Personalized television
Mar 1, 2009 12:00 PM, By Chris Gordon
It goes without saying that personalized television is “in.” Subscribers increasingly demand content they selected, while advertisers are moving toward interactive, personalized advertising. The power of the Internet to customize ad delivery per user has set a new bar for advertising ROI. Few are feeling the impact of this change more acutely than the old guard of news and information, the newspapers. The Internet started as a text-based medium and now offers much of the same content found in the paper. Users have taken notice and are changing their behavior, with advertisers following their every move. As the Internet evolves from text to rich multimedia, savvy video service providers are adjusting their businesses to deliver the personalization demanded by the user while providing the audience segmentation and customization increasingly demanded by the advertiser.
Addressable advertising
Addressable programming and advertising represents a large opportunity for today's video service providers. While local advertising revenue continues to be a growing business for cable operators, it is being outpaced by the rapid growth for the advertising-supported Internet giants. Furthermore, the percentage of paid-click, or click-through, advertising continues to increase, representing a new category of high-value advertising not currently tapped by today's video service providers. Growth in ad spending has been slowly migrating from traditional broadcast outlets to interactive or personalized outlets. As the economy continues to evolve over the next several quarters, many anticipate that the pace of ad migration will accelerate. At the same time, the recipients of this shift in ad spending have announced plans to move in the direction of “display,” which is Internet-speak for television.
Figure 1. Today's stream-based ad splicing technology works well for regional ad placement.
Click to enlarge
The demand for personalized advertising is an enormous opportunity for today's video service provider. Addressable advertising in the context of the home TV environment is the Holy Grail for today's ad buyers. Viewers are receptive and engaged, and personalized messages have high value. Video service providers therefore have a unique opportunity to dramatically increase the advertising CPM by providing advertising messages that deliver on that promise.
They can also tap the relatively new category of high-value paid-click or click-through TV advertising while providing the advertiser with unparalleled metrics about the viewing audience. Video service providers also have an important advantage over the Internet service providers when it comes to the subscriber. For Google to compete with the video service providers, it needs to make us change our lean-back TV behavior, our home network and our love affair with the remote control. Video service providers can extend their offerings to meet the 21st century demands of users and advertisers without asking much of the consumer. All they really need to change is the back-end technical infrastructure.
There are four high-level types of technology required to provide addressable advertising: the subscriber database, the personalization algorithm, the ad splicing technology and the required bandwidth. Service providers have excellent subscriber databases that support billing and marketing efforts, while personalization algorithms are readily available from a variety of vendors. This discussion will focus on the latter two types.
Ad splicing technology
Ad splicing, while relatively new to local operations teams, is a relatively mature technology. Standards for signaling ad avails and transferring files are well understood by a broad array of technology vendors. In short, splicing is easy. (See Figure 1.)
However, splicing ads into programs on a scale of granularity to match the number of televisions in the network is an entirely new challenge. Video processing and quality control must be separated from the ad splicing function such that video processors are allocated per asset (ad or program) and not per stream. Today's stream-based ad splicer is a fully equipped piece of video processing hardware, capable of changing the video pixels and macroblock quantization to create the correctly sized and shaped space for the inserted advertisement. While this stream-based approach has worked well for regional ad placement, it has two fundamental limitations for addressable advertising: quality and cost. By enabling these platforms to modify the video to insert the advertisement, operators lose control over the quality of the program and advertisement. The highly distributed architecture required to support personalized ad insertion makes the QC issue exponentially larger.
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