Keeping Commercials Fresh in Video on Demand

With Less Than Half of VOD Ad Opportunities Selling, Cable Players Hope New Technology Will Provide Fix

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NEW YORK ( -- Advertising is often like fresh bread -- best as it leaves the oven and less appealing as time goes on. That's not a problem for TV as long as everyone watches it live, but it has become an important hurdle for selling the commercials that play during increasingly popular video-on-demand offerings.

Ads usually have to be loaded onto a cable system several weeks in advance to be paired with VOD content. And once the two are mixed, there really isn't much of a chance to swap out one ad for another. That's suppressing some marketers' interest. Only 40% of the ad opportunities on VOD content are typically being sold, said Carol Hinnant, senior VP-business development at Rentrak, a media-measurement company that analyzes video-on-demand activity.

The fix, some cable and media companies hope, is a technique called dynamic ad insertion that allows marketers to update or swap out the commercials that get baked into VOD programming, thereby keeping commercials timely and contemporary no matter when a viewer watches.

Last summer, Cablevision Systems Corp. started offering "same day" VOD insertion, letting advertisers start new ad efforts or swap out those already in with just 24 hours' notice. And last month, News Corp.'s Fox Cable Networks announced a trial in which it is testing the technology for video-on-demand content from its Speed, FX and National Geographic cable channels. Nick Troiano, president of BlackArrow, a company that is supplying the technology for the Fox Cable trial, said the idea could open a "huge new market for advertisers."

Ads with expiration dates
The efforts further spotlight a growing new feeling in the marketing business: If certain ads aren't of-the-moment, they're useless. With more viewers watching programming on a delayed basis -- playing it back on a digital-video recorder, an online or mobile player, or on-demand through a cable system -- episodes of favorite shows are often viewed hours, days, even weeks after they originally aired on traditional TV. That's little help for movie studios trying to push audiences on Thursday nights to Friday movie openings or retailers blasting out ads for a sale on a particular holiday weekend.

Dynamic ad insertion also joins another much-lauded idea -- addressable advertising -- as a solution that marketing and media executives hope will save TV advertising from the destabilization from which it currently suffers. With viewers spread more thinly over a broader range of viewing opportunities, the old strategy of blasting a single ad to a TV audience is showing signs of strain. Advertisers hope new technologies that allow them to beam ads that are more relevant to particular customers or households will help them gain more leverage in the fight for consumer attention.

Those days remain on the horizon, however, and aren't part of the immediate landscape. "The reality is that it is still early days," said Carolyn Everson, exec-VP, ad sales strategy and operations, MTV Networks. "I think there is more momentum and progress this year."

VOD's rapid spread
Retooling advertising for video-on-demand is the more immediate concern -- particularly as more consumers grow accustomed to the notion that they can watch their favorite shows when they choose, not on the days or times that TV networks have long chosen for them. VOD will be available in 54% of TV households by the end of 2015, up from 40% in the third quarter of last year, according to research from Interpublic Group of Cos.' Magna Global.

And despite Fox Cable and Cablevision's efforts, obstacles remain. Each cable, satellite or telecommunications concern that provides TV services, however, often has its own unique technology or system of ad sales, which means that national advertisers looking for the broadest reach across VOD may be out of luck for the near future.

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