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CBS Puts New Commercials in Old Episodes as On-Demand Grows Up as Ad Platform

Selling New Ads as Soon as Original Advertisers' First Three Days Are Up

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'The Crazy Ones'
'The Crazy Ones' Credit: Monty Brinton/CBS

CBS Corp. will begin selling new commercials in "NCIS," "The Crazy Ones" and other programs that viewers watch on demand using their cable-TV service, a bid to generate revenue from audiences who watch shows on a delayed basis.

The new commercials will appear three days after a program is broadcast, Jo Ann Ross, CBS's head of advertising sales, said in an interview. CBS, the most-watched TV network, starts taking orders today, she said.

Broadcast and cable channels are trying to extend ad sales to younger viewers who shun program schedules and watch shows after the three days that advertisers pay for now. NBC and Fox already use so-called dynamic advertising to put spots into shows on demand, giving marketers the flexibility to change commercials on short notice.

"Our clients have been asking for this," Ms. Ross said. "Some clients want to take advantage of being able to update or change their messaging."

CBS's move will introduce dynamic advertising to more marketers, said Marc DeBevoise, executive VP and general manager of entertainment, sports and news for CBS Interactive.

The network enlisted Canoe Ventures, a company formed by cable operators including Comcast and Time Warner Cable, to develop a system that allows commercials to be added or removed from shows like they are online. CBS's first dynamic ads will appear on Comcast and Time Warner Cable systems in a few weeks, followed shortly by Cox Communications and Bright House Networks, Ms. Ross said.

Making on-demand pay
Viewers who watch on demand are younger and more affluent than average, Mr. DeBevoise said. As VOD users, they're valuable to advertisers because they're more engaged, Ms. Ross said. Plus, VOD systems disable fast forward, preventing them from skipping commercials. Until now, commercials seen after three days haven't produced revenue for TV networks.

"The Good Wife" and "The Big Bang Theory" are CBS's two most popular shows for on-demand viewing, the network said.

CBS is introducing the new service ahead of the annual upfront meetings that big TV networks hold in May with their biggest advertisers to showcase new programs and set rates for the next TV season.

"This will definitely be part of those conversations," Ms. Ross said.

Most CBS shows are available on demand for 35 days after they first air, potentially giving the network an extra month to sell ads for every episode, Mr. DeBevoise said. CBS is using data from Canoe and Rentrak to show clients how many times their commercials are seen, he said.

Dynamic advertising produced about $150 million in revenue last year, Seth Haberman, CEO of marketing firm Visible World, said in an interview in September. That will double annually for the next three years, exceeding $1 billion in 2016, he estimated.

Even with that growth, the sum is tiny compared with the $73 billion that SNL Kagan said was spent on U.S. TV ads in 2013.

~ Bloomberg News ~

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