Charter VOD Ad Trial’s Dynamic

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In what’s being called the biggest trial of its kind, Charter Communications is dynamically inserting video advertising spots with free video-on-demand content in its home St. Louis market.

The 250,000-subscriber St. Louis system started serving up ads on Oct. 30 from two major advertisers on two free-VOD channels: Vehix TV, a collection of video car-buying guides, and a movie-trailer section provided by Hollywood Media. The trial will run through the end of January 2007.

Charter and the ad agencies involved in the trial — Ogilvy North America and Mediaedge:cia — would not disclose which advertisers have signed on.

ALLSTATE, SEARS ARE IN

However, a Charter subscriber in St. Louis said insurance giant Allstate and retailer Sears are the initial marketers testing out dynamic VOD ads.

The system works by “playlisting” ad content, which is stored separately from other VOD files, to run before or after a piece of selected video.

Charter’s deployment uses components from multiple vendors, including VOD systems from C-COR, Harmonic’s video encoders, Atlas’s automated campaign-management tools and VOD content provider TVN Entertainment’s ad-distribution system.

The cable industry is keenly interested in exploiting dynamic VOD ads, hoping the technology will drive sales against free on-demand content. Today, the process of selling ads for VOD is cumbersome, taking anywhere between 45 and 90 days from when ad content is delivered to when runs.

One of the main bottlenecks has been technical: VOD ads have had to be encoded and stored with the primary content — as a single file, or “asset.” That means if four different advertisers want to run with the same VOD clip, an operator would need to create and store four different files.

In a dynamic on-demand ad system, any ad can be set to run against any other on-demand segment virtually instantaneously.

“This is really going to let us do the type of dynamic ad insertion with VOD that we’ve done with linear channels,” said Maria Mandel, executive director of digital innovation with OgilvyInteractive, an ad agency with a client participating in the Charter trial.

Initially, Charter is inserting new ad content every two weeks, said Todd Stewart, Charter’s vice president of national ad sales and development. But eventually that lead-time could drop to as short as 24 hours, he said.

Another advantage: Dynamic VOD ads provide the ability to more closely track ad plays, delivering the type of detailed analysis that’s available with Internet-based advertising. “Now we can track VOD ads in real time,” Mandel said. “Not only will we be able to see who’s watched the ad, we can see who fast-forwarded through it.”

Most other cable operators are earlier in the process of kicking the tires on the technology.

At Time Warner Cable, dynamic VOD ads are “definitely a priority for us,” said Joan Gillman, president of media sales. But she said her team is still comparing vendors’ wares for dynamic VOD advertising and hasn’t made a selection yet. In the meantime, Time Warner is pushing hard on interactive advertising, launching its biggest deployment to date in New York (see story below).

Charter’s St. Louis trial was preceded by a smaller rollout this summer by Sunflower Broadband, which has 30,000 subscribers in and around Lawrence, Kan. The operator began inserting ads into VOD content from Comedy Central, including trailers for Paramount/MTV Films’s Jackass: Number Two. Sunflower is using SeaChange International’s AdPulse on-demand advertising system and VOD servers.

The advent of dynamic VOD ads is new enough that marketers aren’t really sure what works yet. Charter’s charter advertisers are testing 15- to 30-second spots, as well as pre-roll ads up to 1 minute and post-roll spots as long as 2 minutes.

“We know consumers are willing to watch ads for free content,” Charter’s Stewart said. “But can you put 60-second ad in front of it? If it’s a three-minute preview, probably not.”

SMOOTHING KINKS

Charter had to knock out a few kinks in the system before launching the trial. The main glitch was that a green line or flash would sometimes appear between an ad and the VOD program — the result of certain set-top boxes scanning for a video sync, said Jeff Dillon, network engineer in Charter’s St. Louis system. “Essentially, the set-top was changing the channel,” he said.

Dillon said he fixed the issue by making sure the video signal was being smoothly switched by the Harmonic edge quadrature-amplitude modulation (QAM) system.

Down the road, the technology could allow more-targeted ads. In the trial, Charter is serving ads based only on time of day and which VOD clip is being played. The next step is “to put a brain in the scarecrow,” Stewart said, to allow on-demand ads to be dynamically addressed to subscribers based on ZIP code or other some other information.

“Right now, I think the technology could support that,” he said. “The question is, Who is going to serve that role, to make sure relevant advertising is with relevant content?”

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