The allure of dynamic video-on-demand advertising is its ability to combine micro-targeting of viewers with attractive television content on the biggest screen in the house. But for local cable advertising companies, there’s a second contribution that’s just as important: more time to sell.
A common complaint from cable L.A.S. organizations for years has revolved around not having enough marquee local commercial inventory. With premier cable networks typically offering just two minutes per hour for affiliates, many companies are sold out on prime inventory associated with popular shows. This month’s debut of the highly anticipated fifth season of “Mad Men” on AMC is a case in point: local ad inventory has been snapped up for months across hundreds of cable markets.
But the accelerating category of dynamic VOD insertion is going to make a positive contribution to the amount of time local ad sales companies have to sell, says Nick Troiano, President of the cable ad-technology company BlackArrow.
Two contributors
In a briefing last month, Troiano explained that L.A.S. organizations will enjoy more minutes of commercial time from the emerging dynamic VOD category on two fronts. First, there’s the initial allocation of local minutes within VOD programs supplied by major television networks, which are (finally) coming to terms with their cable distributors about how to allocate VOD ad inventory. Although deals vary widely, Troiano said it won’t be unusual to see roughly 11 minutes of total commercial time per 44-minute series episode in a VOD environment. Of that, around four minutes may be allocated to local video distributors, with the remainder sold by the originating TV network on a national footprint.
The ability of L.A.S. organizations to package targeted local commercials within these discrete VOD streams represents a potentially powerful inventory addition. But it gets even better. Troiano notes that national networks play in the broader environment of C3 measurement – the tracking of viewing impressions within a program’s live network premiere and in DVR (and ultimately VOD) playback within a three-day window after that. Once the C3 period is over, the national advertising time becomes perishable, and some national commercials will vanish from VOD streams. That leaves open inventory that will revert back to the cable distributor, expanding the total number of local minutes available with a particular VOD program. A viewer who summons an episode of a favorite prime time TV show weeks after its debut could see mostly local commercials, as national avails are ceded to the local distributor.
Sales training
There’s still much work to do before L.A.S. organizations are able to fully exploit this emerging real estate, of course. But preparation is under way across the industry, Troiano notes, as large cable ad organizations deploy sales-training programs and assign specialists to representing an emerging and attractive inventory pool.
BlackArrow’s job is to automate and bring scale to the enormously complex web of data and computational relationships that steer particular commercials into particular VOD programs within particular geographies. But Troiano, a former Yahoo executive, says the bulk of the technology and process-development work is actually completed. The remaining tasks are related more to the selling process at both the network and local levels.
Troiano says two schools of thought are at work on the local advertising front. One is to treat household-targeted VOD stream inventory much like an Internet-video buy, with measurement and metrics familiar to digital-media buying specialists.
The other is to arrange and package VOD inventory in a manner that looks and behaves somewhat like familiar linear schedules, with ratings and demographic metrics presented in ways that are comparable to those that prevail in traditional TV. “That way the local ad sales guys don’t have to sell any differently,” Troiano says.
Either way, there’s a compelling opportunity at hand to monetize a category that’s accounting for a rising share of television viewing time. TV shows make up about one-third of the 400 million VOD streams requested monthly by Comcast viewers, according to Comcast. That’s more than 130 million viewing sessions per month in which national and local commercials can be targeted.
Major progress
Although the ad-supported VOD category has been slow to develop, Troiano says 2012 will see a big leap forward at both the network and L.A.S. levels.
At Comcast, for example, the number of markets that can accommodate mid-roll dynamic VOD insertion will rise from just two currently (western Pennsylvania and Denver) to the entire advertising footprint by the end of the year, according to comments made by Comcast Cable SVP and GM of video services Marcien Jenckes at a recent Multichannel News/B&C event.
“We used to call it the free VOD ad-spending paradox,” Troiano says, referring to frustrations in getting the ecosystem up and running. “But now, we’ve solved most of the technology and operations impediments.” That leaves marketplace considerations, such as local/national inventory splits and sales training, as the remaining critical accomplishments.
BlackArrow, which is funded by investors including Comcast Ventures and Time Warner Cable, figures to play a central role in orchestrating the insertion and playback of commercials within VOD streams. In doing that, it will help ease the strain on the fundamental asset of local cable ad sales: inventory. “The local guys are sold out on ‘Mad Men’ inventory at a $60 CPM,” Troiano says. “Now, on demand allows those same guys to have 25 percent more inventory.”
Photo courtesy of Flickr Creative Commons user robstephaustralia
Related:
BlackArrow taps Arris technology exec as CTO (ZoneWire, Jan. 6 2012)
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