New York - No surprise here: Media executives believe video-on-demand advertising is hampered by a lack of established business practices -- while they also remain bullish on VOD's opportunity for growth and viability as an ad platform.
That's according to a survey of industry influencers conducted by the Advanced Advertising Media Project, presented here Wednesday at the B&C/Multichannel News On Demand Summit 3.0.
"We heard a consistent expectation of a growth for VOD [advertising] -- everyone was excited by it, but knew we needed to overcome some challenges to get there," said Carl Fremont, Digitas executive vice president and global media director, in discussing the first phase of AAMP's research.
Digitas is a member of the AAMP research initiative to study the effectiveness of advertising in free video-on-demand. The group was formed by ad trade group the 4A's and BlackArrow, a provider of VOD advertising solutions.
The first phase of research was based on interviews with 20 media-industry executives, mostly conducted in the fall of 2010, designed to establish a baseline of industry perceptions related to dynamic VOD advertising.
According to the survey, the executives said dynamic ad insertion for VOD -- while not a silver bullet -- was crucial to expand the segment's reach.
"For the future of ad-supported VOD to be as bright as some analysts predict, business as usual cannot continue. We need to change the paradigm" by introducing dynamic ad insertion for VOD, Fremont said.
Ineffective marketing of VOD to consumers is also an issue, the AAMP survey found. Video-on-demand services need to be packaged as a product, and marketed to both advertisers and consumers in ways that highlight the unique qualities of the VOD medium, Fremont said.
"Some consumers don't know what VOD is," he said.
In addition, there's a persistence of "frozen" perceptions that VOD is not an attractive ad platform, especially among ad agency executives.
"There's a lack of real understanding of the facts, as online video attracts the majority of the news," Fremont said. Among some industry executives, "VOD is still seen as a vehicle for promotion... and network tune-in."
The AMMP survey further showed the need for metrics that can be relied on by advertisers to understand the value of on-demand placements. There is limited visibility into consumer awareness and usage of VOD, as well as reactions to advertising in a VOD context -- indicating the need for better research.
"Agencies want better insights into VOD viewing," Fremont said.
Fremont called on industry stakeholders to engage in the AAMP initiative. "The future of VOD as a major media and marketing platform is waiting to happen. The question is, Are we willing to act on it?" he said.
The 20 executives interviewed in the AAMP survey were companies including A&E Television Networks, Cablevision-RASCO, CBS, Combe, Comcast, Digitas, Discovery, Fox, General Motors, Interpublic Group (IPG), Mediasmith, MediaVest, NBCU, Rainbow Media and Starcom.
An abbreviated version of the phase-one study, "Remaking Video-on-Demand to Deliver Media Value," is now available for download via http://aamp.blackarrow.tv.
"There was a clear sense among all participants in the study that VOD offers unique strategic advantages to service providers, programmers and advertisers," 4A's executive vice president Mike Donahue said in a statement. "At the same time there was widespread affirmation that VOD is advanced television -- not simply an alternate form of Web-based video, and as such requires specific agency approaches that maximize its value to consumers and the media industry."
Other AAMP participants include ABC, CBS, Comcast, NBC Universal, AETN, the Cable & Telecommunications Association for Marketing, Discovery Communications, Horizon Media, Intel, NDS and Rainbow Media.
AAMP's second phase will involve consumer research with a panel of about 1,000 people, employing a VOD research lab that "explores and validates consumers' responses" when engaging with advertising in simulated VOD versus traditional TV environments.
That study will begin in the next few weeks, with a focus on gauging reaction to different VOD ad loads, and is expected to be completed by the end of the summer, Fremont said.
In the third phase of the project, AAMP will conduct a field study to evaluate real-world results with a major cable TV operator with potentially multiple partners.