Hitting the tar


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Hitting the tar

  1. 1. COVER STORY s Barry Llewellyn, VP, sales and marketing at Packet Vision, IN THESE RECESSIONARY TIMES, PROPONENTS A points out, the real IPTV advertising opportunity is not so much in reaching the right target viewer, but reaching those viewers at the exclusion of other audience groups. According to OF TARGETED ADVERTISING SUGGEST THAT IT OFFERS BETTER VALUE TO ADVERTISERS AND IS MORE USEFUL TO CONSUMERS. DOES ITS Llewellyn, this allows the TV channels the opportunity to sell a commercial spot to multiple advertisers, thereby monetising their RECENT PROMINENCE ALSO REFLECT THE entire audience delivery and it allows TV advertisers the opportunity REALISATION THAT THE ULTIMATE VOD, to reconcile budgets against an intended audience with no wastage. “Addressable TV advertising provides TV channels the accuracy LONG-TAIL, PERSONALISED MEDIA ECOSYSTEM to match advertiser with consumer,” he advises. The actual cost to an IS BETTER SUITED TO IPTV THAN TRADITIONAL advertiser to reach their designated target audience can now be SUBSCRIPTION OR PPV MODELS? COLIN MANN charged at a lower price (or CPT) because the channel has the capability to sell the remaining audience to another advertiser (also SEEKS SOME ANSWERS. at a discount). “The economic efficiency is simple - the TV channels can now generate a higher yield from their airtime inventory and at many downturns, there will be substantive market shifts as we the same time offer their advertisers a cheaper price to reach their emerge; however, because this market is in such a stage of infancy, absolute target audience.” we don’t know what we don’t know.” Rick Mallon, VP, product management, Sigma Systems, points out BASE CAMP. Valerij Zaichenko, VP, business development for Sotal that targeted advertising is already happening in the VOD space. Enterprises feels that it is still too early to talk about significant “Less so in linear TV; however, it’s coming,” is his assessment. revenues coming from targeted advertising, as well as from interac- “Several service providers have lab and field trials underway or tive TV itself, “because the subscriber base is still rather small and planned, based on the new SCTE 130 Advanced Advertising providers are deploying one or the other interactive TV solution as an standard. New interactivity is appearing in linear TV, such as ‘experiment’, keeping in mind future development of this very Requests for Information in ads and polling mechanisms to enhance promising technology.” shows. The business models for TV ads will likely still be based on John Reister, chief architect, IPTV, BigBand Networks, suggest cost per impression. What will be different is that each impression will that the need for targeted advertising is on target. “Research go to a more targeted audience, meaning that the advertiser will indicates that subscribers pay attention longer to ads that are target- experience more interest in their products.” ed and consequently, advertisers are willing to pay a higher CPM. RIGHT PATH. Paul Delzio director of on-demand product strategies And with the introduction of switching and routing to cable and IPTV for the Arris Group, suggests that targeted, or addressable, advertis- delivery systems, targeted ad delivery is now feasible,” he notes, ing is on the right path. “The need to efficiently increase the advertis- recognising that there are a lot of ‘moving parts’ necessary to make ing accuracy to align an advertisers service or product with an inter- targeted linear TV advertising happen. ested customer is the ultimate goal. The industry is making invest- “Today’s advertising buying/selling processes are constructed ments in this area and field around inventory management with ads scheduled far in advance, deployments and trials are and pricing and fulfilment are based upon programme ratings built yielding great results.” from statistical audience sampling. Changing to a more transactional, Pat Dunbar, director of real-time model is disruptive to the large, existing ad revenue stream. advertising for Microsoft’s TV, In addition, the operators - the service providers - have a better video and music business group ability to target than the content providers, who are a step removed recognises that advertisers and from the subscribers. But most advertising, especially in Europe, is media companies are just begin- sold through the content providers, not the operators. Because of ning to understand how to use the these challenges, we are mainly seeing targeted TV advertising emerging targeting capabilities in happen in non-linear video. the TV space to their advantage. EARLY DAYS. Joachim Roos, CEO, Edgeware, is “The economic downturn has