VOD Advertising: Could the Ad Model That Killed TV Bring It Back to Life?

As consumers become more comfortable with video-on-demand (VOD) and digital video recorders (DVRs), marketers are seeing great opportunities to reach them with existing content in these formats.

Television has traditionally been the best way to reach large populations, although reports pop up daily that show TV is steadily losing share to online advertising. Nevertheless Americans are watching more TV than ever – around 120 hours a month – versus time spent on the Internet – around 20 hours a month.

TV advertising is still a viable path to the consumer for marketers. Recent Nielsen Research indicates that TV still accounts for some 60% of advertising outlay.

With so many variables in play, how can smart marketers be sure that their TV ad dollars are spent wisely? Targeted advertising delivered through advanced VOD advertising platforms offers one solution to deliver the right messages to the right viewers.

Is it TV or the Internet?
Time-shifted viewing has made TV more like the Internet, putting the viewer in charge of what’s on the screen – and which ads are viewed. ‘Personal TV’, a term coined by Forrester Research, with its high level of choice, can be viewed as a threat by marketers – or taken as an opportunity. The argument is compelling that what the industry faces is opportunity. The ad model threatening traditional TV – online advertising – could bring TV advertising back to life.

How? Relevance is the key to success here, as in so many other areas of marketing. It’s possible for marketers to place ads in context for a viewer by mining viewing information available from operators using advanced VOD advertising platforms to source the right ads for the right viewer, down to zip codes. Content owners – the networks and cable operators – have opportunities to work more closely with media buying agencies and their advertising clients to reach audiences on what is arguably the best screen in the house, the TV.

VOD ad platforms support a variety of ad formats, from traditional embedded ad spots to ad overlays, bookends and even long-form, on-demand ‘showcase’ ads that deliver information and some degree of interaction. And it won’t be long before an AdWords-type clickable link can take the viewer from a traditional ad to a showcase spot that delivers deep information about a product the viewer is really interested in.

But wait – don’t time-shifting viewers skip the ads?

Reports vary widely on the percentage of viewers who use their DVRs to skip ads. The good news here for marketers, according to Capgemini’s 2008 report on addressable advertising, is that many viewers who watch VOD appear to be willing to watch ads inserted into VOD programming (76% prefer to watch ad-supported content as opposed to 23% who prefer to watch paid content).

New ways to measure ad effectiveness are available as well

For marketers, TV suddenly has growing ad opportunities that are more targeted – addressable- than ever before. When the U.S. completes the transition to digital TV cable operators will be able to collect even more behavioral data and viewing data that can be combined with demographic data to segment audiences. Marketers can create campaigns that closely match viewer interests and needs.

Marketing using TV advertising is becoming more like marketing using the Internet. The big difference is TV viewers have a comfy chair and a more immersive experience. For marketing officers and their brands, this melding of Internet response, TV experience and laser targeting opens up worlds of promise.

Simon McGrath is CMO of SeaChange International.