While the world waits for interactive advertising to arrive,
video on demand commercials get no respect and generate little revenue.
To remedy the situation, the American Association of
Advertising Agencies and advanced advertising technology provider BlackArrow
have formed the Advanced Advertising Media Projects, a research project that
will measure the impact of commercials airing within free VOD
Also joining AAMP are companies representing all sides of
the TV business, including A&E Television Networks, CBS, Comcast, Digitas,
Discovery Communications, Horizon Media and Rainbow Media.
AAMP is starting out by finding out what top executives in
the media business think about VOD. Early
results of that research find that VOD has a
perception problem across the industry, said Nick Troiano, president of
BlackArrow. Despite that "everyone believes it's coming and everyone has
identified 2011 as a tipping point year for dynamic ad insertion," Troiano
Last year, there were 7 billion programs viewed via free VOD,
according to Rentrak. Despite the large number of views, ad revenue was only in
the $100 million range.
A major problem with VOD
advertising has been a lack of flexibility because commercials had to run for a
full month and couldn't be adjusted as marketing conditions changed. With
dynamic ad insertion, ads can be inserted into video streams at the last minute
in order to insure that they are appropriate for the content, the viewer and
the advertiser. Dynamic insertion means VOD
advertising can be addressable and interactive.
Troiano added that the study found that "unlike other media
there is not a lot of data about who the free VOD
consumer is. "One of the key things that will need to happen is a lot more
market understanding of who actually watches free VOD
across the cable operators."
A full report is due in a few weeks.
After getting industry input, AAMP will set up a VOD
media research lab to observe consumer experiences with advertising in
simulated VOD and linear environment.
Phase three of AAMP's effort is a real-world, live
"As consumer viewing trends evolve, agencies are seeking
clarification on how best to integrate numerous TV viewing platforms into their
media buys and optimize value for advertisers," said Mike Donahue, executive VP
of the 4A's. "By working together with industry leaders on the AAMP initiative,
we will be able to gather and analyze data that that supports research-based,
strategic decisions around advanced VOD
Troiano said that enthusiasm for other forms of interactive
advertising won't hurt the adoption of VOD
advertising. "It's not a question of which one will win first or which one
matters more. I think they're both complimentary to the advanced advertising
ecosystem," he said.