That's because the method relied on baking ads into VOD content where they reside three to four months. That technological constraint has hampered the advertising opportunities in VOD because it limited marketers to place only evergreen spots and eliminated certain advertisers, such as retailers and movie studios with time-sensitive messages, from participating.
Ad insertion, by contrast, expands the possibilities because of the flexibility it affords advertisers, essentially bringing VOD closer to the linear model where an advertiser can get on the air in mere days.
Ad insertion technology is also the platform that will allow cool, cutting-edge ad opportunities in the future-such as the ability to serve up tailored ads to individuals when they request an on-demand show.
But to move VOD into the advertising big time, VOD also needs better navigation, better content and deeper measurement, says Tracey Scheppach, VP-video innovation director at Publicis Groupe's Starcom USA. However, ad insertion is a healthy start. "It takes your lead time down from 60 days to seven days," she says, adding that she has a lot of advertisers that can't plan 60 days in advance.
SOLVING MEASUReMENT ISSUES
The technology can help solve some measurement challenges, says Braxton Jarratt, senior VP-marketing and business development at Tandberg. Today, most operators and measurement companies only report impressions for programs, but Tandberg's AdPoint system tracks ads, too, Mr. Jarratt says. "The whole concept of separating the ads from the programming gives advertisers enormous flexibility," he says.
Comcast and other operators would still need to share that data with advertisers.
While Comcast is the first cable MSO to introduce a VOD ad insertion system, Tandberg expects to ink deals with additional cable operators this year, Mr. Jarratt adds.
Data is not available yet on VOD ad insertion because advertisers such as movie studios, have just begun to get involved. But more marketers are eager to participate. Chase, for one, ran a long-form VOD ad in December with Comcast and would like to experiment further this year with VOD, including using this new capability, says Manning Field, senior VP-branding and advertising for Chase Card Services.
In its next VOD test, Chase will take advantage of "telescoping" technology that cable operators are starting to deploy that lets viewers click from a linear spot to a complementary VOD spot. Tandberg plans to introduce such capability this month, while technology developer Navic Networks has tested telescoping capability with Time Warner. Navic found that viewing of a long-form ad increases six-fold when viewers can use their remote control to link from the 30-second spot to the longer VOD ad, contrasted with when the 30-second spot simply has a call to action urging viewers to get more information on VOD.
The flexibility ad insertion allows is particularly important because VOD is still a playground for ad experimentation, says Mitch Oscar, exec VP of Carat Digital. "If it's a new idea, you need more time to sell it," says the executive, who has engineered VOD buys for Chase and other clients.
INSERTING NATIONAL ADS
Comcast is currently using Tandberg's AdPoint service on three VOD networks-SuccessTV, Music Spy Videos and DriverTV-to insert ads on a national basis. By the end of the year, Comcast will layer in the most important level of functionality, allowing local and national ads to be refreshed weekly.
That also gives the operator time to hammer out revenue splits with national networks, like a CNN or Discovery Channel, for instance, which will want to take advantage of the new technology. The ad-insertion capability will be available to all VOD networks, but each one will need to work with Comcast to figure out the business model/financial compensation for each.
Comcast is actively engaged in conversations with networks about how the business model will take shape, says Vicki Lins, VP-marketing and communications at Comcast Spotlight, its ad sales division. Both have a stake because the MSO invests in the technology, and the programmer invests in the content.
Mike Hopkins, senior VP-affiliate sales at Fox Cable Networks, which offers ad-supported, on-demand content, thinks it's premature to say how the business model between cable programmers and operators will look.
"We are at the early stages of this; it's hard to know where it will shake out. It could be a model where the network gets a share of the ad revenue the cable operator sells and maybe that is the payment for VOD. [Also] we have been seeking money, broader carriage for our channel," he says.
However, he is confident these issues will be resolved, because ad insertion is an opportunity for both the operator and network to offer more targeted ads, he says.