On-Demand Advertainment: Push Finally Comes to Pull

Apr 19, 2004  •  Post A Comment

As video-on-demand finally comes into its own, expanding to include content beyond boxing, movies and porn, advertisers are getting into the act with long-form advertainment-content that sells a product but is sufficiently appealing that customers want to watch it.
For instance, Cox Communications’ FreeZone experiment in San Diego offers ad-supported free entertainment, as well as long-form “advertainment” and commercial information that can be viewed on demand with full VCR-like functionality (pause, rewind and fast-forward). The on-demand advertising platform also includes permission-based follow-up interaction between advertisers and viewers who respond using their remote control.
“Traditionally, television advertising has been a push marketing medium, distributing information to as many people as possible,” said Billy Farina, VP of Cox Media. “With our on-demand platform, advertising is offered in a pull environment, with viewers choosing what information they are interested in.”
Automotive advertisers have been among the first to experiment with FreeZone. GM’s Buick used the platform last July and August to show a promo for its Rainier sports utility vehicles that featured golfer Tiger Woods. At the end, viewers were invited to ask for information by mail. GM wouldn’t reveal the level of response, but said it was a “higher than traditional rate” for direct response ads. Cox reported that direct response rates for FreeZone ads averaged 4.4 percent, at least twice as high as is typical for direct-mail efforts.
Volvo, which has bought some experimental on-demand ad spots from Cox, Comcast and TiVo, concluded that customers like these ads, in part because they enjoy being on the cutting edge. “Our customers are highly educated, high-income and the first to buy online. So forward-thinking campaigns on interactive TV really work for us,” said Phil Bienert, customer relations and e-business manager for Volvo.
The growing popularity of such ads is helping relieve networks and cable companies of fears about the threat that time shifting and interactive television pose to advertising profitability, said Hank Oster, senior VP and managing director of sales for Comcast Spotlight, the interactive division. That relief further encourages on-demand rollouts, he said. Current pricing is commensurate with what an advertiser might pay for a conventional 30-second spot, but opportunities down the road are increasingly promising, Mr. Oster said. “Video-on-demand extends brands much deeper into the consumer space and that gets everybody very excited,” he said.
Other companies that have experimented with ads on demand or that now have them in the works include pharmaceutical company Pfizer, Fidelity Investments, Anheuser-Busch, Kraft, RadioShack and BMW.
Comcast’s Mr. Oster said the approach advertisers seem to like best is a 30-second spot sponsoring an event or other programming that directs viewers to long-form, VOD advertainment programming. “It takes that passive spot and gives the viewer a call to action,” Mr. Oster said.
Tracking Users
Three companies offer the hardware and software that integrate VOD advertising into the production system: SeaChange, Concurrent Computer Corp. and nCube. All also offer the ability for a multiple system operator to present advertiser content on demand and track user behavior and response.
“We can track every activity, their neighborhood, how they watched in comparison to another neighborhood, whether they watched the whole thing-all the viewer statistics,” said Jay Schiller, senior VP of market development for nCube.
DVD emulation is the next piece of the puzzle, said Joseph Ambeault, director of broadband systems for SeaChange. Customers won’t need a DVD player because the software to play DVDs will be in the set-top box.
“It really changes the game as we go forward,” Mr. Ambeault said. Because almost every advertiser already produces DVDs that they hand out in showrooms and via mail, being able to use that same content without change for VOD is a whole different ballgame for advertisers.
“I think it will be a big breakthrough, making this approach much more robust without breaking anybody’s production budgets,” Mr. Ambeault said.
What’s slowing things down, of course, is the number of homes that have the hardware in place. Comcast is further ahead-it expects to have 10 million subscribers with a VOD-enabled box by the end of 2004, with 100 percent of its subscribers VOD-enabled by the end of 2005.
Cox already has plenty of proof that VOD advertising works for advertisers, said Debby Mullin, VP of marketing and new media, because it hired Frank Magid Associates to conduct research into FreeZone usage and attitudes.
Magid found that 81 percent of viewers said FreeZone provided additional value to their cable service. And Ms. Mullin boasts that some advertisers reported double-digit response rates.
“I see more and more advertisers investing in long form. I think it’s going to really hit its stride in 2005,” she predicted.