VOD Ads Heading Into the 'Deep End’

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New York— Five years after the birth of video-on-demand, marketers are still grappling with ways to leverage the advanced service against consumers’ ever-increasing capability to avoid watching ads.

At the Cabletelevision Advertising Bureau summit dubbed “On Demand Decoded — New Rules for Advertisers” held here last Tuesday, advertisers, cable operators and technology developers discussed their progress with the application and the hurdles remaining to make it more of a mainstream media option.

One participant in on-demand advertising, Chase Bank, presented a case study of its experiment with Comcast Spotlight, Comcast Corp.’s advertising unit, touting the “Blink” credit card in Philadelphia earlier this year.

That test process involved four weeks of running long-form ads on Comcast’s on-demand platform. Viewers were directed to the ads by on-demand movie trailers that, in turn, directed viewers to a Chase Web site. Once there, they could learn more about the credit card, complete a survey and enter a contest to win a home-entertainment system.

Of roughly 750,000 households that have on-demand service in the operator’s home market, about 167,000 unique viewers saw the movie trailers, said Manning Field, senior vice president of branding and advertising for Chase Card Services. That base brought 2,461 unique viewers to the long-form ads, almost 1.5% of all viewers.

Yet only 128 people ended up visiting the Chase microsite, with only 60 visitors filling out the online survey. Field admitted that the numbers weren’t staggering, but called the fact that people were voluntarily watching those ads “a great first start. It’s still somewhat experimentation, but I promise you we’re in the deep end without the Floaties.”

Cingular Wireless is another company that has made an initial push into on-demand advertising. Recently, it rolled out several long-form spots, some as long as 100 seconds, including a Cinderella-story phone ad and a mobster chase-scene ad for MEdia Net on various on-demand networks.

If Chase and Cingular remain sanguine about the potential of on-demand advertising, other executives at the CAB summit were quick to point out that impediments remain, including inaccurate measurement of on-demand ad usage and difficulties with inserting spots into content.

To date, these constraints have kept the volume of on-demand advertisements from climbing anywhere near that of broadband platforms.

“Every day that we wait is a day that money goes into another medium,” said Jen Soch, vice president and associate director of digital video innovation at MediaVest, the media-buying agency. She said cable operators needed to be more aggressive, both in working with data-tracking technology developers and in testing and deploying ad-insertion tools.

Barry Frey, senior vice president of advanced platforms sales for Cablevision Systems Corp., said he anticipated dynamic insertion tests as early as the fourth quarter on both lifestyle-oriented VOD service Mag Rack and Sportskool, the athletic-instruction vehicle.

Time Warner Cable, Comcast Corp., Cox Communications Inc. and Charter Communications Corp. are also testing or deploying dynamic-insertion tools, such as Tandberg Television’s OpenStream software.

On the measurement side, Rentrak Corp. senior vice president of on-demand essentials Cathy Hetzel said the company in early 2007 would roll out AdTraker, which will break down on-demand ad success by demographics within ZIP codes, as well as by household and set-top box.

“There were two things that I wanted to see” from the Summit, said CAB vice president of sales and marketing Dave Leitner afterward. “A reality check of the development of on-demand versus what those in the audience and the industry knew two or three years ago.” The other: a frank discussion of the technological and performance tracking hurdles still to be overcome.

“In terms of the rate of growth, the way I look at it right now, we are at an accelerated part of the lifecycle,” said Leitner. “I wouldn’t call it in its infancy anymore — I’d call it in its toddler-hood.”

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