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Advertising Advantages of Video on Demand

6 min read


Chris Pizzurro, product, sales and marketing chief

This post is sponsored by Canoe.

Video on demand is a growing category for cable providers and programmers – it offers consumers the same convenience as a DVR, while in many cases restricting ad-skipping to ensure that programmers aren’t losing out on value. Video on demand also has advantages for advertisers, including an engaged audience and accurate, fraud-free reporting

Canoe, an advertising technology company formed by top cable providers, powers much of the video on demand advertising landscape. In this interview, Chris Pizzurro, product, sales and marketing chief at Canoe, discusses the current video-on-demand ad market, how VOD ads stack up against TV and digital video, and the potential for advances in targeting and programmatic buying and selling of VOD ads.

Question: Canoe in November announced it had served its 10 billionth ad impression. How did you get there and what does it mean for the company?

Chris Pizzurro: We got there by focusing our efforts. Canoe started with a “venture” approach — invest in many areas and see what sticks. Eventually, our customers told us video on demand dynamic ad insertion (VOD DAI) could help them the most, so that is where we focused our efforts on a few years ago. We are happy to say that two years after inserting our first ad, we hit that 10 billion ad-insertion mark.

What that means is that advertisers are finding that VOD DAI is a good investment for them. We not only see new advertisers trying VOD, but more importantly, we see them returning for a second and third time, and returning with bigger impression goals and budgets. And we are seeing campaigns from a diversified group of categories, including retail, studios, QSR, auto and telecommunications. VOD is seen as a safe investment for a wide variety of brands.

Q: Advertisers often talk about taking a unique approach to each advertising channel. What sets VOD apart from linear TV as well as digital video? How should advertisers think about VOD as an ad platform?

CP: VOD DAI has all the impact of prime-time TV with the accountability promise of digital — the best of both worlds without their negatives. Simply, it is measureable engagement. As with TV, the VOD viewer watches mainly on a large-screen TV in the living room and has made a conscience decision to engage in that TV episode. And like digital, the advertiser is getting back reporting based on viewed ad impressions and not from a sample. Advertisers get all this with the brand safety they need, knowing they are investing in high-quality, premium programming from the top TV networks. And data show that consumers watch the commercials in VOD. On average, viewers watch 28 minutes of a 30-minute episode on VOD, compared with 20 minutes for linear TV and 23 minutes for DVR. With VOD viewing at about 7% of TV viewing, advertisers can now get all of these benefits at scale.

Q: Viacom chief Philippe Dauman says he wants to move away from revenue tied to Nielsen ratings and toward more dynamic ad insertions, among other options. What do you think is driving that trend, and how can advertisers and programmers both benefit?

CP: This statement is recognition of the shift in consumer behavior and TV viewing. As national TV networks have made their content available on multiple platforms, consumers have found value in that flexibility, and in many cases advertisers are reaching those eyeballs. They already see the benefit right now. It is the programmers that need to make sure they get paid for that viewing; otherwise consumers and advertisers could see the quality of programming go down because it’s not making enough money to produce quality programming. By providing an accurate, fraud-free, verified count to each viewed ad in VOD DAI, Canoe now provides the data for national programmers to trade on VOD on with the advertisers. It compliments and adds to measurement from folks like Nielsen, Rentrak, and ComScore. But advertisers have to be careful about what other options they choose. VOD does not have any of the well-documented fraud issues associated with digital advertising. Since VOD operates on a closed cable operator infrastructure, the “bad guys” cannot get in. Not every digital medium can say that.

Q: How can dynamic ad insertions help advertisers who are targeting specific demographics?

CP: There are two ways to approach VOD DAI targeting today, in line with how traditional cable TV advertising has been bought and sold for years, being “national” and “local.” An advertiser can buy “national VOD” the same way and from the same people they buy TV from today, such as CBS, NBC, Scripps and Viacom. They can target by network or by group of networks, across categories such as time of day, day of week, series and genre. This is powered at scale by the Canoe platform, which is in 30+M households across 29 of the top 30 DMAs. The demographics are the same age/genre targets TV is bought on today.

However, national programmers and advertisers are stretching the boundaries a bit. For instance, Scripps tagged episodes with “summer barbeque” in the metadata of all their various programs that had barbeques in them. This allowed ad sales to go out and sell the outdoor category, and Canoe had an efficient way to steward the campaigns. There is also “local” VOD ad inventory that, while available on a smaller scale, it is able to target to more specific audiences. This is available from the traditional local TV sales teams such as Comcast Spotlight or Time Warner Cable.

Q: Do you expect an industry-wide shift toward programmatic buying of ad placements to have an impact on your business?

CP: Yes. Right now it is a lot of talk for programmatic video, with most people conducting business as an “unwired” network, meaning paper or Excel spreadsheet. However, with the proper business rules in place, programmatic buying/selling of video ad placements makes sense from an efficiency point of view for specific clients with specific goals.

Canoe currently has a technology interconnect with campaign managers from FreeWheel and Google DFP, whereby they send Canoe insertion orders and we provide reporting back in an electronic fashion. This is the first step to programmatic. We are now talking with programmers, agencies, clients and other third-party technologists about how to take more steps towards efficiencies, while not sacrificing the quality and safety of the VOD DAI platform.