IP TV: The other side of the glass

Quick, what is your favorite reality TV show? Is it "Survivor"? "Fear Factor"? Reality TV programming appears to be the successor to tabloid programming--Jerry Springer, Larry Elder, et al.--as the chief portal to transport the viewer to “the other side of the glass.” Such programming places viewers in front of the camera rather than facing the television screen as a consumer viewing a program.

There is a parallel theme to this reversal when it comes to the migration of television technology to IP TV. Much of the excitement about IP TV has been focused on its potential to dramatically change and improve the viewing experience--and that is as it should be. Indeed, the promise of an all-content, all-on-demand delivery model is compelling. However, pundits have ignored “the other side of the glass,” i.e., the role of the advertisers who spend billions of dollars each year to reach viewers. Yet it is becoming clear that IP TV technology developments will prove as exciting and compelling to advertisers (and their business models) as it is to viewers. Through the looking glass brightly The first step toward appreciating this facet of IP TV is to adopt what is likely to be a less comfortable perspective for many of us. Consider the proposition that viewers are not the broadcasters’ customers, rather that broadcasters deliver a service to the advertiser. It is advertisers who pay the broadcaster for inserting advertisement spots into content during broadcast. (Note: The term “broadcaster” includes networks, cable operators, and telephone carriers introducing video services.)

Advertising--in television, radio, newspapers, magazines, the Internet, yellow pages, outdoor billboards and movie theater screens--is a roughly $260 billion per year component of the U.S. communications industry. Basic television advertising spending is roughly 15-20 percent of the total, or a $40 billion to $50 billion market within the U.S. alone. Service providers looking for sources of revenue to recover their investment in IP TV infrastructure must therefore consider how to capture advertising spending in addition to consumer spending, thus intertwining advertisers’ interests with their own. Advertising may become especially important as competition drives down subscriber fees, or as subscribers approach their spending cap for bundled voice, video, and data services. IP TV advertising done right is a great opportunity for both advertisers and viewers.

Technology threatens business model

Having accepted, at least for the moment, that much television programming actually exists for the purpose of bringing viewer attention to its attached advertising, it is self evident that technological developments such as video recorders, remote controls and the like have challenged and even threatened the television advertiser’s business model.

First, the hand-held remote control allowed viewers to change channels at will from the comfort of their chairs. Videocassette recorders with recording timers enabled viewers to watch programs post-broadcast and fast-forward through commercials with their remote controls. Next came digital cable and satellite broadcast systems that vastly increased the number of available channels; these systems also increased the probability that the viewer, upon the start of a commercial break, will hit the remote control to “find something else on.” More recently, VCRs have yielded to in-home personal video recorders, which let viewers completely reprogram the broadcasters’ schedules to fit their own and fast-forward through, or simply skip, ads upon playback. Never has the old advertising axiom “We know half of our advertising dollars are wasted--we just don’t know which half!” been more on point.

One response to these threats is in-programming product placement, or imbedding, but it has limitations. By putting sponsors’ products literally within the frame, or scripting mention of the product or brand name into dialog, producers have provided advertisers with a weapon to counter the remote control. The trouble with product placements is that they can be clumsy, obvious and unnatural within the content. Blatant product placements can add insult to the injury that many viewers already feel for being subjected to the practice. Finally, product placement raises production challenges. For example, scriptwriters may struggle with a last-minute script change to accommodate a product plug.

Advertising metadata at work

Fortunately for advertisers, technology now offers a new way forward. All-digital post-production, distribution and delivery of programming encourages everyone in the food chain, from scriptwriters to editors to the local video services provider, to give thought to the advertising that is broadcast or somehow inserted in stream during a program.

Specifically, digital tags can be appended to the program in post-production that provide cues downstream, during playback, as to the appropriate ad content to play during a commercial break. Such tags are referred to as metadata--information about programming content. Metadata lets broadcasters play ad spots that are relevant to the scene preceding the commercial break, thereby discouraging viewers from flipping channels or directing their attention elsewhere. Such an approach is referred to as in-context advertising. For instance, for a scene that depicts characters driving in an SUV through a mountain road in the winter, the metadata might suggest that ad spots from car manufacturers and ski resorts may be appropriate to follow the scene. The viewer experiences a less jarring segue from the program to the commercial break, and the images and dialog within the program subconsciously prepare the viewer to be receptive to the commercial message, which is relevant to the program context.

The technology to support metadata, while necessary, is insufficient in itself to enable the type of in-context advertising described above. For that, post-production methodology needs to adapt as well. For example, it takes about two weeks to edit raw footage into a one-hour episode of a prime-time drama program. To do the editing job, the editor makes notes about the scene, context, and dialog. Upon completion, the editors’ notes--the valuable metadata--are lost. With new tools and new work methods this invaluable information may be digitally appended to the content, at the source, during post-production, for use downstream to better correlate ad spot content with programming content.

