Trafficking in the Digital Future
Software developments make the most of stations' revenue opportunities
By Glen Dickson -- Broadcasting & Cable, 1/22/2006 7:00:00 PM
As broadcasters face intense competition for viewers' eyeballs from newer platforms like mobile video and on-demand services, they're looking to maximize their opportunities in an increasingly fragmented advertising market. Crucial to that is getting the most out of their traffic systems: the software that controls a station's commercial inventory and links the sales and engineering departments.
More and more stations seek to bundle the traffic functions of multiple stations together and control them from a common database, reducing operational costs while increasing sales efficiency. And stations are looking for tighter integration between traffic and automation systems as a way to further streamline operations. Many also aim to sell time in a new venue, whether a digital television stream, the Internet or even a video display on a city bus.
Helping broadcasters reach those goals, traffic-software vendors such as Optimum Solutions Inc., Harris Broadcast and WideOrbit are providing increased flexibility and richer features. “There are lot of great choices now, which wasn't always the case,” says Belo VP of Advertising Services Steve McIntosh.
Belo centralized its traffic functions with Optimal Solutions' OSI-Traffic in its Dallas headquarters. OSI, which counts Paxson Communications, Dispatch Broadcasting and Sinclair as customers, says more than 400 stations are using OSI-Traffic and “Ad Connections” sales software.
“A REAL-TIME LOOK”
McIntosh says OSI makes operations run smoothly: “Instead of having them send out 30 spreadsheets, we get more of a real-time look at the client base whenever we want, without having to involve the stations. It has also reduced the error rate by more than half when contracts go into the system, and it reduces the revenue loss when spots don't run when they're supposed to.”
McIntosh points out that OSI's centralized system gives both local and national salespeople real-time information on ad placings and budget performance. It also helps comply with the federal Sarbanes-Oxley Act: “We can ensure that everything on the revenue side is all in one place, and auditors only need to go through Dallas [Belo headquarters],” he says. “Your external audit costs drop, since you don't have to make all those trips.”
Another feature of the OSI software is the ability to do zoned programming and geographically targeted logs; Belo's Northwest Cable News in Seattle, for instance, has four logs targeted at different zones in the market.
Today's systems are far more sophisticated than even a few years ago, says Claude Morris, COO of Video Communications Inc. (VCI). “It used to be that every station ran a skim that was available every morning, and people worked off the hard-copy skim,” he says. “Now we have live avails, and they can go look at specific areas. They can look at their competitors, look at rates, and be inputting an order through partners.”
VCI started in 1984, and more than 200 broadcast stations and 100 cable channels use its STARS II+ sales, traffic and accounting software. Morris says the company had its best year ever in 2005. He continues to see stations centralizing their traffic operations, either by “clustering,” where station groups run traffic functions for all stations on one database, or true “centralcasting,” where a hub station not only handles traffic but also pumps out signals to multiple stations via fiber links.
WORKING OFF THE HUB MODEL
One fan of the hub model is LIN Television, which uses VCI software to run six stations out of Springfield, Mass., including Hispanic “superstation” WAPA in San Juan, P.R., and nine more out of Indianapolis. LIN added two stations it acquired from Viacom—WNDY Indianapolis and WWHO Columbus, Ohio—to its Indianapolis hub in less than two weeks. LIN plans to add two more Indiana stations to the hub in the next few months.
“We're always looking at whether it makes economic sense to do that,” says Scott Blumenthal, VP of regional operations for LIN TV. “It's silly to spend money on a new control room when you already have one.”
VCI has worked to make its STARS II+ system compatible with all major automation vendors. Morris says that level of integration with automation will become more important as stations use their digital spectrum to multicast. “Every individual station will turn into its own mini-hub, with two, three, even four channels going out,” says Morris. “We're geared to that.”
LIN is already multicasting at its stations with weather service LWS (Local Weather Station). The additional traffic load has been no problem for the VCI software. “There is no difference,” says Blumenthal. “If anything, it's easier because the breaks are in the same position every hour, 24 hours a day. It doesn't vary by program like a traditional station.”
Another centralcasting customer is Clear Channel Television, which uses VCI across 11 stations in the Northeast and centralcasts to eight New York stations from its Syracuse hub. “When you have a centralcasting structure, it is very user-friendly for the client,” says Stephen Kimatian, regional VP of the Northeast for Clear Channel. “It's a one-stop shop for a lot of their needs. Generally, they have been unaccustomed to having one location to deal with multiple stations and place multiple buys.”
One efficiency for national spot buyers, says Kimatian, is that, instead of sending duplicate commercials to multiple stations, they only need to send one.
Another emerging player in the traffic-system space is WideOrbit. Four years ago, WideOrbit had two stations live; now it has more than 400 broadcasters using its traffic- and revenue-management system, says CEO/founder Eric Mathewson. Customers include the New York Times, Liberty, Meredith and Hearst-Argyle station groups (all of which are investors), as well as Gannett, Post-Newsweek and Canadian broadcaster CORUS. The company has also developed a sales-proposal system, “WO Proposer,” that competes with sales systems from Marketron and OneDomain.
