November 2009 issue of IPTV Magazine
use of the targeted ad revenue success of Internet marketing, implementing
addressable advertising into TV systems can multiply broadcaster ad
revenues by 4 to 10 times (or more). However, implementing full addressable
advertising has complexity and capacity challenges.
The traditional TV advertising business model of
selling ad spots for specific TV programs is shifting to dynamically
selected (well targeted) ads that may have a sophisticated set of campaign
rules and requirements. The good news is that the Society of Cable Telecommunication Engineers (SCTE) has created (and is continuing to
develop) a set of industry specifications that define how addressable
advertising services can be provided.
Matching the right ads to the right customer at the right time can
involve many rules and decisions. Ad campaigns define what promotional
opportunities advertisers are willing to pay for, including territory ,
system type and times of insertion. Advertisers may define what types of
content they want their ads inserted in and how they may be seen in
proximity to other ads. The broadcaster may have a varying number of
promotional opportunities based on programming type and network affiliate
agreements. Subscriber viewing habits and preferences may be available to
help select the types of ads that may be desired. The SCTE has created a
series of industry specifications (known as the SCTE 130 Series) that work
together to provide addressable advertising services.
Advertising Decision Service (ADS)
Ad decision service (ADS) is a set of rules and processing functions
that determine which ads are selected to be combined with other program
content and how they will be combined. Decisions made by the ADS may be
specific (date and time) or they may be based on a set of conditions and
parameters (such as geographic zones and subscriber profile information).
The ADS system is described in SCTE 130-3.
Content Information Service (CIS)
Content information service (CIS) is a system that identifies and
manages descriptive data (metadata) for programs and advertising messages.
The CIS system allows for the searching, discovery, and alerting of the
availability of media items and their classifications. The CIS system is
described in SCTE 130-4.
Information Service (POIS)
Placement opportunity information service is system and process that
identifies and provides descriptions of placement opportunities for media (such as the availability to insert ads). A TV broadcaster
typically has several minutes of ad insertion opportunities for each hour
Placement opportunities are content and time
specific so they can vary based on the type of network, geographic location
or other associated content attributes. The POIS may contain requirements
and attributes that may include which platforms may be used, ownership
rights, and policies that are used to coordinate the placement of media.
The POIS system is described in SCTE 130-5.
Subscriber Information Service (SIS)
information service is a system or process that can store, process and
access subscriber information that can assist in the selection of ads. SIS
enables behavioral targeting of ads. Because SIS captures personal
information from viewers, SIS systems may be required to control access
and limit identification information to ensure viewer privacy. SIS is
defined in SCTE specification 130-6.
Figure 1.1 shows how SCTE has created an addressable advertising system
that uses several different information systems to assist in the selection
of TV ads. The advertising decision system (SCTE 130-3) identifies and
coordinates the insertion of ads into media systems which may include
linear TV advertising. Ads and program content can be classified and
described in the content information system (SCTE-4). The ADS can register
with the CIS system to search for content and receive alerts when specific
types of content are available.
The placement opportunity information service (SCTE 130-5) can be used to
identify when advertising inventory is available for use. The subscriber
information service (SCTE 130-6) can be used to obtain information related
to subscriber activities (preferences or viewing habits).
Addressable Advertising Revenue
According to the Television Bureau of Advertising (TVB), TV advertising
revenue in the United States in 2008 was approximately $48 billion, which
was a 0.4% decrease from the TV ad spending in 2007 .
According to the Interactive Advertising Bureau (IAB), Internet
advertising revenue in the United States in 2008 was $23.4 billion
compared to $21.2 billion spent in 2007 (a 10.6% increase) .
One advertising trend shows the shifting of ad spending from broadcast TV
into communication channels (such as the Internet) that are more targeted
and measurement. TV system operators can modify their systems to take
advantage of this trend. By upgrading TV advertising systems so they can
target ads (addressable advertising) and provide improved measurement and
reporting (even more than Internet advertising in some cases), dramatic
increases in TV advertising revenue can be achieved. The increases can
come from charging higher fees per insertion (higher cpms), obtaining
revenue from new advertisers (from ad bidding networks), and new ad
revenue streams (from new types of advertising services).
Higher Revenue CPMs
Highly targeted ads can lead to higher ad cpms. By targeting ads to specific
viewer groups, the results of advertising can be dramatically improved.
For example, only sending tampon commercials to women viewers in certain
age groups increases the response rates and provides new ad insertion
opportunities for commercial insertions to other viewer groups.
Advertisers may improve their response rates by 5 to 10 times through
precisely targeting their audience groups.
In addition to better targeting viewers with ads, ad viewing
information may be gathered and used to indicate how viewers responded to
the ad. To protect the privacy of viewers, anonymized set top boxes can be
used. Anonymized STBs gather selection and channel changing (tuning
metrics) data, and ad interactions (option selections) with content, all
without revealing the viewer’s identity.
