The cable industry has made big strides getting consumers to use video-on-demand television, but the conversation during an important industry meeting on the subject Tuesday night indicated it’s still not enough to stimulate demand from other key stakeholders: advertisers and agencies. Following a presentation showing that consumers are not only embracing programming, but advertising on VOD platforms (see related story in today’s edition), some top ad executives questioned whether the cable industry’s inroads actually “scale” for big advertisers, and suggested that the real on-demand opportunity may be online, on tablets or in the cloud.
“How are we framing video-on-demand?,” asked Mark Stewart, vice president-global media services for Kraft, during a panel debate at conference organized by AAMP (Advanced Advertising Media Project). “Is it from the distribution experience? Or is it from the consumer experience?”
From a consumer point-of-view, Stewart said, VOD has already taken off, but is being fulfilled by other platforms including online video services such as Hulu, Netflix and a variety of mobile and tablet computing applications.
He suggested that cable operators are playing “catch-up” with consumers, and observed how three big cable players – HBO To Go, Comcast and Time Warner – recently have been running ads promoting iPad access to their programming.
Marcien Jenckes, senior vice president-general manager of video services at Comcast, countered that those alternative platforms have, in fact, been part of Comcast’s strategy to create a more fulfilling TV experience for its subscribers by enabling them to “time-shift” and “place-shift” where they watch the programming they subscribe to. But he also noted that Comcast’s pure VOD service currently is serving “half a billion” video streams a month and continues to grow. At its current level, Jenckes said Comcast’s VOD service is bigger than Hulu and would rank as the “eighth largest site on the Web.”
Even so, he acknowledged that neither Comcast, nor the cable industry at large, has truly reached scale “yet,” and he suggested that part of the problem is due to the lack of consistency across the cable industry. “We need to do a better job,” he conceded, adding, “This is going to be the future of our business. And not just our business, but the future of the media business.”
Kraft’s Stewart suggested that the real opportunity for cable VOD is to “build a great consumer experience,” and that if the cable industry does that, ad budgets will likely follow. But he also said as impressive as Comcast’s half billion monthly streams may be, they don’t necessarily “scale” for Kraft’s brands, which are mostly national. He said the cable industry effectively is asking national marketers to retrofit their coverage models to fit the footprint of cable operator’s VOD distribution, which may not make sense for many brands.
“VOD has never been productized,” quipped moderator Bob DeSena, founder and CEO of Engagement Marketing Group, which has been helping the 4As and TV technology provider BlackArrow coordinate the AAMP initiatives. DeSena said there’s still a lot of confusion surrounding VOD and that the research revealed last night, and another “live, in-market” trial scheduled for next year will shed new light on the subject for advertisers.
During the question and answer session that followed, 4As Executive Vice President Mike Donahue noted that the VOD momentum is important, but asked what kind of progress was being made with “addressable” TV advertising on cable TV systems.
“The Holy Grail for agencies and clients is addressability,” Donahue said, referring to the technology that would enable advertisers to target specific TV commercials to neighborhoods, households, or even individuals within households, giving it the same precision to compete with online and direct response media.
Donahue implied that the cable industry, especially its Canoe Ventures initiative, has essentially stalled the deployment of addressable TV advertising in favor of “interactivity” and VOD.
Kraft’s Stewart responded that from a marketer’s point-of-view, the jury is still out on the inherent value of addressable TV advertising. He said the fundamental question for advertisers is, “Just because it’s addressable, can I use it?”
He noted that there’s a big push in the industry to make advertising more granular via addressable and “hyper-local” targeting technologies, but he questioned whether the returns marketers and agencies would gain from those efforts would justify their investments.
“It’s quite frankly the Nirvana of television advertising,” countered Cablevision Executive Vice president Barry Frey, who said Cablevision has been deploying addressable TV advertising for about two years.
“You want to put dog food commercials in the households that have dogs,” concurred Andy Donchin, executive vice president-national broadcast and media investments at Carat.