QuadPlay and Beyond

TV viewing has undergone profound changes in the past few years with the emergence of Digital Video Recorders (DVR), and especially those with time-shifting capabilities, that turned TV watching into a non-linear experience. This change in watching behavior jeopardizes traditional advertising models and are likely to raise the need for alternative advertising solutions and models. Forrester Research has predicted the viewing of television commercials could decrease by 20% in just a few years. Forrester analyst Joshua Bernoff suggests this is because the DVR “degrades the value of advertising,” predicting the eventual disappearance of an important social element of the television viewing model, that is, “television in which you sit through the commercials is about to be replaced.

But time-shifting is not the only threat facing TV advertising. It is already apparent that TV advertising revenues are generally in decline due to several reasons:

1. Decline in total audience of “traditional” channels
2. Fall in the attractiveness of TV advertising compared with alternative media such as the Internet where ads are adjusted to specific users, selected according to the context and can be effectively measured (CPM, CPA).
3. Reduction in the effectiveness of TV advertising due to time shifting, PVRs, VOD and poor measurement capabilities

Advertisers and services providers need to adapt to these changes and the opportunities they create for new solutions that will tackle these problems through new models and technologies. Such solutions will allow advertisers to target their preferred audience by means of segmentation (possibly using DVRs for generating watching patterns and profiles), and offer an advertising model that will be resilient to ad-skipping and time-shifting.

So, why don’t we see such solutions on the major cable networks? believe that the main reasons are the difficulty to penetrate STBs, the complex business model that requires cable/satellite operators and broadcasters to join forces (and share revenues) and the reluctance of broadcasters to produce accurate measurements of real ad exposures.

A mid-way solution that is already tested in several cable networks is based on geographic targeting where the ads are inserted (using splitters) at the Video Hub Office (VHO) nearest to the end-points (STBs). VisibleWorld is one of the leading companies offering such a solution. VisibleWorld has trials in Comcast, Cablevision and other cable operators. Another company playingin this domain is Navic.

This entry was posted on Monday, February 25th, 2008 at 6:19 pm and is filed under advertising, biz, technology, tv. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.