The Dynamics of On-Demand Ads

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A nomenclature debate worthy of translation is burbling up from the advanced-advertising side of the house, and it goes like this: What’s “dynamic” about “dynamic ad insertion?”

The conversation begins at the splicing of digital advertisements into the stored fare that is on-demand video — as opposed to linear broadcasts, or shows stored on a digital video recorder. It’s entering the lingo because ad-supported on-demand is ascending, both in revenue and in strategic priority.

What makes it tricky is the momentum built into the word “dynamic.”

Because “dynamic” means “continually changing,” it’s one of those words that tends to stay in motion. What’s dynamic today, in other words, will likely seem rigid in hindsight.

Right now, “dynamic ad insertion” (which also sometimes goes by “dynamic VOD”) is what happens when you, as a service provider, can splice a digital ad into a VOD title, precisely at the moment the stream is being assembled to send to the requesting customer.

Translation: At this moment in time, what’s “dynamic” about dynamic ad insertion is the ability to swap out an ad on the fly. It’s not the ability to swap out that ad with an addressable substitute, targeted specifically for Customer Jane and her demographics. (The vendor community submits that the technology is ready to do addressability, as soon as the business-side mechanisms catch up.)

Nomenclature confusion like this usually links to unrealistic expectations.

The descriptor-in-question sounds like it does more (or less) than it really does — like when a potential advertiser or agency grimaces and says, “but I thought you said it was dynamic.”

If the “dynamic” in dynamic VOD could be expressed in a crawl/walk/run sequence, where each improvement is a little better than the last, it’d go like this: First was ad-supported video on demand, where the ads are immovably pre-packaged into the show.

With one notable exception, the crawl-stage is pretty much how things work in today’s cable-delivered VOD systems. If you want to swap out one ad for another within that on-demand episode of Bravo’s Project Runway, for instance, it can take as long as two weeks. It involves re-encoding the show with the new ad, then “re-pitching” the show, with the new ad, into the storage array.

The “walk” phase began with Charter’s news, late last year, that it would conduct a test of “dynamic VOD” technology, provided by C-COR Electronics (and specifically, the work of the former nCUBE group).

What makes it dynamic is the ungluing of advertisements from shows.

Specifically, a sort of “industrial playlist” is created each time a customer requests an on-demand show. Behind the scenes, while the session for that stream is being initiated, the VOD system figures out which files are ad spots, and which are the show itself.

The big bonus: Swapping out the Sears ad takes a day, maybe two — not two weeks.

The bigger bonus: For the first time, viewership data is collectable on which ads were viewed, rewound and replayed, or fast-forwarded.

The “run” stage of dynamic ad insertion — and where all multiple-system operators and their respective technology suppliers are ultimately heading — is the ability to replace an ad with one that’s specifically targeted at a household.

In other words, if a video-on-demand session is already streaming, and you want to switch out the snowblower ad for the hot chocolate ad, you can do that.

It’s probably worth pointing out that two in the roster of VOD suppliers (C-COR’s nCUBE and SeaChange International) started out in life as ad insertion vendors.

Ad swapping for VOD isn’t all that different than ad splicing for linear broadcasts, from that point of view.

From a technology perspective, the big trend for 2007 will be the continued addition of ad-swapping mechanisms for on-demand fare. It’s the addressable part that doesn’t warrant inclusion in “dynamic VOD” just yet.

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