VOD Ads No Longer DOA, Operators Embrace Dynamic Insertion

Advertisers have experimented with video-on-demand content for the last few years, but one of the biggest problems has been that their ads have been "baked" into programming. That meant the advertising lived within VOD-enabled shows for three to four months -- a virtual eternity in a hyper-kinetic world of fickle media consumers. It's also a particularly long time when messages may need to be tweaked often to ensure maximum engagement and relevance. Technical limitations have constrained ad-supported VOD, leaving advertisers to experiment with how to leverage "evergreen" spots and branding messages.

But the situation is changing. Cable operators are slated to deploy VOD ad insertions with technology from suppliers including Tandberg Television and SeaChange. That technology will enable advertisers to deliver targeted and timely messages within VOD content -- possibly at the very moment when the viewer requests a hit movie or the latest episode of HBO's "The Sopranos." The ability to insert ads into VOD content -- swapping them in and out on the fly -- could help spur the number and type of advertisers participating in VOD programming. Fast food restaurants, movie studios, and retailers that want to promote a special, film, or sale with a specific shelf life will be able to exploit the medium to the greatest possible extent.

As an opt-in medium, VOD usually has one ad in front of a show, and as such remains among the few truly clutter-free ad environments on TV, says Raj Amin, president of Amin Media, a strategic consultancy focused on new media. It makes insertion in the targeted medium of VOD even more targeted. A movie studio could even swap out messaging during the run of the film, using a trailer the week before the movie opens, adding reviews the next week, then firing off a fresh spot that touts the film's box-office records.

There are other ways VOD ad insertion could open the floodgates on VOD advertising. As Cingular Wireless rolls out its G3 technology, it may be able pick and choose specific VOD markets and run ads in relevant VOD programming. Since the new wireless technology will roll out on a market-by-market basis, there's no point in advertising nationally. But with the ability to conduct timely and targeted ad insertion, the carrier could run a spot for a week or even a day at a time.

And advertisers may be able jettison a piece of creative earlier if a campaign doesn't resonate, says Michael Bologna, partner and director of emerging communications, MEC Global. "Agencies don't produce creative based on VOD deadlines," he says, adding. "If this is mid-February and we release new creative, instead of waiting several weeks for the VOD refresh, this allows me to do it immediately." Increasingly, TV watching will be non-linear, so now's the time for advertisers to get involved, Amin says. "2006 will be a year for media planners and buyers to take control of the medium before it takes control of them."

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