• by Joe Mandese  @mp_joemandese, March 29, 2004

In a move expected to finally give television commercials the dynamic, real-time addressability of online ads, a major developer of video-on-demand (VOD) TV systems is close to unveiling a new feature that enabling the real-time insertion of relevant advertising content down to the household--and even an individual--level.

The new system, dubbed Ads On VOD (AOVOD), will enable cable TV operators to insert timely and relevant advertising messages into on-demand programming on-the-fly. The system, which is currently being tested live this week in an undisclosed major on-demand video market, will get its official unveiling next week when SeaChange International makes it public.

"Your ad becomes a fire-and-rest missile," said R. James Kelso, vice president-general manager/broadband systems at SeaChange, a pioneer in and a leading proponent of VOD systems. While he declined to provide details of the new advertising system, Kelso said it would be a "major weapon" against ad-skipping in an on-demand television environment: "relevance."

"The game changes when you can make advertising personally relevant to someone," he said, citing examples of advertising that would appeal to consumers even if they have the ability to skip or fast-forward through them.

But Kelso--who is holding court this week from the "Vod Rod," a traveling VOD studio built into a 78-foot tractor-trailer that currently is parked outside Tavern On The Green in New York's Central Park--said the company is also developing some new VOD advertising capabilities to address those viewers who don't necessarily find ads relevant.

One is a "fast-forward lock-out" feature that would literally block the ability of viewers to zip through TV commercials. Another feature that is currently in test would superimpose a special 6-second, real-time TV commercial on screen during the 6 seconds it takes for a viewer to fast-forward through a typical 30-second TV commercial.

While many on Madison Avenue are still oblivious to the implications of VOD, Kelso said the next-generation VOD applications will provide an ideal opportunity for marketers to learn how to deal with advertising in an on-demand environment, whether that is via VOD at a cable head-end, or via digital video recorders in a consumer's home.

SeaChange isn't directly involved in VOD advertising sales, but Kelso said the company wants the ad industry to understand the new capabilities, because they will help determine the economic success of cable operators and cable networks--especially ad-supported cable networks that will depend on addressable advertising as a source of funding for their VOD programming.

SeaChange currently services cable operators in markets representing 12 percent of U.S. TV households.