another executive who feels it is early days. “There’s seen advertisers moving toward a lot of talk, but little on the market,” he says. “IPTV capabilities that demonstrate ROI; seems to be falling behind cable in terms of maturity and this is an area where [of targeting]. It’s not quite ready for the market. It targeting delivers.” will become an important element; we’ve seen serv- “EACH IMPRESSION She also thinks it is too early to ice providers expressing interest, but not going as WILL GO TO A MORE tell whether projected sales vol- far as issuing RfPs at the moment. First of all, we TARGETED AUDIENCE, umes and spot rates stand up to need to see decent penetration of on-demand view- MEANING THAT THE scrutiny, as there is no consensus ers, which will create value for advertisers.” ADVERTISER WILL on what that projection is. “With Gidi Gilboa, advertising solutions marketing man- EXPERIENCE MORE this economic downturn, as in ager, NDS, feels that the sector is on target, “but you INTEREST IN THE Hitting the tar PRODUCTS.” RICK MALLON, SIGMA SYSTEMS 16 IPTV INTERNATIONAL www.advanced-television.com
  2. 2. have to understand that it’s a very long and which process. A big shift has already can change happened. The important issues are according to ones of better accountability and targeting addressability.” He suggests that oper- requirements ators see great opportunity to increase like season revenues. “It’s a long road, but people of the year, are already making commitments. The etcetera. day will come when it’s a standard part Ultimately, of the offering,” he predicts. commercials Lisa Ciangiulli, global advertising can be solutions marketing director, Alcatel- dynamically Lucent, notes that as with all advertis- changed ing there are three ‘levels’: geographic, according to namely advertising to everyone in a who is “OVER TIME, MODELS defined area (which is obviously the watching the ARE GOING TO most basic and least targeted); time-shifted EVOLVE AND BE demographic, which is slightly more session. INDIVIDUALISED TO sophisticated using elements such as He notes THE SPECIFIC post codes to define targets; and finally that BRAND.” behavioural, which uses a range of advanced indicators including lifestyle data for advertising PAT DUNBAR, the most precise targeting. systems can MICROSOFT RAMP UP. “Ultimately, everyone target con- wants to get to behavioural, but this is tent to audi- some way off,” she suggests. “We are ences based on many considerations, including however seeing operators in Europe, Asia and the US experiment market groups, service groups, postcode, demographics, time of with basic geographical advertising, for example linear ad insertions, day, day of the week, consumer device identifiers and name/value and then progressing quite quickly to demographic. In March 2009, pairs. In the mobile industry, targeting can be based on mobile we announced an extensive interactive IPTV advertising proof of phone usage such as the volume of SMS messages sent/received, concept pilot for Telefónica’s Imagenio IPTV customers throughout and location, among other things. “Advanced advertising technolo- Spain based on our Interactive Media Manager platform. Using their gies should be able to target consumers down to individual house- remote controls, viewers can access interactive content linked to a hold level, but today the priority for media buyers is to seek out specific consumer brand product. It’s still early days, but we expect demographic groupings,” he says. to see a significant ramp up in activity in 2010.” TIPPING POINT. David Price, VP, business development and mar- According to Kevin Lingley, head of marketing, solutions at Amino, keting communications at Harmonic, observes that there is no one one of the key requirements for targeted advertising is the ability to large-scale full deployment of targeted advertising as yet, with limited understand the viewer’s preferences by analysing what they testing being carried out globally. He points out that the company consume, with a number of ‘great solutions’ already available. has had the necessary technology enabling ad-splicing available for “So the infrastructure now exists to understand the viewer, it’s just many years. “There’s a chicken-and-egg situation whereby there now necessary to integrate that with segmentation technology and remains too few addressable viewers to make investment appear existing advertising management and delivery tools to make the end- worthwhile,” he says. “The tipping point will be when the advertising to-end chain. IPTV operators have an easier time than broadcast industry starts to demand targeting of ads and there are enough network operators because segmentation is much easier. IPTV allows subscribers to unicast services