As we’ve reported, so far the Comcast-Sony-Lionsgate network FearNet is the only cable network that’s “out there” with live, dynamic ad insertion into viewer-requested VOD streams. But Canoe now publicly says NBCU is already testing the DAI waters, and other programmers are in the wings. They’ll be working a footprint that for now covers about 28 million U.S. homes reached by DAI-enabled delivery networks from Comcast and Time Warner Cable. It includes 26 of the top 30 TV markets.

 “Programmer usage of dynamic ad insertion (DAI) began at the end of the last year with Canoe rolling out services to FearNET, as well as trials with a number of NBCU properties. Full-scale programmer onboarding led by Canoe is currently under way with additional programmer announcements forthcoming in the near future,” Canoe announced.
 

That means we’re getting close to a multi-network DAI/VOD world, with Canoe helping various networks assemble the piece-parts needed to make the medium happen. They involve measurement accreditation, campaign management intelligence, marking and allocation of VOD ad positions and some hand-holding for advertising agencies that are brand new to the terrain.

The Canoe-BlackArrow deal relates to one piece of the puzzle, which is the way advertisers manage their VOD campaigns. Shifting creative in and out and scheduling ad availabilities are two big components. The licensing deal specifically involves BlackArrow’s Affiliate software set, which is used by programmers to help advertisers set ad policies, ad sales rights, and asset metadata.

Some translation is in order: setting “ad policies” and “ad sales rights” is part of the bigger brew of inventory positions in the DAI/VOD world. The way it’s likely to work for the most part is that cable networks initially will inject into their VOD programs the same set of national advertisements that appear during the linear broadcasts of those TV shows. Those spots will show up for three days on the VOD programs, so that networks can get credit for viewing impressions that fall under the Nielsen C3 measurement window – literally a 72-hour period in which commercial ratings are counted. In other words, if you’re the viewer at home and you order up FX’s latest “Sons of Anarchy” episode via VOD within three days of its linear premiere, you’ll see the same set of national commercials people saw during the debut broadcast.

After that – and this is where BlackArrow’s Affiliate toolset comes in – programmers can reconstruct the advertising mix within their VOD shows to allow for local cable advertisements and/or different national advertisements that begin on day four and beyond (remember that most VOD programs are up and available for about a month). The ability to carve out these new inventory positions and shift new commercial content in and out of the assets without having to re-send the entire program file is an important piece of the VOD ad puzzle, and it’s the one that Canoe hopes to help solve with its latest licensing agreement.

Looking at Q1 results for the six publicly reporting cable companies shows average advertising revenue growth of just 2.3%, with three of the six companies making less money than they did a year ago. Here’s the table:

The glass-half-full perspective is that the industry held its ground as the political market went underground except for a few high-profile, isolated races (like the Los Angeles and NYC mayoral contests that contributed positively to TWC Media). The less optimistic view is that, like the broadcast TV market, local cable is in for a challenging year as the macro local ad economy flattens. This week Nexstar Broadcasting’s Chairman and CEO Perry Sook said advertising revenue growth probably won’t top 3% over the next several years.

Still, cable has some bright spots. Suddenlink parent Cequel Communications reported a 9.8% lift in advertising revenue for the Jan.-March period, thanks to “higher national and local advertising sales revenue in part from increased automotive advertising and a new advertising contract in one of our markets.”

TWC’s Q1 comparison benefitted from the inclusion of Insight Communications advertising operations in acquired markets, but backing out the Insight contribution of $6  million in ad revenue, the organic ad revenue increase was a solid 5.8% year over year.

One interesting takeaway is that  two of the three companies showing growth, Comcast and Time Warner Cable, have moved aggressively into multi-screen ad offerings that place advertising across linear television, online and video-on-demand platforms. Whether that’s the difference-maker isn’t certain. Cablevision Systems also has a deep presence in these mediums but posted a net revenue decline year-over-year, but that’s partly because it had to contend with fallout from Hurricane Sandy, which disrupted video service – and thus advertising visibility – for lots of customers.

Dynamic VOD ad insertion over cable, that’s what. Here’s the story.

