New York - Greater data transparency and easier to use navigation are among the factors that could unlock the true value of On Demand advertising, according to a panel of industry experts.
There is no question of VOD's popularity: 7.8 billion on-demand transactions were accessed by consumers last year, and each year the number grows. But, according to Cathy Hetzel, Rentrak president of advanced media and information, 74% of those transactions are free. While that means that the biggest revenue opportunity lies in selling advertising on the service, Hetzel, speaking at the B&C/Multichannel News On Demand Summit 3.0 here Wednesday, said the industry needs to be more transparent in the way it presents its data.
"This really is the only platform in any kind of media that has absolute census-based measurement - every click of the remote from every single cable and satellite operator is available," Hetzel said. "The measurement is there, now we just have to open it up."
Hetzel added that companies like her own, which extracts large amounts of information from set-top boxes, have to share that information with ad agencies and advertisers to show them the power of VOD. Secondly, Hetzel said measurement companies like Rentrak have to integrate themselves into the buying system -- particularly with data processing services like Donovan Data Systems, Media Bank and Strata that process media buying transactions for agencies.
Joe Rooney, Cox Communications senior vice president of brand marketing, advertising and social media, said the customer experience will be an important factor in driving VOD success, particularly an ability to navigate through VOD offerings more simply. Rooney said the pay-TV industry could take a lesson from its online competitors like Netflix.
"If you think about your own experience as a consumer, there is really terrific navigation through some of the online activities that you do," Rooney said. "They know you; they have recommendations that track more usage and which content you're likely to buy. Do you see that when you grab the remote to sit down and watch video at home? Probably not. But why is that? We are leaving the opportunity for others to take what should be the operator's greatest strength."
Rooney said the industry is making headway with iPad and Android apps that turn tablets into high-tech remotes. Cox, he added also is embracing social media on the recommendation front.
"Having friends recommend to friends is really powerful," Rooney said.
Kevin Smith, Comcast Spotlight group vice president of Spotlight integrated media sales, said the evidence points to viewers migrating to the VOD platform in growing numbers, but the business model hasn't quite caught up with it yet.
"The business model has to evolve between cable operators and network partners to facilitate deployment," Smith said. "The traditional business model has become complex."
Dynamic ad insertion- - the ability to place different ads at different times for different customers in a VOD stream -- has long been thought to be the Holy Grail for VOD. And though it has been slow to catch on, Smith said that once advertisers actually see it in use, it becomes an easier sell.
Smith said Comcast is conducting VOD trials which include dynamic ad insertion in Richmond, Va., and Pompano, Fla., with multiple cable nets to show programming partners just how effective VOD can be in selling products.
The response from advertisers has been very enthusiastic, he added.
"We have held back, we haven't taken this to market because we haven't had the technology, we haven't had the deals worked out," Smith said. "They're now worked out. Now we're ready to play."
BlackArrow's president, Nick Troiano, said the industry may need to step back a bit and figure out where VOD fits into the landscape. He added that the industry needs to know how to sell VOD advertising like a product, and package and present it to advertisers and agencies accordingly.
Smith had an even simpler solution: "Follow the impressions. Agencies buy impressions."