available to make the audience for STB and node level addressability and, because IPTV is all-digi- sufficiently large to target en masse. To accelerate this tipping point it tal, there is no analogue legacy to deal with.” will be necessary for a single set of standards to be agreed upon, to ON DEMAND. Noel Matthews, VP, business development, EMEA which all content suppliers adhere.” and APAC, Tandberg Television, accepts that to date, there has been He notes that with addressable audiences fragmented into catch- little appetite for selling advertising against VOD. “But as the number ments that all use different delivery methods, this will prevent adver- of on-demand viewing sessions has grown, media buyers have tisers from engaging as they want to see a single unified and aggre- become more interested in this channel to market. As soon as cable gated group to which they can individually target adverts. “Operators and IPTV can provide the reporting and addressability expected of need to agree on a standard such as the SCTE 130 that’s being VOD, advertising can help pay for the expansion of on-demand,” adopted by a number of US Cable operators and has the potential to he suggests, expand to be embraced by all kinds of operators (not just cable) “An increasingly unicast delivery network creates many opportuni- around the world. The faster one standard prevails as the recognised ties for advert sales in addition to traditional industry specification, the quicker we’ll all be viewing adverts specific get linear and local advertising. This includes to our interests.” static adverts that are burnt into the on- Microsoft’s Dunbar suggests that it is too early to identify predomi- demand programme stream and adverts nant business models, with the company’s research indicating that that are inserted into pre-established posi- marketers are going to need to create individual ‘targeting models’ tions in the programme as it is played out, that reflect the behaviour of the customers for their product or www.advanced-television.com IPTV INTERNATIONAL 17
  3. 3. COVER STORY service. “For example, a home TV advertising is common due to an existing business model improvement store may target or between broadcasters, content developers and service providers put more media weight on house- forged by the cable industry such as in the United States, and select holds in areas with new construc- countries in Latin America, Eastern Europe and Asia, our customers tion, while a CPG maker may look can start with proven business models for national, local and zoned for households with children. Over advertising, and move to demographic and behavioural targeting in time, those models are going to the future when they are ready,” she claims. evolve and be individualised to CAPEX. “For interactive advertising, we have seen revenue sharing the specific brand. Targeting, between the operator and the broadcaster/content provider as a especially when it is paired with predominant model given that the interactivity in the advertisements engagement capabilities such as typically require both parties to enable the technology. A service microsites or RFIs, can support provider may want to consider alternative business models to CAPEX marketers in better understanding and revenue sharing in the TV domain such as aggregating inventory “FIELD DEPLOYMENTS how their media plan is performing of multiple service providers like the Canoe Venture is doing with AND TRIALS ARE in terms of translating viewers into cable. Another option may be to partner with a media sales house YIELDING GREAT customers – and that, after all, is within the broadcaster, content provider or cable companies to have RESULTS.” the ultimate goal,” she says. them sell the ad inventory of the IPTV service provider with a revenue SPOT SALES. Joseph Weihs, sharing agreement.” PAUL DELZIO, director of advertising systems, Arris’s Delzio observes that it is all revenue based, so the increase ARRIS SeaChange International, sug- in accuracy yields increases in value and hence increases in the rate gests that creative versioning is that the service provider or programmer can charge for the place- finding its place as a leading ment of the advertisements. “Models are different for linear/broadcast model for driving advanced advertising. “In these cases, a spot will programming and VOD programming but the premise remains the still be sold to an advertiser, but the advertiser can run different ad same: increase targeting and increase revenue.” copy geared toward different demographics. For example, an elec- Amino’s Lingley identifies three particular business models: tronics retailer could run a campaign advertising HDTVs. Lower VOD – Often called Free On Demand (FOD) advertising, the income