• by David Goetzl  @dgoetzl, March 10, 2010

Fox Cable Networks is testing a system that allows real-time switching of ads in video-on-demand programs, a technique known as dynamic ad insertion.

Advertisers have been frustrated for years by an inability to alter creative during a program's long run on a VOD lineup. If a pre-roll for Pepsi is inserted in an episode of FX's "Sons of Anarchy," the spot remains as long as the show is offered -- there's no opportunity to swap in a Mountain Dew ad.

The issue is particularly vexing for movie advertisers that may want to run an ad before a film opens, and then slide in a spot for a coming attraction afterward. In its six-month trial, the Fox Cable group appears particularly sensitive to that.

The experiment includes VOD content from FX, National Geographic Channel and Speed. The networks are running "house" ads for their programs, but also for corporate sibling 20th Century Fox films.

Fox Cable has licensed technology from BlackArrow, a company that provides the backbone for ad-serving in on-demand content. The deal is BlackArrow's first with a national programmer, but it has initiatives with cable operators Comcast and Bresnan Communications for VOD dynamic insertion.

The Fox Cable trial is in four markets, likely drawn from the combined five where Bresnan and Comcast are in test mode. Those include four Bresnan areas in Montana and a Comcast system in Jacksonville, Fla.

There is an opportunity for addressable advertising and split creative, so the same ad doesn't have to run in all four markets. Snowshoes can be plugged in Montana and flip flops in Jacksonville -- or other demographic characteristics for breakdowns.

Sherry Brennan, senior vice president of sales strategy and development at Fox Cable, stated the test should "help us better understand the value of dynamic insertion capabilities for (VOD), and to start thinking about how to design campaigns with targeting in mind."

BlackArrow's system, among other things, helps facilitate privacy with addressable advertising by using anonymous subscriber data when deciding which ads go where.

The privately held company counts a Comcast arm as an investor, along with Cisco, Intel and two venture-capital funds.