• by John F. Collins , December 6, 2013

Free On-Demand as a platform for the multichannel video programming distributor (MVPD) and programmers is maturing into a stone-cold winner, and I’d venture to say that within the next 18-24 months, advertising-supported Free On-Demand could become the most valuable inventory available in the entire television ecosystem.

The On-Demand advertising environment has a key element that any brand would relish: a captive, attentive, audience. The innate nature of On Demand forces consumers to agree to watch commercials – with fast-forward functionality often being limited or completely disabled– simply by selecting the show they want to watch.

While viewers will be able to pause and in some cases even rewind, they will not be able to avoid  advertising. Even when fast-forward is not disabled, the On-Demand fast-forward calibration is not as accurate or nimble as most DVR's, as the controls make it difficult to not miss content.  The On-Demand environment also curtails channel changing, since doing so would cause the On-Demand session to be restarted. All of these viewing features make it a prime environment for advertisers and brands to tout their products and services to an engaged attentive audience.

On-Demand’s Advertising Models

There are two advertising models as On-Demand continues to grow over the next several months and years. The first is the C3 window, which allows new content to be available the next day that also carries the full commercial load of the original show. New shows also have a longer shelf life than their original broadcast window, which allows them to be available for days after the original airdate with full monetization. As this blog post from Comcast lays out, the numbers behind these proof points are staggering for recent broadcast and cable shows that are achieving millions of additional views with regularity. Comcast also provides more than 100,000 TV shows streaming On-Demand.  

The second advertising window, D4, refers to content made available on the fourth day after originally being scheduled, allowing programmers to reformat the show with a new commercial load. Most programmers choose to present a reformatted show that contains significantly fewer advertising breaks.

The Best Bet Ad Model for Brands 

The real opportunity and promise of On-Demand advertising is in the D4 window. The important differentiator here is that the D4 window utilizes Dynamic Ad Insertion (DAI). DAI delivers on the dream of On-Demand, inserting a relevant ad to a consumer that has chosen to watch a particular piece of content.

The key is that there is an excellent chance the viewer will actually see the advertisements, and the ability to target with DAI is one that is just newly being explored. The CPMs (cost per 1,000 impressions) in this uncluttered, engaged environment will only rise, adding millions to the value of all of the players since the reduced commercial load and limited fast-forward functionality will make this inventory and environment so valuable.

What’s Next

The future of On-Demand is boundless. Smart marketers will take notice, and smart sellers will begin to push the envelope more. I can envision the day when a programmer introduces a program in its entirety on MVPD On-Demand, in a similar fashion to how Netflix introduces its original content. It won’t work for all content, but for some, with the right advertiser support, On-Demand has the potential to be a game-changing opportunity for those that do it correctly.