neighbourhoods would receive an ad for a $500 model, while viewer is willing to exchange their time watching targeted higher income neighbourhoods would see an ad for a $2,000 model.” adverts for free VOD rental. “For this to be a success, it requires Noting that consumers have a finite budget for television and great content in exchange for the advert, clear navigation to find multimedia, Matthews suggests that advertising can fill the gap it within the UI, dynamic ad insertion, delivery measurement, STB between what consumers want and what they are willing to pay for, or even viewer addressabili- making services viable that would not otherwise be possible to ty,” he advises. launch. “We believe that by using advanced advertising technologies, platform operators can sell advertising space to exploit the resource RFI – The request for consuming, non-revenue generating parts of their infrastructure. An information ad - originally a obvious place to begin is VOD, where the majority of the content phone number overlaid on viewed is free of charge and all of the content is delivered on a top of video became aug- unicast basis so the operator knows which household is watching mented with web and email which content. Advertising can then help to pay for the expansion of addresses, with fulfilment and on-demand services to include Everything-on-Demand and eventually response definitely separate network PVR.” from the ad. “With the advent Alcatel-Lucent’s Ciangiulli suggests that in the area of linear TV of Digital TV, response was advertising, CAPEX is the predominant consideration. The company integrated with the availability enables its customers to leverage the Alcatel-Lucent Triple Play of automatic triggers and a Service Delivery Architecture (TPSDA) for integrated linear ad inser- return path and fulfilment tion that offers a lower cost method in terms of CAPEX: a minimal automation became possible. incremental investment, and with OPEX: savings in training, mainte- But these were still ‘spray “THE TIME WILL COME nance, and pray’. Response rates TO ACTIVATE THE repairs, floor should be greatly improved if TARGETED space, the viewer not only responds ADVERTISING power, etc. within the ad but that the ad FEATURE, WITH THE when com- is relevant to them in the first CONTENT PREPARED pared with place.” AND TARGETING standalone INFORMATION appliance DVR: “This has so far been COLLECTED AND based splic- restricted to whatever the ANALYSED.” ing solu- viewer has recorded. tions. “For Operators don’t track what is VALERIJ ZAICHENKO, regions being watched by the viewer SOTAL ENTERPRISES where linear unless they have a consump- 18 IPTV INTERNATIONAL www.advanced-television.com
  4. 4. tion engine. But it is the ideal platform for the implementation of ‘telescoped’ long form advertising leading from short-form showcase ads.” PREMIUM PRICE. Fundamental questions arise as to the value of targeted or addressable advertis- ing. Will advertisers pay a premi- um for targeting? Why should they if they’re reaching the target and not paying for the wastage “TO DATE, THERE HAS anyway? Ronald Brockmann, BEEN LITTLE managing director, Europe, target groups and individuals wherever they are, regardless of what APPETITE FOR ActiveVideo Networks, suggests device they are using to consume their video. They will want the abili- SELLING that the answer is somewhere in ty to unify their advertising campaigns so they know how many times ADVERTISING between. “It is likely that advertis- their message has been seen by their targets across all platforms.” AGAINST VOD.” ers will pay a higher CPM for tar- Arris’s Delzio notes that being revenue-based, the increase in geted advertising, but that number accuracy yields increases in value and hence increases in the rate NOEL MATTHEWS, will be based on a smaller audi- that the service provider or programmer can charge for the place- TANDBERG ence base, so the total cost to an ment of the advertisements. “Models are different for linear/broadcast TELEVISION advertiser for almost any individual programming and VOD programming but the premise remains the spot will be reduced. If advertisers same: increase targeting and increase revenue,” he suggests. pay more – and that remains to be seen - it may well be because SUBS BASE. Sotal’s Zaichenko identifies a similar dilemma to they are reaching an audience base that maximises the number of Harmonic’s Price. “Although operators are still in a subscriber base individuals who are interested in the product and minimises wastage.” gaining phase, they have to start deploying an interactive applica- Sigma’s Mallon suggests they may pay a premium if it can be tions/targeting engine, as it enables the new viewers’ experience demonstrated that they are receiving more value. “At