Digital Ad Insertion Evolves Toward Its Bright Future

Aug. 6, 2014
Cable operators look forward to a day when advertising on any programming they offer - VOD, linear, on demand, you name it - can be ...
Cable operators look forward to a day when advertising on any programming they offer - VOD, linear, on demand, you name it - can be inserted into traditional TV sets, IP-connected sets, tablets, smartphones, PCs and any other gadget the CE folks come up with. The ads will be customized for the owner of that device. So, during one avail, a kid watching on a tablet will get a different message than Mom and Dad who are down in the den.

Sound great? Sound difficult? Observers agree with both assessments and say that progress is being made. In late July, Frost & Sullivan released research projecting the growth of ad insertion for cable operators and other service providers. The study predicts that the market for equipment will grow from $1.32 billion last year to $2.33 billion in 2019. Much of the growth is driven by the desire to advertise on high profile events, such as the FIFA World Cup and Sochi Olympics that both were held earlier this year, according to the company.

To tap into this market, the entire ecosystem will have to wade through the complexities of a public that is increasingly consuming content of all sorts on nontraditional devices. Aravindh Vanchesan, a digital media research analyst for Frost & Sullivan and an author of the report, said progress is being made, but that tier 2 providers are lagging. “The smaller cable operators still are struggling with this,” he said. “That is a result of their lower budgets, lower financial resources and their limited technical capabilities.”

Vanchesans’ demarcation between the top operators and those below was echoed by Randy Lykes, the CTO of Viamedia. In addition to technology gaps, the smaller operators face a greater challenge in in gaining rights to insert programming in a great many programming networks. “There still is a gap” between the top operators and the rest of the industry, he said. “The tier 2s are narrowing it, and the tier 3s still are not at the starting gate.”

Clearly, digital ad insertion is an area in which the cloud - which makes it possible for operators to dive into business without making huge capital expense investments or hiring specialized personnel - will help get the smaller operators get into the game faster. For now, though, the most intense work in the digital ad insertion realm is being done by the top operators, which is a common way that the industry develops.

Chris Hock, the senior vice president for marketing and business development for BlackArrow, said that at the highest level, operators need to do three things: They must enable any time viewing on any device, set up platforms that allow programmers to monetize their content, and support the advertising industry through what is a very difficult logistical challenge.

Hock says the matrix is set for the end game, which is the full menu of inserting programming on a fluid basis into any device. Hock said the basic building blocks are in place, but the ability to work with a variety of standards and interfaces on the wide variety of devices that will carry advertising will take a while to satisfy. It is a work in progress on many levels.

There also are non-technical issues with which the industry must deal, Hock said. The inventory splits between the programmer and the distributors in many cases have been extended to non-traditional devices.

Last week, BlackArrow said that Bright House Networks selected the vendor to manage its DAI efforts across its multiscreen universe. Hock suggested that moving behind the top of the tier 1 market is a significant move. The press release announcing the deal says the BlackArrow Advanced Advertising System will enable Bright House to unify “campaign management, advertising reports, and advertising execution across all their TV platforms.” In the future, the platform will increase Bright House inventory in its local and regional markets.

The good news for cable operators is that advertisers are very interested in the fully-formed picture of DAI, in which any spot is distributed in real time to any device. The reason is simple: Those capabilities deliver the best potential target demographic. There is a lot of interest in targeted advertising and digital ad insertion, Vanchesans said. “There is a lot of pressure on the cable operators and vendors working on the solutions to get it right, and soon,” he said.

It is a tall order, however, and one that won’t be fully ready for years, particularly below the top handful of operators. Slowly, however, the challenges are coming into view and beginning to be met. “For the first time, just this year, it is beginning to come to fruition,” Hock said.