Small and midsized cable operators are looking to cash in on revenues offered by advanced advertising. WideOpenWest (WOW) said it is in the process of sending out requests for information to technology companies that could help the cable company upgrade its plant to enable selling more targeted and addressable advertising.
Advertising represents a small share of the revenue for cable operators, but every dollar counts as cord-cutting puts pressure on the video business. Unlike the biggest cable companies, most midsized operators don’t insert commercials into all of the networks they offer and don’t process the data or have the equipment needed to do advanced advertising.
“The industry is continuing to change with how consumers are viewing traditional linear and beginning to view video on other platforms, so we’re working hard to make sure that we have capabilities to reach off of the consumers for our advertisers,” Misty Jensen, VP of advertising sales at WOW, said.
WOW sells its ad inventory through Viamedia and Comcast’s Effectv and is working with them to determine what advertisers and media buyers want. WOW doesn’t break out its advertising business, but during the third quarter “other revenue” was $17.7 million of its $291.6 million in total revenue.
“We’re looking for incremental revenue, absolutely,” Jensen said. “But we’re also looking to protect ourselves as this shift continues to happen with viewership of television and video on different platforms to make sure that we have the impressions where the agencies and advertisers need to be.”
WOW is one of a number of operators talking about ways to increase ad revenue, said Jon Radloff, VP of video solutions at the National Cable Television Cooperative, which represents more than 750 independent cable operators.
“Advertising has been kind of a hot topic over the last six or nine months,” Radloff said. Radloff noted these operators have been leaving money on the table because they’re not inserting ads on some networks. At the same time, they’re starting to take advantage of opportunities as they offer video over-the-top and shift to internet protocol delivery.
The trick is that ad technology can be expensive, especially for operators with small footprints and a limited ad revenue base.
Earlier this year, the NCTC announced a deal with Imagine Communications that lets midsized and small operators opt into AdKey, a cloud-based service that inserts ads into IP-based video streams. That will let them tap into the fast-growing OTT and connected TV space.
Shifting some subscribers to lower-cost IP systems and using AdKey should help some NCTC members. “They’re saying, if we can take some of the costs out of providing video, and add some incremental revenue from the advertising side, then that gives us a little bit longer runway for video to continue to be viable for us,” Radloff said.
Radloff said that AdKey creates a virtual interconnect that advertisers can tap into by aggregating impressions across the particulating operators.
At the same time, Viamedia, which sells cable TV ad inventory from 60 distributors in 72 markets, introduced QTT, a cloud-based product that allows computer-based and programmatic buying of linear cable TV ad inventory. One of the first test’s QTT was at WOW’s Columbus, Ohio, system, and the product is now being rolled out to additional WOW markets.
“Advertisers love the idea of using digital platforms to do their buying. The beauty of our solution is they can buy access to the biggest platform out there, which is linear TV,” said Viamedia president and CEO Mark Lieberman.
Lieberman said small and midsized operators have been “left in the dust by some of the bigger MVPDs. Now these midsized MVPDs can play catch-up by bringing dollars back by using a solution like QTT.”
Obstacles remain for smaller operators looking to cash in on advanced advertising. Step one is building the ability to harness their own set-top-box data.
“The power of data isn’t just advertising,” Lieberman noted. Having that data available can help operators with marketing and in negotiations with programmers. There’s even a business selling data.
“I think they’re talking about taking the first step,” Lieberman said. “What you have is a challenge around the cost at a time when their traditional video business is not nearly as profitable their broadband business.”
QTT does not require operators to upgrade their plant, making it an easy way to offer more sophisticated advertising products and might provide encouragement to wade deeper into the advertising pool.
“We feel that’s definitely one product that’s going to be beneficial not only to WOW, but I think also the industry,” Jensen said.