Spot on

Research has backed up the theory that viewers are more likely to embrace targeted advertising, ensuring a win-win situation for the industry and audiences alike, writes John Reister.

Successful advertising strategies are an imperative for any service provider building a sustainable IPTV network. Today's television viewers are becoming frustrated with advertising that is not relevant to them. An ongoing study conducted by Comcast Spotlight, the advertising sales division of Comcast Cable, and media agency Starcom MediaVest Group, illustrates the impact of addressable advertising in terms of increased ad relevance and advertiser accountability.

Comcast delivered ads across eight cable networks designed to target households based on characteristics specified by advertisers including General Motors, Discover Card, Hallmark, Kraft, Mars and Procter & Gamble.

The study found that households served targeted ads in commercial breaks were less likely to change channels, tuning in elsewhere 38 percent less of the time than homes that received non-addressable advertising.

This result underlines just how powerful addressable advertising can be, offering IPTV service providers the opportunity to increase IPTV revenue streams by enabling marketers to send specific messages to the intended audiences. Advertisers can make use of targeted delivery methodologies to increase ad effectiveness and obtain real-time feedback on ad campaigns. IPTV operators will also enjoy much higher average revenue per user (ARPU) to grow and sustain their subscriber bases.

"Addressable advertising gets us closer to the power of mass personalisation by delivering highly relevant brand messages to engaged consumers," says Laura Desmond, CEO, The Americas at Starcom MediaVest Group. "This is the ideal connection in a world of scarce consumer attention."

In deploying targeted advertising, operators first need to settle on a choice of delivery mechanism. There are three principal models to choose from, centralised, customer premises and intelligent network edge.

In a centralised model, operators process insertions for all streams at the network head-end and deliver video content across the network from there.

With a customer premises model, programme streams and ads are sent to a set-top box (STB) at the customer site which splices the ads and then distributes to the consumer.

And finally, an intelligent network edge model uses a distributed network-based ad insertion system that places different ads into the same media slot for individual IPTV subscribers or set-top boxes. Typically, programmes are sent to video service offices before being processed and distributed to subscribers.

In the centralised model, all individual programme streams are processed either in the head-end or at associated video hub offices. As a result, the transportation of processed content across the entire video delivery process can overload the network during peak periods or when scaling to large numbers of subscribers.

This approach requires expensive upgrades to the network transport infrastructure and is difficult to scale, especially as the amount of available programme channel increases.

Ultimately, it fails to leverage the carriers' network ownership to deliver a superior service or differentiated advertising package.

The customer premises model calls for higher performance and more expensive devices in the customer premises supporting ad insertion. In addition to the high cost of incorporating such intelligence in STBs, scalability becomes an issue as operators have to manage the process of downloading thousands of ads to hundreds of thousands of IPTV STBs, with frequent updates.

STBs may also need replacing as and when new types of advertising come on stream.

The network-based intelligent edge approach allows telcos to maximise the utilisation of their network and the services that run over it. Operators can provide mechanisms to build specific geographic and demographic rules for targeted ads at the edge of the network before delivering programmes. The capital expenditure (CAPEX) cost per subscriber to deliver ads is optimised, as are network manageability and control.

Verification, monitoring and reporting capabilities are also superior to those in the CPE approach. For example, advertisers are interested in the ad viewing data by different geographic and demographic groups.

This information is likely to eventually lead to more effective interactive applications such as television commerce (t-commerce).

The edge of the network is also the best place to control personalisation in line with network conditions. An intelligent edge has the flexibility to default to regional ads as networks become congested, or deliver more personalisation as access network bandwidth becomes available.

While putting in place a suitable network infrastructure to deliver targeted advertising is central to the whole process, the choice of ad delivery models is equally important.

The implementation process is clear enough: addressable advertising is achieved by inserting specific ad clips into the available programmes before delivery. Operators can send targeted ads to groups of subscribers and even to individual television sets, with many advertisements simultaneously sharing one available spot. As the viewers watch the same programme streams, they will see different ad clips.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM