Advanced and Legacy Ad Systems Starting to Mesh

Content Dam Btr Migrated 2012 03 Btr Feature Ad Systems Mesh
Btr Feature Ad Systems MeshThe legacy approach to cable advertising -- scheduling, inserting, running and verifying spots on linear cable channels -- is among the most complex things that cable operators do. The emergence of interactivity and multiscreen doesn't change the many moving parts of what is done at that level. Instead, it adds a distinct, and even more complex, layer to the advertising landscape.

Today, the new Rube Goldberg of advanced advertising is just getting started. "Ninety-five percent [still] is … linear programming," said Paul Woidke, the senior VP and GM for the advanced advertising division of Nagra and the principal of Working Group Five of the SCTE's Digital Video Subcommittee. "Everything else is transitional."

The goal, of course, is to grow to more than five percent of the total quickly. The challenges are great. It goes beyond technology: Interactive advertising is a basic and fundamental change in the nature of what is being done.

Ramin Farassat, RGB Networks' VP of product marketing and business development, wrote in response to emailed questions that adaptive bitrate streaming-based delivery -- the way in which programming, including advertising, is delivered over IP-based broadband networks -- uses unicast models that facilitate one-on-one relationships between advertisers and the operator's subscribers.

That's the conceptual change that the industry must recognize and accept: The traditional concept of cable advertising -- presenting an ad to people grouped by zones in hopes that a percentage of them see it and that a portion of that group take a future action such as making a call or visiting a store -- is put on its head. The new world of advanced advertising is infinitely more narrowly targeted and is a two-way street in which valuable information flows upstream to the operator, advertiser and agency. This is true in interactive advertising that is delivered through the set-top box and over-the-top (OTT) ads that reach subscribers outside their homes.

Aseem Bakshi, the general manager of SeaChange's advertising business unit, said it is a long-term change. The idea of quick transition is unrealistic due to expense involved. Efforts to transform quickly are "kind of unraveling right now," Bakshi said. "Canoe was the ultimate example. It was a good idea, but its problem had a lot to do with the infrastructure cable would have to upgrade to in order to bring it to a reality. It was about taking a multicast infrastructure and making it completely unicast. That required at the end of the day an enormous investment."

Instead, a layered approach -- Bakshi likened it to Google Maps, with different elements laid atop each other -- is more feasible. In the case of advertising, one layer is multicast with most of the data flowing downstream. Its advanced counterpart is unicast with a much greater flow of data upstream to the advertiser. The operators who adjust to the hybrid model most quickly -- and the vendors who make the gear that supports both -- will thrive.

Farassat agrees that it won't happen all at once. "It is important to note that while some operators want to deploy a fully targeted infrastructure, meaning that individual users can be fully addressed, others are looking to leverage existing zone-based infrastructure as a step towards full addressability."

That change comes with a lot of luggage. "The opportunity is the ability to target individual users, with a presumable increase in CPM [cost per thousand impressions] rates due to better information about what would be of interest for each individual subscriber," Farassat wrote. "The challenge is maintaining the database of users and staging campaigns to target them."

The transition for the cable industry is the difference between sending advertisements to zones -- the traditional approach -- and to households. The goal is to sell interactive ads on the basis of impressions and not ratings points, as linear advertising was and still is sold. The difference is that in a broadcast model, it is enough to run an advertisement. In an addressable, impression-based landscape, it is possible to prove that it was seen. "It is not so much a question of what zone the commercial was shown in, but who saw the commercial," Woidke said.

It seems likely that in such an environment the billing provider will play an even more central role than in the past, since it controls a tremendous amount of data. Mike Pellegrino, the vice president of strategic alliances and partnerships for CSG International, said deeper relationships are being built between the advertising and billing silos.

The valuable information held by the billing firms can be used to address the subscribers who suddenly can be targeted much more narrowly by the operator. "We have a lot of customer data," Pellegrino said. "Our primary responsibility is to make sure the bill is accurate, [but] a lot of that data can be leveraged with targeted advertising."

The cable industry is not immune to the huge changes brought by broadband and a subscriber group accustomed to instantaneous gratification of their advertising needs. While it is clear that operators and their vendors are on the case, it will be a long -- and perhaps bumpy -- ride.

Carl Weinschenk is the Senior Editor of Broadband Technology Report. Reach him at carl@broadbandtechreport.com.
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