It’s a big PR breakthrough today for a medium that’s been a long time coming. The article doesn’t fixate solely on the advertising dimensions of VOD, but does talk about how cable networks and operators can monetize a growing medium by capitalizing on viewing impressions with advertising exposure. The attention comes after the conclusion of the 2013 advertising upfronts, where several networks, including Fox and ABC-Disney, talked about VOD ad insertion (as we recently wrote they would).

It also point to an advertiser-friendly bonus of VOD: the prevailing practice of disabling fast-forwarding capability so that, unlike in the DVR environment, commercials can’t easily be vanquished from the program stream. Toby Byrne, President for advertising sales at Fox, is quoted as saying that VOD “will hopefully replace some digital video recorder viewing, where fast-forwarding is enabled.”

Neat job, too, of explaining what can be an arcane subject. As the NYT article points out, the progression for VOD advertising is to replicate for three days the same national advertisements that are tied to linear broadcasts of cable shows, so that they can be counted in the 72-hour Nielsen-defined C3 measurement period.

After that, the advertisements and ad positions change, with local cable companies getting to insert local commercials within pre-, mid- and post-break pods. A bonus there: most of the viewing to VOD streams actually occurs after the C3 window, meaning the positions available to local cable operators on Day 4 and thereafter should have significant value.

The intricacies of inventory arrangements are only now being figured out by major cable network programmers, and as the NYT article points out, for cable network powers like Fox, dynamic VOD insertion is still a few months off.

But still. It’s a big day for an emerging medium when the nation’s No. 3 newspaper devotes serious ink to the subject. Especially considering how much attention Internet video advertising gets in the national media these days, it’s satisfying to see cable’s next big advertising play come into prominence.

Related:

Upfronts: ready for a dynamic dose of VOD (Feb. 21, 2013)

Don’t wait: be proactive

By Jim Doyle

Do you wait for the client to say, “Put something together for me?”

I had an AE tell me the other day, “I called up my client and told him we should do something for February. He said, ‘Put something together for me.’” Lucky for her! What would she have done if the client had said, “Nah, I’m gonna wait a few months.”

Don’t wait for the client to say “put something together.” Be proactive and start with an idea. You will dramatically increase your chances of progressing towards a sale.

Think about it, which approach has a better chance of yielding results?

We should do something to get your business going next month.

Or

I know that March is National Back Pain Awareness Month. I have an idea to hold a free pain exam clinic on your slow days. I’d like to show you a script and I can make you our “health minute” sponsor on Tuesday mornings in March. Can we meet this week to discuss it?

I know we’re the “Prescription without Diagnosis is Malpractice” guys, but in today’s environment, we need to bring something of value to our clients. An idea, a success story, a VBR – Valid Business Reason – is what it takes to get your client’s attention.

If your client doesn’t have a good reason to spend his advertising dollars, you need to provide one. Seriously, if it was as simple as, “we should do something next month,” management could simply hire telemarketers! Your job as a Business Development Specialist is to provide strategies and ideas.

And guess what? Many of your clients either don’t have the time to come up with, or are plumb out of, ideas to help their business. They don’t like peddler AE’s (“we should do something”) but they respect and come to rely on proactive partners.

By the way, this goes for your ad agency relationships as well, particularly the smaller shops. Heck, they’re just like you, salespeople looking for ideas to bring to their clients. They may not come right out and say it, but they’re constantly looking for good ideas (to steal!). Let ‘em steal yours.

The first-blush answer seems “no.” What we heard from ESPN’s executives today was mostly about playing on the national and international new-media stage with new cross-platform alliances like one involving Twitter.

Here, the idea is to plant quick-hit highlights clips of almost-live sports events on ESPN’s Twitter feed, giving sports junkies a sort of ongoing digital newsreel of big plays from events that run the ESPN gamut – college football, X Games, you name it. Advertisers will get packages that include sponsored messages inside the video clips, along with a bank of promotional Tweets.

“We want to be able to push ESPN’s…content wherever sports fans are,” said Eric Johnson, ESPN EVP of Multimedia Sales in this Wall St. Journal piece (subscription required). “Twitter is a great opportunity for us to do that.”

