Surging over-the-top video services could serve as an increasingly attractive opportunity for targeted, interactive advertising -- and cause pay-TV providers to move faster on initiatives like dynamic ad insertion for video-on-demand.
That was one of the key points of debate on a panel at B&C/Multichannel News' Advanced Advertising 3.0 event here Tuesday.
"Frankly, any discussion of advanced advertising has to absolutely consider" broadband-delivered video services, according to Tim Hanlon, CEO of Velociter, a unit of Interpublic Group's Mediabrands focused on investments and strategic partnerships.
Internet-delivered video could spur traditional TV providers to adopt advanced advertising capabilities more quickly, according to Hanlon.
"Netflix, at 20 million subscribers, starts to look like a pretty broad, segmentable audience," Hanlon said, advising advertisers and content owners to "be open to that possibility, rather than it being a dalliance or an afterthought." Netflix does not currently sell advertising on its website or for its streaming video service.
However, Visible World president and CEO Seth Haberman challenged the premise that over-the-top services are a threat to traditional TV ads, citing lack of inventory and infrastructure in the online space. TV operators are "not worried about one-tenth of 1% of their [advertising] spend going to another platform," he said.
The Weather Channel, for one, considers all the advertising potential across many different platforms, including Internet-connected TVs and tablets, vice president of ad sales Christopher Raleigh said. "The consumer is looking for our programming wherever it is," he said, noting that the network must work to balance marketing messages with consumer expectations for a given platform.
Cable is poised to generate more ad dollars from VOD by targeting ads to on-demand viewers -- if it can get to mass scale, said Cathy Hetzel, president of Rentrak's Advanced Media and Information division.
"What we have the opportunity to do now is take those databases that have been used for targeting for many years... and bring a more exciting experience to television," she said. "It's another way to find the household with the dog, which has probably been getting some catalog about pets for years."
Even without dynamic ad insertion, Hetzel added, VOD is a very effective ad platform given that those viewers make a deliberate decision about what to watch. According to Rentrak, the industry in 2010 served 8 billion VOD sessions totaling 3.5 billion hours.
Hanlon agreed that nonlinear viewing has huge potential for ad targeting and expressed surprise that VOD services generally still lack that capability.
"I'm incredulous that we haven't come to a realization of that on a scale basis," he said.
Canoe Ventures, the advertising technology and services company formed by the six biggest U.S. cable operators, plans to test dynamic VOD ad insertion on a nationwide basis this year.
As for addressable ads, Haberman -- whose company provides systems for delivering target TV spots -- noted that Cablevision Systems has deployed Visible World's addressable advertising capability across some 3 million homes in the New York market.
"On Cablevision, the addressability is actually here, and the combination of interactivity and addressability is coming soon," he said. "I'm trying to add a little optimism to the 10-year plan because if it's here in one place it should be able to go other places pretty easily." Haberman was alluding to the presentation earlier by SMGx executives calling for TV providers to be fully enabled for addressable advertising by 2020.
Meanwhile, Hanlon said privacy should be a major concern for advanced forms of TV advertising and is an area "probably overdue for regulation."
"We have to take a pause and be realistic about how far we can take targeting," he said. "Anything in the television environment will probably be even more scrutinized than anything on the Internet."
Haberman, though, said cable operators have been sensitive to privacy issues from the outset and have proceeded cautiously in how they treat subscriber information. "I know because of the hoops we've had to jump through," he said.
The panel was moderated by Broadcasting & Cable business editor Jon Lafayette.