Stations Grapple With Internet-Advertising Pipe

New delivery services consume bandwidth, labor
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At the same time that standard-definition syndicated delivery services are being overhauled in favor of new high-definition systems, local broadcasters are increasingly contending with a new delivery method for commercials. The television industry's broad shift over the past decade from tape-based ingest, storage and playback to file-based, server-centric operations has paved the way for advertisers to deliver commercials as files over the public Internet, either on their own by using basic FTP (file-transfer protocol) technology or through third-party firms.

Commercial “catch servers” from DG FastChannel and others have long used an Internet backchannel to confirm the receipt of files sent via satellite and to repair minor errors. But now advertisers are using the Internet as their primary ad-delivery pipe. While that reduces costs for advertisers compared to sending tapes or paying delivery firms like DG FastChannel, it creates new burdens for stations.

“The problem we're running into now is that everybody and their brother wants to put a commercial up on their FTP site for you to get,” says Del Parks, Sinclair's VP of operations and engineering. “But you're using your bandwidth. So what happens is they shift the cost to the TV stations.”

Besides dedicating expensive broadband bandwidth to receiving the ads, station personnel have to actively seek a file of a commercial and then download it, a time-consuming task. In most cases, they then have to use their own hardware and/or software to transcode the file to match the MPEG-2 file format used by their play-to-air server.

Parks and other broadcast engineers say that FTP workflow is a big step backward from DG FastChannel's Spot Boxes and other ad-delivery servers used by stations today; these servers automatically receive commercials and transfer those files to playout servers under the control of traditional broadcast automation systems. And they worry that the public-Internet delivery trend will keep accelerating, perhaps eventually extending to longer-form content such as syndicated shows. That could force them to upgrade their broadband speeds and curtail other uses for their bandwidth, such as using the Internet to share content between stations or pull news from the field.

“We're getting faced with a lot of ad agencies that will not deliver content via satellite anymore but only over the public Internet, and that's painful,” says Raycom Media CTO Dave Folsom. “We're already faced with national advertisers, and I'm sure the program-length stuff, the paid programming and syndicated programming, is not far behind. It's like a pizzeria saying that they want to continue to be in the pizza delivery business, but you'll provide the driver and the car.”

A number of Internet ad-delivery firms have sprung up in the past year as advertisers have looked to cut costs, including Extreme Reach, Hula Media Exchange and Rapid Transmit. Cable giant Comcast has also gotten into the game, unveiling its own Internet-based ad-delivery service that it will market to both cable operators and broadcasters.

“A whole lot of services have been springing up out of the weeds,” notes Ardell Hill, Media General's president of broadcast services. Media General has done some initial testing with Extreme Reach and other new Internet-based services, but hasn't yet received any meaningful volume of commercials through them. The station group already uses its broadband bandwidth to transmit graphics files between stations, and it is concerned about the potential impact of Internet ad delivery as it scales up.

To some degree, the FTP trend is “self-inflicted pain,” Hill says, as stations have moved away from commonly used tape formats like one-inch tape to a variety of different vendors' video servers and corresponding file formats. That can makes it harder for smaller advertisers and other content providers to figure out how to deliver their product to stations.

“Be careful what you ask for,” Hill warns. “We got ourselves into an environment where file transfer is the call of the day. Whether it's a large finance or IT data file, or a large video file, managing bandwidth is a real significant issue.”

The transcoding tools from vendors such as Telestream and Rhozet, which are required to handle files delivered in a different format from stations' playout servers, can also be an expensive proposition. The Telestream systems that Media General uses run anywhere from $13,000 to $20,000 per device, depending on configuration, says Matt Heffernan, general manager of Media General's central broadcast operations in Spartanburg, S.C. As Heffernan points out: “It can get expensive real quick.”

Extreme
Reach, which officially launched in January, has raised nearly $6 million in
venture financing and signed up 30 national advertisers including Geico, Hanes
and UPS. Extreme Reach says it is
well aware of broadcasters' concerns over Internet ad delivery. The Needham,
Mass.-based company has tried to make the process easier for stations by
pulling commercials from post-production houses and storing them in cloud
storage until a station needs them. It also transcodes the files with whatever
file wrapper a station needs for its playout server.

This
method represents a leap forward from the hardware-based architecture used by
DG FastChannel, says Extreme Reach CEO
John Roland, who was president of FastChannel before it merged with DG Systems
in 2006. "It's an all-software model," Roland says. "The post houses [export]
right out of their editing stations into the system, and the TV stations ingest
right into their automation system. It's not just an FTP site. This is a very
secure system with immense storage capacity that is highly fault-tolerant."

Sinclair
has used Extreme Reach extensively with good success, according to Parks. "What
we like about those guys is they adhere to standards," he says.

Moreover,
Extreme Reach compensates stations for using their bandwidth to support the
delivery of ads through the Extreme Reach service. According to Roland, it pays
stations 50 cents per each standard-def spot they receive, and $2 per HD spot.
Several broadcasters say that level of compensation from Extreme Reach doesn't
come close to covering their bandwidth and operational costs. But Parks
disagrees. "That is a very fair business proposition," he says.

Denver-based
Comcast Media Center (CMC), which
encodes and transmits VOD content
to headends across the country and also originates a number of cable networks,
has been using its own bandwidth to electronically deliver commercials and
promos to cable headends since mid-2007. Seeing a broader opportunity in the
commercial distribution market, last October it spent $5 million to acquire
asset-delivery firm Radiance Technologies; Radiance has patented technology for
performing large data transfers over the public Internet and serves aerospace
and automotive companies as well as media companies and advertising firms.

In
June, CMC announced Radiance
AdDelivery, a software-based system that will deliver commercials over the
Internet. While CMC's ad-delivery
business has primarily been limited to cable headends, it hopes that Radiance
AdDelivery will attract broadcast customers as well.

"Our
intent and our goal is to have every one of the broadcast stations connected up
to this network, so our customers, the ad agencies and post houses can use us
as an alternative to deliver content," says CMC
Senior VP and COO Gary Traver. "We
understand why some of these folks have gone to other alternatives [for ad
delivery], and we think we have the right kind of solutions for the problems
they're having."

E-mail comments to glen.dickson@reedbusiness.com

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