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Advertising Insertion and Vod: a Match Made in Heaven

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Advertising Insertion and Vod: a Match Made in Heaven ADVERTISING INSERTION AND VOD: A MATCH MADE IN HEAVEN Jay B. Schiller, Senior Vice President, Market Development nCUBE Corporation Abstract • Recapture digital viewers watching VOD and not watching broadcast cable Video-on-demand (VOD) is now a standard • Support geographically targeted and 'must-have' service for cable operators. It is household addressable ads highly strategic in reducing churn and growing • Provide 100% measurable advertising premium digital subscriptions. It also provides data a great financial return on invested capital through movies on demand and subscription Historically, cable operator’s and cable VOD (SVOD). Local ad sales, meanwhile, networks’ ad sales businesses have not continue to provide cable operators significant leveraged VOD although some have cash flow and are an excellent promotional experimented with it. This is primarily due to vehicle for cable operator’s various services multiple factors including: 1) most VOD including VOD. As viewers migrate to on- content is pay-per-view movies and premium demand, local and national ad insertion must cable programming, which is not normally ad- migrate as well in order to sustain and grow supported programming and does not have cable ad sales’ revenue. In addition, VOD and local breaks; 2) a lack of critical mass of digital cable platforms offer unique viewers; and 3) a lack of acceptable audience opportunities to target advertising to measurement data available (and the newness households, as well as interact with ads, both of the medium) to the advertising industry. of which have the potential to grow ad sales businesses for both operators and cable However, these factors are all changing. networks far beyond today's TV advertising Ad-supported cable networks such as ESPN are market share. becoming VOD programmers themselves. In addition, a number of new programmers are appearing only on VOD services, such as ADVERTISING INSERTION AND VOD MagRack, and may consider ad-supported models. The number of VOD households has VOD streams are unique, one-to-one TV rapidly increased as well, to 16.5 million of the sessions with each household. VOD ad 23 million digital homes (66.6 million basic insertion is local ad insertion but in VOD homes) now, and is growing to more than 38.2 content. VOD ad insertion appears to be million by the end of 2008.1 VOD usage and unique and advantageous for advertisers and ad VOD audiences are also growing weekly. For sales operations in that it has the potential to: instance, nCUBE has seen on average 10-15 VOD session starts per digital subscriber per • Use local breaks in VOD content month in the field. Lastly, ad agencies, media similar to traditional local breaks on buyers and advertisers are being exposed to the broadcast cable (called ad replacement) medium. However, they will need to value • Create new local breaks before and after new audience measurement data and will need VOD content (called playlists) to be able to process it with their back office 1 Kagan VOD & iTV Investor, July 23, 2003 systems, which they rely on to plan effective ad • Detecting local breaks campaigns and to value advertising. Nielsen • Inserting ads in VOD content Media Research, the leading audience • Targeting ads by geography measurement service, has published a VOD • Household addressability in the future system interface specification, which is being implemented into VOD vendors’ systems and An overview of today’s ad insertion may address advertisers’ needs. technology and today’s VOD technology follows. These two sections are helpful for This paper presents both technical those unfamiliar with the technical aspects of requirements and an implementation for each and also set the context for extending ad advertising insertion around VOD content (i.e. insertion into VOD. playlists) and in local breaks in VOD content (i.e. ad replacement). VOD content includes Today’s Ad Insertion movies, SVOD, free VOD and network PVR. The solution leverages existing ad sales Local cable ad sales is a mature and growing organizations, research, and traffic and billing business in the U.S. contributing significantly systems as a starting point. However, the to cable operators’ revenue and net income. Ad solution scales into the future with household sales organizations sell TV commercial time level addressable advertising using newer designated for local insertion on cable networks traffic and billing, and research systems. There to ad agencies and advertisers. Ads are sold for are several other advanced advertising particular networks, day parts, programs, or applications being implemented, tested and groups of networks. Each cable network speculated by nCUBE and others which are not provides 2 to 3 minutes per hour for local discussed in this paper including: insertion, or enough to run 96 ads each on average per day. Typically, 15 to 25% are used • Advertiser-sponsored