×
You will be redirected back to your article in seconds

Nets Find New Ways to Squeeze More Money Out of VOD

Dynamic ad insertion allows networks to swap in new commercials for shows available on demand

If TV networks have their way, advertisers will soon see fewer differences between placing their spots on a show viewers watch live at 9 p.m. on a Tuesday night and that same show viewed via video-on-demand a week later.

Starting in 2014, Fox intends to offer sponsors the chance to swap out stale promotions accompanying VOD selections and replace them with something fresh. Think of it as Starbucks retiring generic slices of three-day-old carrot cake in the display case for a fresh pastry-of-the-day.

Together with Comcast and approximately a dozen advertisers, Fox has been testing a technology known as “dynamic ad insertion” that allows sponsors to keep the ads that run alongside the video content current, said Toby Byrne, president of sales for Fox. For years, ads were loaded onto VOD and more or less abandoned. The commercials could end up being weeks old — and completely irrelevant. Fox expects to offer the service on Comcast in January and then roll it out to other video distributors.

With more people using VOD to catch up on programming and to binge view, the networks see an opportunity to corral some of the money that floats out the door every time a viewer watches a favorite program in a way that is not measured by the current standard. “We have quite a bit of viewing that takes place in online video, and now increasingly on VOD — and if anything, VOD is trending upward,” Byrne said. “Naturally, we want that audience to be counted.”

VOD has other allures. In many dynaminstances, viewers can’t forward past the commercials like they can with a DVR. With that in mind, it’s no wonder the TV nets are moving to make the on-demand environment more hospitable to those who pay for their shows to stay on the air.

Other networks, too, are moving to embrace dynamic ad insertion. A spokeswoman for NBCUniversal said the company has already sold sponsors the opportunity to update ads in VOD content. “We’re headed toward a place where eventually all ads viewed at any time are current, and therefore have maximum value,” CBS said in a statement. “This is a big opportunity for the entire industry, and we are working with clients, agencies and distribution partners toward this goal.”

The technology could help TV networks snare more dollars from Madison Avenue. At present, the nets get paid only for “C3” viewership — audiences who watch the ads that support a program within three days of an episode’s airing. After three days, the theory goes, ad messages can go stale: Why would a movie studio promoting a movie opening on Friday pay for viewers to see that blurb on the Tuesday after the weekend? The ad-insertion technology would let networks monetize some part of that long-tail audience.

Better still, marketers can update their ads in nearly every venue where video commercials are run, whether it be regular TV or online streaming, said Kris Magel, exec veep and director of national broadcast at ad buyer Initiative.

And the on-demand crowd is growing. According to media-research firm Magna Global, 56% of U.S. homes have access to video-on-demand. By 2017, the company estimates, that figure should reach 66.1% — far more than the percentage of people who will have DVRs (48%) by the same point in time. Indeed, VOD viewing of TV shows has become so commonplace that many TV networks make sure the on-demand programs have the exact same ads as they did when they ran live on TV, then use the views as part of their ratings guarantees to advertisers.

Marketers who might once have shunned the new tech are warming to it, noted Steve Kalb, senior veep and director of video investment at Boston ad agency Mullen. And why not, given changing viewer habits.

“The percentage of growth each year of consumers adapting to VOD and having it as part of their viewing toolbox has been pretty astronomical,” Kalb said, “and the growth is going to continue.”

More Biz

  • A view of the SK Telecom

    Korean OTT Players, SK Telecom Join Forces to Compete Against Netflix

    South Korea’s three major broadcasters KBS, MBC and SBS have joined forces with the country’s leading telecom firm, SK Telecom, to launch a new video streaming platform. The move is regarded as a defensive reaction against the growing influence of foreign competitors, lead by Netflix. The broadcasters already jointly own Pooq, with MBC and SBS [...]

  • David Lubliner Moves to UTA From

    Veteran WME Agent David Lubliner to Join UTA

    William Morris Endeavor agent David Lubliner is departing the company for a post at United Talent Agency, individuals familiar with the move told Variety. The parting of ways was amicable, the insiders added. Lubliner was a veteran in WME’s motion picture literary department. Rumors of his exit had been floating since Hollywood reopened for the new [...]

  • Bruce Tufeld Dead: Hollywood Agent and

    Hollywood Agent and Manager Bruce Tufeld Dies at 66

    Bruce Tufeld, a Hollywood agent and manager who once repped stars like Rob Lowe, Laura Dern, and Kelsey Grammer, died Tuesday in Los Angeles as a result of complications from liver cancer. He was 66. The son of respected television announcer Richard “Dick” Tufeld and Adrienne Tufeld, Bruce began his career as an assistant at ICM [...]

  • R Kelly protest

    Protesters Rally Outside Sony Music Headquarters, Demand the Company Drop R. Kelly

    Standing in the cold with megaphones outside of Sony Music’s New York headquarters, a group of activists delivered the company, parent of Kelly’s longtime label RCA, a petition signed by over 217,000 people demanding that the singer be dropped from the label. The rally comes less than a week after a plane carrying a banner [...]

  • Robert Smith, Longtime Executive at DuArt

    Robert Smith, Longtime Executive at New York's DuArt Film Labs, Dies at 88

    Robert Smith, a longtime executive with New York’s DuArt Film Labs, died Jan. 11 in Montvale, N.J. He was 88. Smith spent some 62 years with DuArt, the film processing and post-production facility founded in 1922 in the penthouse of an automobile garage in Midtown. Smith rose to president of DuArt before retiring in 2015. [...]

  • Fake Washington Post

    Fake Editions of Washington Post Distributed in D.C.

    The Washington Post was forced to issue a statement on Wednesday morning after commuters were handed fake print copies of the newspaper with a headline claiming President Donald Trump had fled the White House. “There are fake print editions of The Washington Post being distributed around downtown DC, and we are aware of a website [...]

  • Stock market Stock buyback

    Stock Buybacks Leave Firms Without Funds to Invest in Future (Column)

    Corporate giants on the S&P 500 have spent more than $720 billion during the past year on stock buybacks. Media and entertainment firms account for only a fraction of that spending, but even $1 million spent on share repurchases seems a foolhardy expenditure at this transformational moment for the industry. The record level of spending [...]

More From Our Brands

Access exclusive content