising in that set-up as well.

So we have had quite a few discussions with some telcos who are looking to use this same technology with linear television as well as VOD. It’s not over the air, but it is live TV.

It’s also been very appealing to programmers looking for a way to manage ad placement into VOD and other file-based on-demand content. So right now the way you stick an ad into VOD content is very difficult. You edit it in, in generally a very expensive editing system, and then you would encode that ad into a file in the program and then you ship that out to whoever your distributor is for VOD or broadband content. And that is a cumbersome process.

So the system was designed to keep separate programming and advertising and then manage the two separately. So some programmers are looking to use the same technology to manage ad placement into VOD content before they would even ship it out to any number of sources. So that is the other application.

IPTVU: Could you give a little more detail on the differences between a telco deployment of AdPoint for IPTV and a cable MSO?

BJ: The big difference between IPTV generally and broadcast or cable is that even though everyone might be watching the same program at a given point in time on an IPTV network, you actually are generally going to have to stream all of that content to all of those people individually because you aren’t tuning to some frequency. You are getting it by it being delivered over IP.

What that means is that every one of those is essentially like a VOD stream where every stream is separate and you can actually look in the network and identify that stream and put an ad into it and give every user a different ad.

And because of the nature of IPTV, it just lends itself better to that highly targeted advertising for live television. And the way our system works, it really doesn’t matter if it’s IPTV, VOD or linear for that matter. What it does is have capabilities to individualize an ad for every individual user viewing content. So that’s the appeal in IPTV because it suits itself that much better to this type of targeted advertising even in linear.

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