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Dynamic Ad Insertion: A Long Term View

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It’s no secret that broadcasters with major sporting rights are able to unlock hundreds of millions of ad impressions in live streams each year. To give you an idea why such services are so valuable, at Yospace we see an average viewing duration of 30 minutes per live stream, across some 300+ live online channels. That equates to around 12 previously unavailable ad spots being opened up per viewing session. Compare that with the next best solution – a couple of pre-rolls – and you can see why broadcasters are so excited about server-side Dynamic Ad Insertion.

2016 may well prove to be a watershed in this regard. Across Europe between Q1 and Q3 there was an eight-fold increase in available, addressable ad inventory created by DAI. Add to that the fact that average view-through rates are over 95% for replaced ad breaks and you’ll get a sense as to why DAI is so valuable.

Despite the sharp growth this year, we’re only at the beginning of what will be achieved. A number of territories with large online TV audiences are yet to deploy DAI, but will do in the next 12 months or so. There’s also plenty of room for expansion across platforms, especially if DAI is deployed at scale across IP delivered TV services, as many expect it will. Plus of course there’s a full plethora of connected devices that have not yet come into full focus for many broadcasters, not least the set-top box.

The overall point I’m making is this: the model works. Supporting it all is the fact that server-side ad insertion technology has now been proven out at scale, and that’s one of the biggest takeaways of 2016. However, we are only in the foothills of revenue potential. It’s one thing to dynamically replace an ad and to apply some form of addressability, but if the ultimate target is to optimise yield then there is a lot more to come. GroupM Chairman Irwin Gotlieb attempted to apply some pressure at last week’s Future TV Advertising Forum, when he urged broadcasters to “start delivering the goods that technology now allows TV to provide”.

Gotlieb also stated that he would “settle for baby-steps” toward a world where every piece of inventory across all channels and all platforms is accessible. In this vein, the initial priority for many broadcasters in implementing Dynamic Ad Insertion is simply to open up otherwise inaccessible inventory. This was certainly the case for STV, who, nearly three years ago, became the first UK broadcaster to launch DAI for live streams. At the time they were preparing for the 2014 World Cup and, knowing a significant proportion of its audience wanted access to live channels on its STV Player service, needed to find an effective monetisation strategy.

STV launched user registration on its platform at the same time and were able to apply some broad segmentation rules to its advertising. A year later it was in a position to apply more advanced techniques that combined first party and third party data, and this was implemented ahead of the Rugby World Cup in 2015. The system was also in place for the European Championships earlier this year. From no targeting at the start of 2014, 98% of STV’s online inventory is now addressable.

This example sets a marker for other broadcasters. It’s well documented that Sky and Channel 4 lead the way in addressable advertising, having the resources to build out their own programmatic sales infrastructure, but it’s encouraging to see what a broadcaster like STV has already achieved in this space.

So what’s next? Live streaming audiences will continue to grow, which means the opportunities to optimise yield through addressable advertising will also grow. Those opportunities will be supported by ever more advanced programmatic infrastructure and, possibly, though by no means certainly, widespread adoption of real-time bidding.

Underpinning all these elements will be the availability of ad creative. The cost of creating high-end ad content is certainly an area that needs to be addressed if there is to be a move towards fully addressable. On the other side of the scale are the ads from local businesses, to which broadcast-grade standards need to apply at an affordable rate. A unified broadcast-standard approach will be needed on the ad stitching side, too, particularly around encoding and tracking when there is so much ad creative entering the system.

But the broadcast industry has an amazing ability to adapt when it needs to, hence its long and successful history. STV were among the first broadcasters in the world to launch the technology for live channels, and their example offers a unique long-term view, but it’s important to remember that the deployment happened just three years ago. The speed with which those at the cutting edge of broadcasting have advanced in that time is incredible, and who would bet against Irwin Gotlieb’s wish coming true within the next three years, for addressable inventory on every channel and every platform?

This is an exciting period for all concerned, especially as we know that the journey has only just begun.


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