Serious buzz about multichannel video advertising

Wednesday, November, 28 2012

In Canada, dynamic ad insertion has promise—and limits

By: Stewart Schley Wednesday, November, 28 2012

Irony alert: As dynamic VOD ad insertion picks up steam, one of the most prominent early implementations is coming from a market where cable companies aren’t even allowed to sell local advertising.

That would be Canada, where the Canadian Radio-television Telecommunications Commission (CRTC) forbids companies like Shaw Communications and Rogers Cable from engaging in a practice that’s common in the U.S.: inserting 30-second commercials into assigned local ad breaks within linear network TV signals. Aiming to protect Canada’s TV broadcasting system and the revenue streams that support it, Canada’s media industry regulator allows only originating broadcasters to sell TV advertising time.

Video on demand, though, is treated differently. Canada’s cable companies still can’t sell local ad time on their own, but a 2010 CRTC decision does allow them to serve as ad-insertion intermediaries for TV broadcasters that are interested in leveraging the new capabilities of DAI, or dynamic ad insertion, into cable-delivered VOD program streams.

In reaching its decision, the CRTC noted that “VOD services will undoubtedly become increasingly competitive with linear services for audiences and revenues. In light of this, the Commission considered it necessary to clarify the expected role and contributions of VOD undertakings to the Canadian broadcasting system.”

The 2010 ruling was important, because without it, DAI would be off-limits to broadcast TV networks in Canada. That’s because they lack the networking technology and resources required to align particular commercials with discrete VOD program streams requested by viewers. They need help – in the form of dedicated hardware, software and business processes – from cable distribution affiliates to accomplish that task.

And now, they’re getting it. Canada’s Rogers Communications, with roughly 2.2 million subscribing households, began implementing DAI in March 2012, becoming the first North American operator to commercially deploy DAI, according to SeaChange International Inc . So far Rogers is the only Canadian cable company to publicly announce it’s offering dynamic VOD advertising.

Although Rogers can’t directly sell its VOD positions, it’s not in the game for charity. Rogers charges broadcasters a per-insertion flat fee for serving ads over its DAI system, according to an explanation by Mark Freedman, a technology strategist for Telus who previously helped establish the Rogers DIA system. As he described it to Videonet last month, “At Rogers we charged a flat fee CPM; we were not interested in revenue shares. I don’t want to know what the programmer sells their advertising spot for and if they can sell it for 12 times what we charge them then great.” (The entire article from Videonet has good detail about DAI and is worth a read.)

Because Canada’s top television broadcasters share common ownership with leading cable companies, there’s an obvious motivation to work together on DAI. “With carriers now owning the four largest private broadcasters (Bell/CTV, Shaw/Global, Videotron/TVA and Rogers/Citytv), dynamic VOD would look to become a new revenue opportunity for the vertically integrated companies,” observed the Television Bureau of Canada .

Canada’s budding DAI market also has opened up opportunities for technology vendors. In addition to SeaChange, which supplies ad decision management software for Rogers’ DAI implementation, BlackArrow provides an advanced advertising platform that enables insertion of DAI commercials.

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