Then there’s ESPN’s wildly popular “ScoreCenter” app, which has been downloaded more than 50 million times, according to EVP Sales & Marketing Sean Bratches. That makes it the most popular sports app on record. ESPN announced today it will rebrand the app “SportsCenter” in time for the 2013 fall football season. Like the Twitter alliance, the app offers national advertisers a variety of media opportunities. Beyond that, ESPN itself is a player of sorts in the local advertising market already, with sponsorships on ESPN.com that allow for locally targeted advertising.

One observation here is that while stalwart cable networks like ESPN and its parent ABC-Disney have made it clear they’ll continue to provide affiliates with local advertising time to sell within their existing TV networks, there’s no such quid-pro-quo guarantee in the new media space. (Side note: There was captivating news this weekend about ABC’s new “live” TV feeds, which will give viewers access to live broadcast signals from ABC stations on tablets and smartphones in selected markets. In that instance, local broadcasters are part of the picture, because the local commercials they sell will appear in the signals.)

That’s no small thing, given the audience that ESPN’s on-television content draws. Especially in an increasingly fragmented, time-shifted world, ESPN’s live sports coverage (and that of other live sports networks) is a prized audience-getter – a point that ESPN President of Global Consumer Marketing & Sales Ed Erhardt made today, as reported by Ad Age.

Our take: The upfronts are about positioning for national advertisers, so it's certainly possible that ESPN will follow up with affiliate ad extensions or local involvement. But there’s clearly a movement toward new-media channels that drift away from affiliate advertising considerations in the TV marketplace at large. The Twitter-ESPN alliance is a good example of how brand name networks can carve out strong positions in the digital media environment on a global level. Whether “global” translates to “local” remains to be seen, however. For now, today’s news is one more indication that cable/satellite/telco affiliates will increasingly need to fend for themselves in developing digital content that can be monetized locally with advertising.

Related:

Affiliate ad rights extend to ABC-Disney's authenticated channels (Jan. 13, 2013)

Advertising revenue for the NY cable company came in at $27 million for the Jan.-March period, down 1.8% from the $32 million recorded a year earlier. Total revenue from cable operations was flat at $1.36 billion.

Advertising makes up only about 2% of total cable revenue for Cablevision, lower than the average industry share. That’s partly because Cablevision has above-average subscription revenue from its customers.

Cablevision didn’t address advertising results during its conference call, but noted that disruptions caused by Hurricane Sandy hurt overall results and comparisons in the latest quarter. President and CEO James Dolan said he foresees “an improved advertising outlook” in Q2 which should contribute to sequential gains in cash flow.  

The drop in advertising revenue is the second reported so far among cable’s public MSO group. Mediacom Communications Corp. posted a 5.6% decline in Q1 revenue from advertising. Cable’s two largest operating companies, Comcast and Time Warner Cable, reported increases in Q1 advertising revenue.  

Total ad revenue for Mediacom’s two publicly owned units, Mediacom Broadband and Mediacom LLC, came in at $14.6 million for the January-March period, versus $15.5 million in 2012. That compares to a total revenue increase of 1.7% from all sources. The fastest-growing contributor was Mediacom’s business services group, which posted a nearly 20% increase in Q1 revenue. But revenues from subscription video services fell by roughly 4%.

Mediacom didn’t provide detail about its advertising sales performance, but one ongoing factor in the equation is a decline in household circulation for Mediacom’s video services, which face competition from satellite TV providers and, in some markets, from telco-video operations. In the latest quarter, video subscribers declined to just under 1 million, with the year-over-year drop of 5.7% mirroring the decline in ad revenue.

As the base of video customers erodes, so does the effective universe in which local TV spots appear. According to Nielsen data compiled by the broadcast TV industry association TVB, Mediacom’s share of the television household universe in the company’s two largest advertising markets is less than 50%. In the Cedar Rapids-Waterloo-Dubuque DMA, wired cable (mostly Mediacom) reaches 50.3% of households, with alternative pay-TV providers capturing 36.6%, and over-the-air TV homes accounting for 13.6%. In Des Moines, the wired cable share is just 40%, less than the 45% owned by alternative pay-TV services. Nielsen reports 15% of Des Moines HHs rely solely on over-the-air TV.

