Fox Hopes to Roll Out VOD Dynamic Ad Insertion on Comcast - Broadcasting & Cable

Fox Hopes to Roll Out VOD Dynamic Ad Insertion on Comcast

Plans to follow testing that will begin in July
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Overshadowed by all the new programming announcements Fox
made during its Monday upfront presentation was the mention by Toby Byrne, the
network's sales president, that Fox wants to roll out dynamic ad insertions for
all marketers into all of the network's video-on-demand programming on Comcast by
January 2014.

Byrne says the plan is to begin testing of dynamic ad
insertion—which means replacing dated commercials in VOD programming with newer
ads—beginning in July with a select group of advertisers. Nielsen has the
ability to measure VOD viewing and Fox would begin selling the service to all
advertisers about four months into the 2013-14 primetime season.

Byrne says the deal for Comcast to allow the insertion of
new ads after three days and to disable the viewers' ability to fast-forward
through the commercials of those programs was reached when Fox agreed to its
new retransmission contract with the cable operator in February.

Comcast is the first cable MSO that Fox has reached an
agreement with on dynamic ad insertion, but Byrne says there could be a few
additional deals in place with other cable MSOs by fall 2014.

According to Comcast, in 2012, it delivered 2.4 billion
hours of VOD programming from all sources. Fox's animated hit Family Guy
was the second most-watched TV show on Comcast VOD. Some of the
networks are currently delivering shows with commercials in programming
run via Comcast systems that can be measured by Nielsen and count toward its C3
(live-plus-three-day) ratings. However, after three days, the commercials
viewed become valueless to the networks that can no longer monetize them.

Dynamic ad insertion changes that since fresh ads can be
inserted into older VOD programming and those new ads can then be measured and
monetized.

Other networks have been experimenting with dynamic ad
insertion into VOD programming with assorted MSOs. NBCUniversal has been
working with Comcast, while ABC has a deal with Cox. But Fox hopes to roll out
a system by January where it can sell dynamic ad insertion packages
for its VOD programming to all marketers for all of its shows as part of cross-platform
packages.

"It's something we've been looking at and talking about
doing for several years and we are finally getting it rolling now," Byrne says.
"Our goal is to get the same capabilities as we have now for our online video ad
insertion on Fox.com and Hulu."

Byrne says the rollout beyond Comcast will be slow, since
new deals will have to be done with each cable MSO as new retransmission deals
come up. "While our deal with Comcast is done, we are talking to lots of other
cable operators," Byrne says.

He said ads will be dynamically inserted into all of Fox
programming except for The X Factor and American Idol, which have
episodes available on VOD but not for the extended periods other shows do.

Dynamic ad insertion into VOD programming is particularly
important to movie studios and retailers who want to reach consumers within a
certain time span. However, Byrne says in discussing the plan with clients, "we
have plenty of advertisers who have shown an interest in participating." He
says a small group of marketers will be selected for testing this summer and
into the fall and that Fox may also use some of its own program promotional
spots as tests.

In addition to the technical side of inserting the new ads
into the programs, an important part of the test process will be audience
measurement and the ability to break out VOD viewership of the new inserted ads
by demo.

"This should be attractive to advertisers
because it is appointment television for the viewer," Byrne says. "Viewers are
choosing the programs they want to watch, when they want to watch them,
launching the programs themselves and the fast-forward mechanism is disabled so
the commercials will be there to watch. In a perfect world, VOD will become a
bigger piece of the way audiences consume our programs relative to DVRs."

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