Linear TV has long been the benchmark by which all advertising has been measured against. There is a well established valuation system (Nielsen) as well as a well established sales workflow process and finally a well established ad-content licensing process (where the ad breaks are,
types of breaks - national, regional or local, how long the ad breaks are etc).
Schedule based
Dynamic Ad insertion
Dynamic Ad insertion (DAI) involves an Ad Decision System making the decision on which ad will be placed AT the time that the ad is aired. To take the above example of Tuesday at 9:00 PM you won't know for sure which ad will be placed until 9:00PM. Instead a number of ad campaigns are running at the same time and a number of different factors can influence which ad is actually placed. Some of the key factors are associated with targeting the "right" ad for the right user group based on demographic data, geographic data etc.
Differences in MSV
Multiscreen Advertising for linear video is different for a number of reasons:
1. There is no established valuation system for the advertisement spots in the linear schedule in MSV.
2. Sales workflow process could follow the traditional schedule based process. It could also be sold as completely campaign based Dynamic Ad insertion or a mixture of both.
3. The right to content delivery to Multiscreen devices is still being negotiated. There are some "content everywhere" deals (such as the ones that Netflix recently negotiated) but overall this is an evolving process.
4. For real time linear content delivery the current format and length of ads seems applicable. For catchup TV, only pre-rolls and mid-rolls seem to be valuable. The duration of the break is decreasing in catchup TV.
5. Targeting opportunities are greater for MSV Linear ads.
6. Interactivity opportunities are greater for MSV ads.
Value of an MSV ad insertion
So this begs the following questions:
1. For pure ad replacement what's the value of the linear ad on a Multiscreen non TV device?
3. What increase in value will occur for increased interactivity of the ad?
This will be another topic that I explore in much more detail in future blogs.
For the current transition that is occuring from pure re-transmission (here is the model as I see it progressing multiscreenadvertising-evolution ) of linear feeds to replacement of ad inventory the current schedule based ad insertion will work. However, as we start moving to the increased addressability/targeting phase there will be a lot more value that can be obtained for the ad placement by using a DAI model. Thus at this point a blend of schedule based and DAI will come into operation. I suspect that there will be a inverse relationship between the value of the ad break(based on the premium content) and the amount of DAI that will be used.
Inverse model for DAI in linear ad insertion
This will happen for a number of reasons :
1. Content deals for the highest premium content will be the hardest to negotiate and thus staying with current model will be preferred in the short-term.
2. For low value ad slots (middle of the night or remnant inventory) there will be a greater return in trying to optimize the yield.
3. Experimentation will be preferred on the lower value ad slots...the downside risk is far lower.
4. Remnant inventory is already being experimented with for DAI placement in the traditional linear space.
The inverse model for DAI versus current linear ad value is depicted pictorially below.
Over time many of the factors that are influencing this trend will become less and less relevant and a blend of DAI and schedule based ad placement will become the norm. However this is going to take a few years.......
Schedule based
Traditional linear ad sales are based on a schedule based process. What is a a schedule based ad sale? Pretty straightforward....at the first break between 9:00 pm and 9:15 pm on Tuesday an ad will be placed on X channel for a national or local ad insertion. The sales force sells the date/time of the ad spot. The valuation is based on the content that is being aired (if its during the Superbowl there is a HIGH valuation..... $3.5 Million this year!!Superbowl 2012 ad Value 3.5 Million ) and calculated based on the final
Nielsen rating, extrapolated to the specific market. For example, if network
NBC does a 10/15 share, and New York TV market is 6.5% of US TV market, then the
New York’s Nielsen rating is 10 times 6.5% = 0.65/15.
Dynamic Ad insertion
Dynamic Ad insertion (DAI) involves an Ad Decision System making the decision on which ad will be placed AT the time that the ad is aired. To take the above example of Tuesday at 9:00 PM you won't know for sure which ad will be placed until 9:00PM. Instead a number of ad campaigns are running at the same time and a number of different factors can influence which ad is actually placed. Some of the key factors are associated with targeting the "right" ad for the right user group based on demographic data, geographic data etc.
Differences in MSV
Multiscreen Advertising for linear video is different for a number of reasons:
1. There is no established valuation system for the advertisement spots in the linear schedule in MSV.
2. Sales workflow process could follow the traditional schedule based process. It could also be sold as completely campaign based Dynamic Ad insertion or a mixture of both.
3. The right to content delivery to Multiscreen devices is still being negotiated. There are some "content everywhere" deals (such as the ones that Netflix recently negotiated) but overall this is an evolving process.
4. For real time linear content delivery the current format and length of ads seems applicable. For catchup TV, only pre-rolls and mid-rolls seem to be valuable. The duration of the break is decreasing in catchup TV.
5. Targeting opportunities are greater for MSV Linear ads.
6. Interactivity opportunities are greater for MSV ads.
Value of an MSV ad insertion
So this begs the following questions:
1. For pure ad replacement what's the value of the linear ad on a Multiscreen non TV device?
- Same as traditional linear?
- Less than traditional linear?
3. What increase in value will occur for increased interactivity of the ad?
This will be another topic that I explore in much more detail in future blogs.
For the current transition that is occuring from pure re-transmission (here is the model as I see it progressing multiscreenadvertising-evolution ) of linear feeds to replacement of ad inventory the current schedule based ad insertion will work. However, as we start moving to the increased addressability/targeting phase there will be a lot more value that can be obtained for the ad placement by using a DAI model. Thus at this point a blend of schedule based and DAI will come into operation. I suspect that there will be a inverse relationship between the value of the ad break(based on the premium content) and the amount of DAI that will be used.
Inverse model for DAI in linear ad insertion
This will happen for a number of reasons :
1. Content deals for the highest premium content will be the hardest to negotiate and thus staying with current model will be preferred in the short-term.
2. For low value ad slots (middle of the night or remnant inventory) there will be a greater return in trying to optimize the yield.
3. Experimentation will be preferred on the lower value ad slots...the downside risk is far lower.
4. Remnant inventory is already being experimented with for DAI placement in the traditional linear space.
The inverse model for DAI versus current linear ad value is depicted pictorially below.
Over time many of the factors that are influencing this trend will become less and less relevant and a blend of DAI and schedule based ad placement will become the norm. However this is going to take a few years.......
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