Posted by Peter Kim on April 24, 2006
Forrester believes that cable companies should embrace VOD advertising as a competitive weapon against satellite. In a March 2006 survey of ANA members, Forrester found that 80% of respondents had already experimented with VOD ads or had plans to. So what's going on with VOD advertising? Some answers were provided in Comcast's VOD "upfront" on Friday, April 21st at the Museum of Television & Radio in New York - the first event of its kind for VOD advertising.
Comcast is putting up some impressive numbers. In the past year, they have 10 million VOD customers and $1.4 billion in spot advertising. VOD programs have over 2 billion views since 2004. Over 70% of their digital cable customers use VOD monthly, selecting from over 7,000 programs. According to Nielsen, the largest segment consuming Comcast VOD is ages 18-34, with 37% of the segment accessing the programming.
Regarding content, Comcast gives customers 5 ways to access the "On Demand" features and music, kids, and free movies are the most popular types. They have content from NBC and CBS and expect Fox and ABC within 90 - 180 days. Comcast is also beefing up original content, e.g. NFL Network, Music, Trivia, Dating, Real Estate, Medical, Horror and Hip Hop channels launched or in the works.
As for advertising opportunities, there's two kinds: skippable and baby-with-the-bathwater (bwtb). Here's what I mean. There are traditional pre-roll and interstitial opportunities that can be ffwded through. However, BTWB opportunities include a branded lower third, branded framing, and branded infotainment/edutainment. Viewers can't skip the advertising unless they're willing to skip the content as well.
Although calling the event an "upfront" was ironic for an on-demand, always-on advertising format, Comcast has sent a clear signal that VOD advertising is viable now and growing into a larger future opportunity. Marketers should be adding VOD to their media mix, with the help of companies like BrightLine Partners who are breaking ground in the space. Hopefully next year we'll see more of the 80% convert to already using VOD ads.
Cable operators should explore licensing the content from others (Cox and Time Warner are with Exercise TV) or striking their own deals. Satellite operators should be watching intently - using lessons from the more advanced European market - and be formulating their own content strategy in response. One element discussed, but missing so far in any real sense is online integration and related transactive capabilities - something either satellite or terrestrial could provide in the US. Who'll be first? And who will put rigorous measurement in place? A combination of Nielsen, Rentrac, and web analytics will have to emerge to support true cross-channel delivery.