Personalised advertising is the future of the TV advertising industry, if the industry is to survive the threat posed to it by new technology and online advertising, analysts said.

Alan Hoff, Vice-President, Product Marketing, SeaChange International, a developer, manufacturer and marketer of digital video systems, told Emirates Business: "One word summarises the future of the TV advertising industry and that is 'personalised'."

Technologically this type of advertising is possible and already happening in trials and commercial deployments. For example, Virgin Media conducted a very successful on demand advertising campaign to 100,000 households in London – the largest initiative of its kind so far – and is currently evaluating the next steps.

In addition, several cable TV operators in the US are in various states of commercial deployments and trials with both on-demand and targeted linear advertising.

Hoff said: "TV operators, advertisers and technology providers are working to develop and deploy advertising platforms and business models that better target the advertisers' desired audience and present viewers with ads that are more pertinent to their particular interests. This will take place across traditional linear broadcast channels as well as through unique video on demand streams to each viewer.

"In addition, TV operators will be able to provide much more detailed reporting information to the advertiser, such as how many viewers watched the ad or if the ad was fast-forwarded at any point or skipped entirely. This is the type of functionality that advertisers have grown accustomed to with internet advertising and have been looking for with television advertising.

"However, this innovation must fall within all existing privacy laws, with subscriber participation subject to 'opt-in' permission."

But before this happens, there are significant challenges that have to be met first. For example, the first issue that needs to be sorted out is developing the most effective business models as this is an entirely new concept in advertising to be sold. That it why it requires a great deal of education so all parties understand how to best sell and buy the ads. Then there are factors such as revenue splits – how the TV operator, content provider and television network divide the advertising profits.

Talking about how these challenges can be overcome, Hoff said: "The key here is getting each of the parties together and on the same page, making sure that everybody understands the entire picture. This means getting all of the stakeholders in the business of TV – content owners, networks, operators and advertisers – to work together and agree on the business processes to allow TV to provide more value. The good news is that several industry-wide standards are being established and embraced on the technical side, and similar work is beginning to happen on the business side."

According to Hoff, the TV industry can take advantage of the new technologies that exist these days so that its advertisers can measure the impact they are having on the target audience.

Cable and Telco TV operators are particularly well-positioned to begin offering advertisers markedly improved measurement and analysis capabilities, thanks to the two-way connectivity they manage between their facilities and the settop box in every customer's home. These interactive capabilities coupled with software and hardware that is available today cannot only deliver the right ad at the right time to the right home, but also provide performance and viewing metrics similar to that of internet advertising.

Hoff added: "On-demand television affords advertisers another means by which to capture viewers' eyes on the best screen in the house. On- demand and TV advertising is not competitive, but rather complementary.

"Advertisers have the ability to follow viewers from traditional linear TV channels to on demand channels. And in fact, on-demand technology can give viewers an opportunity to learn more about a particular advertisement through 'telescoping'.

"In this type of scenario, a viewer watches a traditional television ad. During the ad, they are presented with an option to 'learn more' about the product, at which point they can choose to do so by pressing a button on their remote control. They would then be taken to a longer-form video that resides in the on-demand system that can provide more information than can be delivered in a 30 or 60-second advertisement."

According to Hoff, one of the most compelling benefits of on demand advertising is the ability to match advertisements with the type of content that is available. For example, if a viewer is watching a movie on racing cars, it is a perfect platform for an automobile manufacturer to place an ad for his sports car line to play before the movie when a viewer selects it through their on-demand system. This is because, somebody ordering this movie is likely within the automobile manufacturers' target demographic for that sports car.

However, the billion dirham question here is do on demand TV viewers actually see the ads or do they skip them?

While on demand advertising is still fairly new, early returns from Virgin Media highlighting the results of its three-month long on-demand advertising trial in London indicate that on demand viewers were positive about advertisements when watching on demand content.

As part of the trial, ads from leading brands – including Kellogg's, John Lewis and Royal Mail – were inserted around selected on-
demand programmes from Virgin Media TV, Channel 4 and Warner TV, to 100,000 homes across north London.

More than half (54 per cent) of Virgin Media's triallists were positive about advertising when watching on-demand content from commercial providers and 65 per cent preferred to see ads beforehand with ads lasting 30 seconds the most popular format.

Mark Schweitzer, Chief Commercial Officer at Virgin Media, UK, said: "There is a clear opportunity for on-demand television to deliver relevant ads to an engaged and growing audience. Our TV customers watched more than half a billion on-demand programmes during 2008 and the service's popularity has grown by over 60 per cent during those 12 months."

 

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