By Chris Hock, SVP Business Development & Strategic Initiatives, BlackArrow
The pay-TV industryâ€™s transition to â€œanywhere, anytime, any deviceâ€ viewing is connecting broadcasters and programming networks directly with consumers via OTT applications that can be monetized with targeted advertising. But on that big TV in your living room and traditional pay-TV platforms, which still command the most TV eyeballs and advertising dollars, the new paradigms of time shifting and binge watching are causing economic havoc. Broadcasters are losing money every time a stale ad is locked up on a DVR or in a VOD library.
Whatâ€™s changing the equation is the evolution of Dynamic Ad Insertion (DAI) in recent years. DAI has grown from its roots as an operator-centric technology to one that is being extended to operatorsâ€™ content partners, allowing broadcasters to stack full seasons of all of their programming into VOD libraries and dynamically insert fresh ads whenever the programs are watched.
Virgin Media, for example, has used technology from BlackArrow to fast track a strategy to enable their broadcaster partners to monetise â€œBig Screen VODâ€. Broadcasters can now deliver fresh ads in time-shifted programming to the 3.8 million subscribers who watch the broadcasterâ€™s programs on the television as well as any of Virginâ€™s other platforms.
Just three months after its December 2014 announcement that it is implementing cross platform, addressable advertising capabilities, Virgin Media had the system up and running. Lynette Turnbull, Head of Digital Entertainment Product Management for Virgin Media, indicated that more changes â€“ including DAI on IP VOD and addressable linear platforms â€“ are in store for the industry later this year, and has said that it is â€œabsolutely criticalâ€ that the content industry adapt to the changing landscape.
â€œSo what can the broadcasters do to protect and grow their advertising revenues?â€ Turnbull asked recently. â€œThey need to embrace â€˜Big-Screen VODâ€™ â€“ adapting to consumer demand is absolutely critical. The broadcasters need to expand their VOD offerings, introduce catchup services, deeper archives and invest in original content. This is, after all, how the consumer now expects to consume their content.
â€œSecondly, they need an effective and deliverable monetization strategy focused on VOD. And as an industry, we need to create the right ecosystem for advertisers, broadcasters and platforms to establish an effective audience measurement standard for the Big-Screen VOD viewership and advertising. We all know that this is a huge challenge but it is critical that we come together as an industry to drive this forward.â€
Currently, Turnbull said 68 percent of its 3.8 million TV subscribers use its VOD service. Last year, Virgin Media served up 1.2 billion VOD views, a 9 percent increase over the previous year. On the advertising front, Virgin Media is now delivering 300 million ad views annually, including on its TV Everywhere service.
How do the operators benefit from providing their broadcaster partners with dynamic ad insertion? More content available whenever and wherever their subscribers want to view it means a happier subscriber base and less churn.
In the United States, a recent article noted that VOD advertising has generated a 6 percent lift in retention, a 4 percent increase in motivating viewers to search for and find the advertised product, and a 14 increase in overall ad â€œlikability.â€ Turnbull echoed similar advantages within the Virgin Media ecosystem.
â€œSo all of this results in benefits for advertisers, customers and broadcasters and, of course, the platforms,â€ Turnbull said. â€œFor advertisers, weâ€™ve created the ability to buy against targeted and segmented audiences with richer data and dynamically managed campaigns in real time. For customers, the ads that they see are more relevant to them, thus improving their TV viewing experience. Weâ€™re also able to promote more relevant content to the customers based on what we know they love to watch, and we can keep them up to date on relevant new products and services, reminding them of the value of their quad play subscription.â€
And finally, for broadcasters and programming networks, the advantages are obvious. Moving to an addressable, dynamic advertising capability will help drive new revenue streams from time-shifted content and coupled with the targeting capability and rich data from the platform, drive incremental value from the existing audiences.