Furthermore, within the current broadcast-and-forget legacy television broadcast model, measuring consumer-viewing habits has long been a significant challenge. IP TV delivery systems are well equipped to report viewing habits, on programming content and advertising content alike, across the entire subscriber base. Service providers that increase ad relevancy through in-context advertising over IP TV architectures should be able to demonstrate measurable improvements in returns to advertisers, and thus significantly increase their advertising revenue.

The path to in-context advertising

IP TV technology combined with metadata provides a powerful revenue-generating model for service providers. The scalability of today’s IP TV systems in terms of hours of stored content and hours of stored ad spots is unprecedented, and distributed architectures allow the network to scale to millions of users. In addition, broadcasters may use the DVD capability that prohibits the viewer from fast-forwarding through important messages to enforce advertising spot play in the IP TV model.

Broadcasters can record consumer viewing habits--such as programs and ad spots skipped, accelerated, viewed, or replayed--with each click of the remote and store the information for offline analysis. By assigning each member of the household a user login, and combining this with archived viewing data, broadcasters can develop psychographic and demographic profiles for each viewer within a home. Individual users may even have a personal television “home page” and set of “bookmarks” that highlight favorite content and alerts much like those that Internet surfers have. Broadcasters may even allow viewers to enter voluntary behavioral data into the network, such as readiness to purchase a new car and therefore an interest in seeing advertisements for certain brands or styles of automobiles.

In the bigger picture, IP TV offers to end “channelthink”--the idea that there are a finite number of linear broadcast channels--and moves viewers toward a more engaging, non-linear, programming-on-demand model with near infinite content, accessible at will. Under such a model, any viewing time is ‘prime time’ and thereby commands premium spot fees. The network ‘knows’ that the viewer is engaged, because he or she has specifically requested or pulled in a particular piece of content. Advertisers can narrowly target ad spots to such a viewer based on demographic, psychographic and behavioral data, and match the ad closely to the context of the program to maintain viewer interest into and through the commercial break.

Dynamic ad scheduling

Without a doubt, IP TV offers a direct route to an in-context advertising model, and the combination of the two provides a powerful attractant to the many billions of advertising dollars spent each year. The story does not stop there, however – this episode has a sequel. As service providers move further away from the channelthink model of legacy television broadcasting and deeper into programming-on-demand portal models, “watching television” will become more dynamic from the consumer perspective. Ad spot scheduling will also become more dynamic from the broadcaster’s point of view.

Along with massive content and ad spot libraries, service providers may also build subscriber demographics databases. By linking this database to real-time programming demand information, service providers may be able to report an enormous amount of demographic and psychographic information on who is watching, and what they are watching, right now. Such information could be fed into a dynamic market for ad spots--a spot market for spots, if you will--that allows advertisers to bid in real-time for their spot to be played to a given demographic and psychographic group, matched to the context of the program being viewed. The result could be an extremely efficient market, one that allows advertisers to clearly see which advertising dollars are well spent, and which are not.

Something great for consumers as well

The structure of television programs today is a based on a rigid fixed formula driven by the need to support advertising more or less the old-fashioned way. Programs are scripted and edited with a view toward routine commercial breaks. Even to the uninitiated, the structure becomes fairly self-evident after viewing only a couple of popular thirty-minute sitcom shows or a weekly crime drama. The format of the programming day itself has been driven by assumptions about what people are doing and who is watching at various times of day. Soap operas were named for the products targeted to the homemakers who were the programs presumed audience.

Programming-on-demand containing in-context advertising may offer the best hope for innovative and creative television programming that breaks the current formula. Content that is available on demand need not be tied to a rigid programming grid with program start times firmly on the hour or half hour, and it follows that programs no longer need fit neatly into thirty or sixty minute segments. Individual programs or even individual episodes of the same program may now be of varying lengths, allowing greater dramatic license. Commercial breaks within programs need not even occur at the same scene for two different viewers of the same program. Depending on the viewers’ profiles and preferences, the video head-end may take advantage of metadata to insert different ads at different places in the program, maximizing the relevancy for each viewer.

Greater impact for advertisers may beget more advertising dollars and greater license fees to production studios to enable the development of new programming. In the same vein, more niche content may come to market, as service providers mine their subscriber database to identify the niche viewers and find sponsors to reach them. As IP TV comes to the PDA, the mobile phone, and the laptop, the busy lifestyle of the modern consumer may be better suited to short-duration content that includes interactive in-context ads. Viewers too should ‘stay tuned’ for exciting developments on their side of the glass. The next 50 years Television advertising and viewing has remained essentially unchanged since its inception more than half a century ago. While various programming fads have come and gone, we are only now on the cusp of a true technology shift that will enable many new entrants to broadcasting and the delivery of media services. As service providers enter the broadcasting space they will be pressured to show timely returns on their investment. They would do well to exploit the capabilities of new IP technology to capture a growing portion of the dollars spent on advertising. With the IP TV model, service providers may well find sponsors more than willing to reward measurable results with increased spending. It is indeed a win-win for everyone involved.

David Howard is Manager of Field Product Marketing for UTStarcom Inc.