Delivering Distinct TV Ads

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Switched digital video, a technology designed to conserve space on coaxial cable networks, could become the way operators dish out dozens of different ads to viewers watching the same live TV programs.

The original purpose of switched digital video was to let cable companies expand their lineups, and it’s become a launching pad for more high-definition channels and specialty content like in-language programming.

But switched video also provides a foundation for delivering targeted ads -- inserted into live TV -- that are more relevant to viewers. “We’re now seeing service providers look at switched digital video as a platform for advertising,” said Biren Sood, vice president of marketing and business development at BigBand Networks.

Switched video delivers certain channels to households in a serving group only when somebody in the neighborhood requests it. That means more linear programming choices can be delivered in the same amount of space allocated for broadcast channels, because not every channel will be requested at the same time. The “oversubscription” ratio can be 2:1 or more, depending on viewing patterns.

How advertising fits in: Switched digital video systems inherently take a broadcast lineup and break it up for delivery over numerous serving groups. A 100,000-subscriber cable system, for example, might be divided into 100 different 1,000-household groups -- each served by a different switched digital video server -- which represent demographic groups that are finer-grained than today’s ad zones.

“Now you have a very natural target area that is smaller in scope, and you can now send more specific content to that serving group,” Sood said.

In addition, switched video technology can allow cable operators to effectively tap local ad avails beyond the top 60 or so networks for which they do ad insertion now. That represents an opportunity to generate advertising revenue from the “long tail” of linear television programming, said Greg Hardy, vice president of business development in Cisco’s Service Provider Video Technology Group.

“There are just not enough people watching some channels to justify building a whole ad zone,” Hardy said. Switched digital video “lets you reach more viewers with local ad insertion” by targeting spots based on viewer profiles.

Canoe Ventures, the joint venture of the six biggest MSOs in the U.S., expects to introduce a “creative versioning” product in the next few months that will allow national cable networks to extend to their advertisers the zone-based targeting used by cable operators. If those channels were delivered via switched video, ads could theoretically be even more accurately targeted.

But it will be a long while before switched video ad insertion becomes mainstream, according to David Price, Harmonic’s vice president of business development and marketing communications. “The ad agencies and the advertisers themselves are not interested in small numbers,” he said.

Until the concept hits critical mass, marketers will still target advertising based on the makeup of a network’s viewership, Price said. “Frankly I think 99% of switched digital video’s value is reclaiming the bandwidth.”

Meanwhile, an issue for addressable advertising in general is that there’s an extra cost to create multiple ad versions, Hardy noted.

“The issue you run into is, given how many different ads do you want to offer, what is the cost of producing those versus what I get in terms of a higher CPM [cost per thousand impressions]?” he said.

Another pitfall: The most-watched channels, which should return the most ad dollars, typically are not delivered via switched digital video today because that wouldn’t yield any of the bandwidth efficiencies that are the reason the MSOs are deploying the technology to begin with.

Operators will “continue to deliver their high-profile, highest-rated networks via broadcast,” said Tim Myers, vice president of product marketing for advanced-advertising systems vendor Visible World.

Once there’s a realizable business benefit in providing targeted ads through switched digital video, it will make sense for cable operators to move networks from the broadcast tier to the switched tier, said BigBand’s Sood. Ultimately, in a “switched unicast” environment, every single subscriber could be sent a separate video stream. “We view addressability as a phased approach,” he said.

A competing approach for delivering addressable linear TV ads puts the decision point about which spot to show the viewer in the set-top box. Under this set-up, a set-top agent splices in the appropriate ad based on a set of rules.

Proponents of using switched video to insert targeted ads, though, assert that the complexity involved in set-top-based addressable advertising is far greater than performing those functions in the network.

“The jury’s still out on which is better,” Cisco’s Hardy said. “But if you were going to do set-top switching, think about the number of different boxes the application must be certified in. If you do it in the network, you do it once and the set-top doesn’t care.”

Of course, delivering different ad versions to viewers watching the same program requires additional bandwidth regardless of the technique. For example, a recent Motorola demonstration using switched digital video to deliver spots aimed at four different demographic profiles required four discrete feeds of the channels in the queue.

But while there are more possible feeds that could be delivered over the plant, the probabilities underlying switched digital video still hold -- that is, most channels won’t be in rotation, said Bruce Bradley, Motorola’s director of product management. In addition, he added, a switched video system can scale back the number of different ad versions it serves if capacity becomes constrained.

“In an SDV environment, you usually end up with spare capacity that would let you deliver addressable content,” Bradley said.

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