Mathewson says the main advantage of WideOrbit is in its graphical user interface. “It's easy for the average layperson to go in and get information out of the system, while other systems require custom reports or a more advanced user,” he says.
OVERSTATED AND OVERRATED
Mathewson downplays the importance of true centralcasting, such as is done by the Clear Channel stations. He believes that the bandwidth costs are too much for most stations and the labor savings in master control are often overstated. He says that 80% of the value of centralcasting can be achieved just by centralizing the traffic system.
However, he agrees that handling new services through the digital spectrum is a huge driver for traffic systems. Mathewson says some WideOrbit customers want to offer weather, music and news channels in addition to their primary program feed. “They want to traffic all four systems without additional headcount,” he says. “Four years ago, they would have needed a linear growth in staff.”
Marketron's “TV Traffic” customers are also pursuing new revenue opportunities, says Kristen Fechner, Marketron senior VP of business strategy and development. “Our customers want to take advantage of multichannel opportunities with the digital spectrum, as well as out-of-home environments,” she says. “It acts like a channel when it's talking to the traffic system. We want to make it easy to plug in and give them a centralized way to operate that.”
Marketron's TV Sales product is installed in about 800 stations. In many instances, it is integrated into the TV Traffic system, which launched in 2003, although the systems are sold separately. “Marketron is focused on making sure we provide not just a basic inventory-management system but the tools that make that inventory come alive,” says Fechner.
The company is unique in providing a “hosted platform”; all of the traffic data and applications for Marketron's TV clients are hosted by the company's data center, with locations in the Midwest and on the West Coast. This outsourcing arrangement allows customers to log in from anywhere and save money by taking advantage of Marketron's centralized storage.
While such an arrangement would seem to appeal more to smaller broadcasters on a tight budget, Marketron's hosted traffic service has attracted big players as well, including the NBC and Telemundo station groups.
ROLLING OUT H-CLASS
While Harris Broadcast has a large base of traffic customers through its ownership of the Encoda, Columbine and JDS brands, the company is looking to expand market share. It's rolling out its H-Class solution, which integrates traffic, automation, sales and scheduling on one platform, with a focus on international customers and the U.S. cable market. H-Class is designed as a multimedia system that can schedule a Web advertisement as easily as it can cue up an on-air spot.
“We initiated a new development project and created a platform for those organizations that want to run an SQL database on Windows NT to those who want Oracle running on Unix,” explains Taras Bugir, chief strategy officer for Harris Broadcast software systems. “The business layer of H-Class is composed of two platforms: a Java platform with real-time applications for automation, and a Microsoft.net platform for business functions.”
A relatively new player in the U.S. traffic-software market is Pilat Media, a UK-based company that got its start in television by developing a content-management system for satellite broadcaster BSkyB in the late '90s, then branched into sales by adding sales-proposal and traffic systems. Pilat, which has an office in Denver, also offers rights management and scheduling software in a package it calls the Integrated Broadcast Management System.
John Larrabee, VP of North America for Pilat, says that, in this digital age, the days of the basic traffic system are over. “Clients know their future profitability depends on more than what goes on in one department,” he says. “They are looking at their overall cost of operations and their ability to sell things other than 30-second spots.”
Pilat clients include Network 10 in Australia, Playboy Enterprises, Discovery International and National Geographic Channel. Its biggest U.S. customer is Fox Television Stations, which signed on last year to use Pilat content- and sales-management software for its 35 O&Os and 11 regional sports networks. The Fox rollout will begin in mid 2006 and should be completed by the end of 2007, says Larrabee.
He believes a key issue for larger television operations is management reporting through an enterprise-class database. “They want to see what they are doing across all departments,” he explains. “The traffic system might give information about sales performance, but it doesn't include ratings. They want to match up ratings and traffic all in one bundle—the great triangle of ratings, traffic and sales.”
Two other players looking to gain traction are SintecMedia and Broadview Software. SintecMedia, which originated in Israel in 2000, offers a broad solution called “OnAir” that includes traffic, sales proposals, promotion management and billing. It has a large contract with the BBC and counts Canadian Broadcasting Corporation as its biggest North American client.
OnAir was designed for large installations and has a three-tier architecture consisting of Windows clients, an application server tier running on Windows, and a database tier that can run on robust platforms such as Unix, says VP of Marketing Dan Yuval. “Unix machines are usually stronger, and they have a lot of scalability and fault tolerance,” he says. “Those are the kind of elements that are important for a large organization.”
Toronto-based BroadView is supplying a traffic system to PBS as part of the network's initiative to automate program delivery with a file-based workflow, a project called ACE. BroadView is also working with individual PBS stations that purchase the modular ACE system to handle program ingest, storage and playout; WMHT Albany, N.Y., was the first ACE station to launch last fall. BroadView, which does the bulk of its traffic business in Canada, has sold systems to several small U.S. cable networks.
“One of the things that really differentiates us is that we're traffic software that integrates programming functionality,” says Arthur Drevnig, director of sales and marketing for BroadView. “That's our special sauce—particularly for the cable networks, who are acquiring all their own content.”
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