free VOD using for cable operator marketing purposes. There long form ads and programming on the are more than 80 ad supported networks with VOD service roughly 40 carried on analog and 40 carried on • Interactive advertising for direct digital cable. Most ad sales revenue occurs on response, surveys, coupons, the top 20 networks carried in the analog personalized messages and more domain. However, operators are rapidly • Linking from traditional ads to long moving toward 40 channels of ad insertion and form programming on the VOD service are also beginning to migrate away from analog • Advertising on digital video recorders cable and toward all digital cable. These applications may be the topics of Cable operators use traffic and billing subsequent papers. This paper will talk (T&B) systems to enter orders, schedule spots specifically about extending today’s ad and bill advertisers. T&B systems track the insertion business and technical operations into number of ads that are sold and thirty second VOD. Of particular relevance in combing ad ads available to be sold (called “avails”) for insertion operations with VOD systems are: each network, and produce schedules for the ad insertion systems so it knows which ads to • Organizational responsibilities, play. The schedules list ads to play during each architecture and workflow local break on each network. Based on • Traffic and billing system configuration schedules, the ad insertion system determines and back office integration which ads need to be encoded, distributed, and removed, as well as whether any are missing. deployments, with both standard definition Once played, the ad insertion systems log each television (SDTV) and high definition ad played and returns the logs to the T&B television (HDTV) naturally supported for ads system so that advertisers may be billed. and programming. Nearly 100% of all ad insertion systems in Analog and digital switching each have use today use digital ad content based on unique requirements. Analog switches must be MPEG 2 content locally encoded at 4 to 6 accurate and fast time-wise such that the switch Mbps constant bit rate (CBR). Digital ads, into the local break is not late so that the mostly thirty seconds long, are distributed as beginning of the network’s underlying ad is not data files and are stored on video servers’ hard shown or heard. And they must not switch out disk drive arrays located in headends. During of the local break too late so that the network’s local breaks ads stream from the video servers programming following the local break is not and are switched in place of ads in the cable stepped over, although cues may also be sent to network feed. Local breaks in ad-supported signal the end of the break which may prevent cable programming (e.g. CNN) are identified this; in which case the local ad would be cut by the presence of cue signals detected by the short. They must also not switch too slowly ad insertion system. Historically, cue signals such that black video results. Lastly, analog consisted of DTMF tones carried in a second switches typically contain audio automatic gain audio channel in each ad-supported cable control and level matching circuitry to ensure network receive at each headend. Cable that audio levels of the networks and ads networks are migrating to newer MPEG cue match. packets specified by SCTE in the SCTE 35 (formerly SCTE DVS 253) standard. The Digital switching is done by ad splicers SCTE 35 cue packets multiplexed into the which are statistical bitrate re-multiplexers MPEG 2 program stream along with other typically located in headends for efficiently elements such as video, audio and data. The creating digital multiplexes with digital cable cue packets signal local break positions and programming. Ad splicers have the same time insertion splice in and out points. accuracy requirements as the analog switches. Audio level matching is a more complicated Once the cue is detected, ads are streamed issue however for DPI than for analog and from video servers at the appropriate time. cooperation among cable networks, splicer Today, they are typically decoded to analog manufacturers and cable operators are required and switched into analog broadcasts prior to to ensure consistent audio levels before and distribution into the cable plant and distributed after switching. to viewers’ homes. With digital cable growing in popularity, and with cable operators Local cable is unique in that it can insert migrating to all digital cable, ads may also be advertisers’ commercials across a metropolitan streamed from video servers and switched into area (i.e. “market”), and can also “target” ads to digital broadcasts where decoding to analog geographic regions within a market (i.e. occurs in digital set-top boxes in viewers’ “zones”). This flexibility offers advertisers homes. When digital ads are inserted into tremendous efficiency in reaching relevant digital cable programming, as opposed to viewers, while maximizing ad sales revenue for analog programming, it is called Digital operators.
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