least initially, offering lots of new features that interactivity brings to TV. As the sub- targeted advertising in VOD and linear TV is more about competing scriber base will reach a decent with Google for ad dollars than about increasing ad revenue,” he volume, the time will come to acti- says. For Gilboa “the bottom line is that we see willingness on the buy vate the targeted advertising fea- side to pay more for better, measured results.” ture, while already having the con- According to Tandberg Television’s Matthews, addressable tent prepared and targeting infor- adverts are more valuable than traditional broadcast messages, mation collected and analysed.” noting that Frost & Sullivan research from October 2008 indicated that Matthews emphasises the rele- CPM increases 10 times when you move from anonymous to person- vance of advertising to the con- alised advertising. “The CPM rate for anonymous advertising is $5 sumer. “Adverts should be while contextual advertising, where the advert is based on criteria addressable and relevant so they such as the type of content viewed or location, is worth $25. CPM for deliver value to the consumer. The personalised advertising based on specific personal criteria such as viewer must have the option to preferences, location, usage and time is $50.” opt-in to receive advertising in USER PROFILES. He suggests that advanced advertising gives return for subsidized or free con- media buyers what they want. “Buyers want the ability to deliver the tent, and the right to refuse right message to the right audience, at the right time. This requires adverts. Each platform operator targeting, including by geography and demographics, and ultimately will decide whether their sub- “IT IS LIKELY THAT addressable advertising that matches messages to user profiles, scribers are ready to be offered ADVERTISERS WILL delivered to set-top box level.” He adds that media buyers need this trade-off. Independent PAY A HIGHER CPM accurate reports about how their messages are received including research confirms that on nearly FOR TARGETED where and when they were watched. “Given the increasing competi- every mass-market Pay TV plat- ADVERTISING, BUT tion for their dollar, they expect CPM rates to be justified with demon- form there is a sizeable subscriber THAT NUMBER WILL strable results. When television is unicast, operators can provide demographic that will accept BE BASED ON A second-by-second and near real-time reporting.” adverts in return for free content.” SMALLER AUDIENCE He notes that a cable or IPTV operator can report whether an on- Dunbar contends that what BASE.” demand asset has been watched and how many times, whether marketers are interested in paying delivering a programme or the advert inserted into a programme. for are consumers that are, or RONALD “With the right VOD platform, cable operators can even report on have a potential to be, interested BROCKMANN, trick-mode usage during playback and tell advertisers if their ads in their marketing message – not ACTIVEVIDEO were watched or fast-forwarded. We anticipate that as media buyers in people to watch their ads. NETWORKS gain experience in a personalised TV environment, they will want to “They know that viewers can find www.advanced-television.com IPTV INTERNATIONAL 19
  5. 5. COVER STORY irrelevant ads annoying, and this munity from media planning and buying agencies, full service ad does not improve their brand agencies, brand marketers, etc. image. So it is to their advantage When asked the question, “Will advertisers pay a premium for real- to pay a premium when they can time subscriber and context information based on network and sub- more accurately focus their scriber data?” 67.65% of the respondents said yes that they might message.” pay a premium, which indicates that the advertising community CPM UPLIFT. According to knows it is not always reaching its target audience. Ciangiulli, we are seeing a decline FUTURE PROSPECTS. So what are the realistic prospects for tar- in the value of traditional national geted advertising? According to Packet Vision’s Llewellyn, “the future advertising CPM rates. In addition, for this advertising dynamic looks good but, so far, addressable TV online ad values seem to be advertising has come nowhere near realising its true potential. weathering the economic storm Although the technology exists today to allow addressable advertis- and are taking share from more ing to happen and the interest and appetite from advertisers and their “IPTV ALLOWS FOR traditional forms of advertising media agencies is strong, true addressable advertising relies on TV STB AND NODE LEVEL such as broadcast TV because of channels being distributed over IP based networks and distribution ADDRESSABILITY.” their