HD Ads May Double by Year-End

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While most major programmers and broadcasters have already
made the move to high-definition production, many viewers have noted that the
amount of advertisements produced in the format has generally lagged.

Scott K. Ginsburg, chairman and CEO of Irving, Texas-based
electronic-advertising network DG FastChannel, said his company estimates that it
will more than double the amount of high-definition spots it sends out by year
end. But the total number will still remain relatively small, he added.

"About 3.5% of our sends are in HD [in June of 2009] and we
predict that by the end of the year that throughput will be closer to 10%, in
7% to 9% range," Ginsburg estimated in a recent interview.

While Ginsburg notes "our network is ubiquitous and has a
high 90% share of the electronic distribution of ads," it doesn't transmit a
number of local ads from smaller local businesses. Because many of these
advertisers have been the slowest to embrace HD production, the overall
proportion of HD ads is likely to be even smaller.

DG FastChannel hopes to change that. The company, which runs
an electronic ad-distribution network serving more than 4,100 television
stations, cable systems and other programmers, has launched an HD Xtreme
initiative to expand the number of ads being distributed in HD.

"We've spent $10 million to $15 million on hardware and
another $20 million on software," as part of that effort to upgrade its network,
Ginsburg said.

Several factors account for the relatively low, though
rapidly growing, proportion of HD ads.

Most major brands have already made the switch to HD
production. DG FastChannel currently works with over 5,000 advertisers,
including more than 90 of the top 100 marketers and about "1,500 brands are
working with us for HD delivery [of ads] at the current time," Ginsburg said.

"The material is being overwhelmingly produced in HD and our
company has worked with virtually all of these advertisers with their HD
workflow to make sure they are able to send it in HD," he added. "The issue has
been the ability of the TV stations and cable stations to be able to ingest and
play those ads out over the air in HD."

Here, the progress varies by the size of the programmer and
markets they serve.

"Our projection is that as we look towards the end of this
year, virtually every cable and TV network will be able to ingest and play
over-the-air HD ads," Ginsburg said. "We look at the top 30 TV markets and
virtually all of the TV stations in those markets that are English speaking
will be able to play HD. It is when we start going down market [into the
smaller DMAs, designated market areas] that you start to lose some of the
adoption."

Programmers, operators and advertisers who've been slow to
make the switch to HD are making a major mistake, Ginsburg said.

"HD advertising and the entire HD movement is an opportunity
for the first screen, the television, to compete against the second screen, the
computer," Ginsburg said. "If we continue to provide programming in an SD
format when we in fact have an opportunity to provide HD, that is like playing
with one arm behind your back."

Looking forward, Ginsburg also said FastChannel is
launching initiatives to expand its involvement in the electronic distribution
of ads for local cable and direct-response advertising.

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