• by David Goetzl  @dgoetzl, May 11, 2011

A coalition looking to find ways to better take advantage of VOD as an ad platform has wrapped a first phase of its work and concluded there are hurdles, but also opportunities. Free video on demand (VOD) could "play a unique role in the television ecosystem," it finds.

But that optimism seems misplaced and better suited for 2005. The Advanced Advertising Media Project (AAMP) - the coalition pushing to turn VOD into a viable revenue generator - should have been formed years ago and made its aggressive push then.

The AAMP roster is impressive with ABC, Discovery Communications, Digitas, Horizon Media and Comcast, with the 4As acting as sort of a linchpin. Which raises the question why with that collection, it took so long.

It seems as if each stakeholder was waiting for someone else to move first. Networks were willing to place shows up for on-demand viewing to placate Comcast and other operators, looking to tout their extensive offerings.

Maybe a network would offer a sponsor the chance to run a pre-roll spot, but that begged a viewer to "fast forward." Maybe there was an opportunity for a post-roll ad, but who would stick around for that?

With the less-than-captivating advertising options, the agencies likely turned their focus and dollars elsewhere.

So, after moving slowly, now there are multiple barricades to turning VOD into a viable marketing platform.

Forget about the need for an advertiser-friendly common system for dynamic ad insertion. The idea being Paramount might want to buy space in an MTV show for a month, but with the opportunity to swap in a spot for a different movie or DVD each week.

A method to overcome that might already be in the bank. In 2009, Comcast began testing technology from BlackArrow with that ability. (BlackArrow is also a coalition member.)

Another secular challenge is establishing common metrics for VOD ad tracking. But measuring those impressions -- including fast-forwarding levels -- seems easily achievable. Technology would seem to be less a problem than agreement between buyers and sellers.

What's more problematic, however, is generating consumer interest in free VOD as a medium (HBO and Showtime fall within another bucket). Among the mountains to climb: difficult navigation, Netflix, Hulu and perhaps more than anything else: the DVR.

In navigation, it's hard to know swiftly whether a specific episode of "Storage Wars" is available on A&E On Demand. Cable operators say they are addressing the matter and developing improved search capabilities.

But Netflix is already there. Its search functionality and quick access to streaming content seems to be attractive enough that consumers are willing to forgive that its content isn't nearly as timely as what a VOD channel offers. But, Hulu is easy to get around and has shows soon after they air on a network.

Then, there's the DVR. It's the ultimate VOD. By allowing a person to record anything and watch it later, without having to wonder what a VOD channel might be offering or not, arguably could render VOD useless. 

So many Americans have DVRs - and those are the people advertisers want to reach - that it would seem impossible to wean them off and turn them into avid surfers and viewers of VOD channels.

Even if that could happen, programmers still face the challenge of developing effective ad models. Standard 30-second spots aren't going to do it, unless special offers or opportunities - and really special - are somehow attached.

To its credit, the AAMP seems to realize the need for VOD ads to be something out of the box. And it seems willing to embrace the challenge of finding it.

4As executive Mike Donahue stated that the AAMP found in its research that "there was widespread affirmation that VOD is advanced television - not simply an alternate form of Web-based video, and as such requires specific agency approaches that maximize its value to consumers and the media industry."

The AAMP's just-completed first phase of its research included 20-plus interviews with industry stakeholders about various aspects of the VOD advertising landscape. Next up is consumer research in a lab that examines viewer response for VOD ads versus traditional ones.

In interviews, AAMP found industry executives are aware of the challenges ahead, from determing content viewers want on VOD to a need for ad models that veer from linear TV.

A cable distribution executive told researchers that thinking "let's just throw in a bunch of commercials like we do on regular TV and we will make money" isn't a recipe for success. On the advertiser side, an executive said VOD advertising does offer potential to go "further into the relationship-building process with the consumer."

Well said. Now time for action.