Adding the ability to precisely target ads to groups of viewers and
provide detailed viewing measurements will help to motive advertisers to
pay much higher cpm rates.
Ad Bidding Networks
Advertisers may compete (bid) for access to
available advertising spots and they may have paid or committed to pay an
amount that is determined by the number of viewers reached by the
broadcaster. Ad bidding systems dynamically allocate promotional ad
opportunities to pre-approved advertising companies.
One of the key
advantages to using ad bidding networks for TV advertising is that it
lowers the barrier to entry for advertisers. It makes TV advertising more
like Internet advertising where the advertiser can setup their own ad
campaigns and budgets. While the minimum TV ad bidding budget may be low,
the actual ad spend per cpm is very high. Lower entry costs result in more
advertisers, more competition and higher ad revenues.
Another advantage of ad
bidding networks is that they automatically coordinate the selection and
placement of ads. Once the automation process is setup, it can
dramatically reduce the advertising system’s operational costs.
New Ad Revenue Streams
Addressable advertising offers new types of advertising services which can
create new revenue streams for the operator. Like Internet advertising,
some of the transaction based revenue sources can have high transaction
value (possibly over $20 per event). Some of the new types of ad revenue
streams include placing ads in on demand programming, overlay advertising
and downloaded ad applications.
Advertising in on
demand programs (such as movies on demand) can be performed as pre-rolls,
post rolls and in program advertisements. Because the viewer is already
streaming the program from the media server, the insertion of ads into on
demand programs may require only relatively simple software upgrades.
An overlay ad is a
promotional message that is overlaid on top of another media item. An
example of an overlay ad is the insertion of a company or brand logo, or a
message onto part of a video display. A benefit to overlay advertising is
the assurance that viewers will see the advertising messages. When overlay
ads are used, viewers cannot skip or fast forward through promotional
Ad applications, which
are a new type of advertising service, are downloadable software programs
that an initiate an advertising message (such as within a STB) when certain
conditions exist. Ad triggers may occur during the viewer’s selection of
certain types of media, allowing for highly targeted advertising
experiences. For example, if a viewer has selected to watch a TV program on
car repair, a car repair ad may appear.
Upgrading to Addressable Advertising
Upgrading to addressable advertising involves the addition of software
intelligence and equipment, the installation of more ad servers, and,
potentially the addition of more bandwidth to the distribution network.
Addressable advertising systems can dynamically
setup campaigns, select ads, coordinate ad insertion and track the ad
consumption (viewing and interaction). Addressable ad insertion systems
may be capable of managing ad in broadcasts (linear advertising) or
programs (on demand).
Addressable advertising systems operate on a system
of rules rather than simple ad insertion orders. They use databases
(usually in relatively simple XML text formats) that identify content,
promotional opportunities and subscriber preferences. Addressable ad
insertion systems may be designed to integrate with existing (legacy) TV
ad systems. Some of the companies that provide addressable advertising
systems include Black Arrow (www.blackarrow.tv, Big Band Networks (www.bigbandnet.com),
and SeaChange (www.schange.com).
Ad Server Capacity
server capacity is a measure of the ability of a storage device to select
and deliver ads. Ad server capacity may be defined using a combination of
media storage capacity (storage of ad media), device streaming capacity
(in Mbps or Gbps), and the number of streams that can be simultaneously
delivered (media processing).
The number of ad requests that can be processed over a period of time
is also important as ad requests in addressable advertising systems may
simultaneously occur. The ability to process the requests and to find the
media file and start streaming can be limited.
Ad servers have traditionally relied upon the use of disk storage. The
relatively long disk access times (seek time) for disk storage ad servers
can limit their capacity to rapidly service many ad requests. To overcome
the long seek time challenge, ad servers are transitioning into flash
memory servers, eliminating the disk access challenge.
Ad Transmission Bandwidth
The transmission bandwidth that is needed for addressable
ad delivery is related to the number of streams and the average bandwidth
per stream. For networks with tens of thousands of customers, distribution
networks cannot provide simultaneous streams.
Some of the solutions to the bandwidth that is required for ad delivery
include moving ad servers towards the edge of the network, increasing
media compression and preloading ads.
By installing ad servers closer to the edge of the network, the need to
provide many simultaneous streams through the distribution network is no
longer present. Viewers are connected to a local ad server.
For unexpected occurrences of high addressable ad activity, the media
server might be configured to deliver ads in lower resolution formats.
While this may result in some adjustments in ad revenues, it may help to
ensure that all advertisers reach their desired target audiences.
Preloading ads into the memory of set top boxes can be performed before
the ads are scheduled to be inserted. When the ad spot comes on, the system
can simply redirect the viewer’s media source to the memory inside the STB.
This allows ad servers to transfer the media between times that require the
delivery of many simultaneous ads.
1. “2008 TV Ad Revenue Figures,” Television
Bureau of Advertising
(TVB), April 2009, http://www.tvb.org/
2. “IAB Internet Advertising Report,”
March, 2009, http://www.iab.net/media/file/