Mediacom has fought back by creating other ad-supported media options, including an ambitious local retail website, ravvid.com, that doesn’t depend on cable video subscription accounts to achieve consumer reach.

Today's announcement at the ANA’s annual Advertising Financial Management Conference in Phoenix involves the Comcast-owned TV spot distribution service AdDelivery and Mediaocean, the agency software provider that resulted from the 2011 merger of Donovan Data Systems and Mediabank LLC.

The agreement basically puts Comcast’s AdDelivery inside the ad agency tent by setting up links between Mediaocean’s ad-booking platform (called Spectra) and AdDelivery’s high-bandwidth network for whisking digital TV commercials to their intended destinations. That means agency buyers can stop using separate systems and manual processes to get from Point A – ordering up an ad schedule – to Point B – getting digital commercial files sent to the proper cable systems and other media outlets. The companies are calling the new integration Mediaocean Optica.

It sounds like a handy fix for improving efficiency in today’s cable ad environment, where AdDelivery handles lots of spot traffic for Comcast’s systems and those of other cable companies. But it’s probably more important going forward for accommodating what’s likely to be a tremendous surge in data needs tied to the targeted advertising movement. As cable companies start to inject commercials into more VOD sessions plus video streams aimed at tablets and other devices, the number of “insertions” agencies must track and validate for billing purposes is going to multiply dramatically.

Taking away some of the manual work around shuffling spots to the right network servers and insertion points will help – something Comcast AdDelivery alludes to in its announcement: “Ultimately, it will promote the holistic management across agency units, laying a critical framework for targeted, optimized TV advertising,” the release says.

The deal raises the profile of Comcast’s AdDelivery unit, which started out life as a mechanism for unifying the way cable networks provided cross-promotional TV ads to Comcast and other cable affiliates. Based in Denver, the group has grown to become a serious player in the world of video ad delivery, competing with companies including Texas-based DG.

Related:

Digital delivery: Comcast’s ADN and the tale of the disappearing tape (Oct. 7, 2011)

It’s a so-so start for a year that’s expected to be challenging from a growth standpoint given the absence of major political battles and an Olympic Games. Even so, the nation’s largest cable advertising company has shown a steady progression in the first quarter, with revenue rising from $455 million in 2011 to $475 million last year, and now to the $488 million Comcast reported today.

Advertising made up 4.7% of Comcast’s total cable revenue of $10.2 billion in the latest quarter, behind business services (7.2%), voice services (8.8%) and broadband Internet (24.7%). Comcast still makes most of its money from video services, which contributed half of the Q1 cable revenue.

With the two largest U.S. cable companies reporting, ad revenue for the industry at large looks to be shaping up in the low single-digit range. Time Warner Cable reported its Q1 revenue from advertising sales rose 8.1%, with contributions from systems acquired from Insight Communications contributing to the gain. Without Insight, ad sales revenue rose 5.2%.

The company’s TWC Media unit, which sells video and online advertising positions to local/regional advertisers, generated $228 million in revenue from January-March, up from $211 million in the same period a year ago. That’s a healthy 8.1% increase overall, but it includes $6 million of advertising revenue from the cable systems TWC acquired last year from Insight Communications. So backing out Insight’s contribution the same-store sales increase was a still-impressive 5.2%.

I say “impressive” because TWC and other cable companies are starting in on a year that lacks two marquee revenue producers – a national presidential campaign plus an Olympic Games event.

The political category isn’t entirely absent, as TWC Media benefitted in Q1 from targeted advertising initiatives tied to mayoral races in two big markets, Los Angeles and New York City. But most of the spending gains TWC Media realizes will come from traditional account categories like automotive, retail and financial.

On that front, there’s some good news from media researcher BIA/Kelsey, which issued a forecast for a 12.5% increase in local TV revenues (from over-the-air stations) through 2017, with the total climbing to $21.5 billion. BIA/Kelsey’s chief economist Mark Fratrik sees online ad sales contributing to an improving picture, although the firm notes that this year revenue is likely to slip below the $20.8 billion TV stations collected in 2012 (a 13.2% increase) thanks in part to a strong political marketplace. With that projection in mind, TWC Media’s 5.2% gain in Q1 looks all the better.