ability to better target users needs to grow to a sensible level before advertisers automatically and provide more accurate prioritise and appropriate their budgets.” KEVIN LINGLEY, response rates. “We believe IPTV He points out that IP networks that collect registration or subscrip- AMINO advertising can leverage the best tion data from their customers, offer a key aspect in the addressable characteristics of online and advertising scenario; the requirement to segregate audience groups broadcast advertising to target relevant ads to their subscriber base,” by any combination of socio-economics, age, gender and geography she affirms. “By utilising interactive advertising and applications, allowing the technology providers/middleware operators to deliver service providers can benefit from the uplift in CPM that rich media relevant commercials to each demographic. campaigns have been proven to provide (about 20% uplift in CPM). “Additionally and just as important,” he suggests, “is the ability to What is unique is that IPTV advertising has improved mechanisms for report actual audience delivery by harvesting the return path data behavioural feedback, and overtime has the ability to couple both lin- from the network provider. Actual audience data (rather than panel or ear and interactive advertising to create new formats that can target sample based audience measurement) can create a few challenges users from a demographic and behavioural perspective.” though. One of these is that the current TV advertising trading culture She recognises that the advertising industry is facing a number of is based on ratings data collected from long established panel based challenges including reaching the right audience resulting from the reporting systems independently operated under contract by fragmentation of media consumption. “Reach and frequency were the organisations like TNS, GFK and Nielsen.” dominant methods of reaching the consumer and very often this RETURN PATH. He contends that TV sales departments and air- could be easily accomplished through advertising on broadcast TV. time planners/buyers have long recognised this research as the sole But as more consumers access established metric to define airtime trading currencies, and suggests content on their own terms such that as return path data is introduced in to the ecosystem, it will need as time shifted, on demand to live alongside the current audience measurement methodology sessions and various devices, it and become accepted within the airtime efficiency auditing process becomes increasingly difficult for until the balance of TV distribution falls in favour of IPTV. advertisers to find their audience.” “Distribution of linear TV channels over IP (whether closed She suggests that advertising networks or OTT) is beginning to happen in earnest (especially in activity is beginning to shift markets such as France, Scandinavia, Benelux and Spain where Towards more accountable national telcos are offering competitive triple-play services) and this and responsive media method of delivery benefits all constituents; media owners, advertis- Towards inserting ads in on ers and TV consumers. As IP delivery grows and addressable TV demand sessions advertising becomes part of the advertising ecosystem, it will enable Towards new formats such TV channels to generate a higher yield from their advertising invento- as mobile and sponsored con- ry and TV will become more affordable and viable for a wider tent/entertainment advertising community.” Towards placing ads based He suggests that at the same time, it will provide a more efficient, “WE NEED TO SEE on an individual rather than a accountable and economically superior service to TV advertiser DECENT context – moving from reach clients and provide the viewers with more relevant (and therefore PENETRATION OF and frequency to reach and engaging) advertising breaks. “TV is still regarded by the consumer ON-DEMAND relevancy as the most entertaining advertising medium and with revenues VIEWERS, WHICH declining slower than other above–the-line media during the global WILL CREATE VALUE Alcatel-Lucent co-sponsored a recession it continues to be a priority for advertisers. Addressable TV FOR ADVERTISERS.” Next Generation Advertising study advertising is all about providing added efficiencies to an existing with Heavy Reading that was con- and proven spot advertising model and an ecosystem that is long JOACHIM ROOS, ducted in September 2008 that established. The question is not ‘if’ but ‘when’ and the depending CEO, EDGEWARE included a survey of 34 respon- factor is IP network carriage and the point at which critical mass is dents from the Advertising com- reached in any one territory.” 20 IPTV INTERNATIONAL www.advanced-television.com