Discovery Rolls Out VOD

Sep 6, 2004  •  Post A Comment

In one of the most anticipated video-on-demand rollouts, Discovery Networks planned to begin delivery Sept. 3 of 75 hours of on-demand programming each month across its 14 networks in a content slate that will be teeming with a dozen advertisers who are eager to use the high-profile launch as a mean to test consumer interest in VOD ads.

In fact, Discovery has landed 12 well-known advertisers for its on-demand service. They include Best Buy, Kohler, General Motors, Chase, Remax, Marriott, Allstate Insurance and Pfizer.

The launch of the service, initially with Comcast, is significant because Discovery has lurked on the on-demand sidelines for so long, though it is one of the most desirable TV content brands. Discovery On Demand will include past episodes of popular series “American Chopper” and “Monster Garage” from Discovery Channel and “Trading Spaces” from TLC.

Delay Paid Off

Two years ago Discovery announced plans to launch several types of on-demand content, including various free, subscription and advertiser-centric packages, but quickly abandoned those plans to focus its new media efforts on Discovery HD Theater. That decision appears to have paid off, since the HD channel has now secured carriage with nearly all major cable operators and satellite providers. In addition, the stall in launching VOD may indeed have been prescient, since this month’s rollout of the service occurs in an advertising climate that is much more receptive and eager to experiment aggressively in VOD than two years ago, when VOD was more of a technology in testing.

Discovery On Demand initially will include billboards and 30-second spots baked into the content, because dynamic ad insertion isn’t ready yet that would allow ads to be swapped out or changed on the fly.

“We think there is something here,” said Manning Field, first VP, brand management, at Chase Manhattan Card Services. “We don’t know if Discovery’s approach versus others’ is the right one. We are willing to invest the resources to understand that.”

In return, Mr. Field and the other advertisers expect to receive some usage data. That’s a critical issue for advertisers and ad-supported networks because without information on how consumers use VOD content, marketers won’t invest in the platform.

Discovery’s advertisers should receive aggregated usage data for total views per day per show, but probably won’t receive information yet on whether commercials were skipped. “I would rather get more macro numbers,” Mr. Field said. “The more critical learnings are the big-picture ones. I think the more strategic questions are around consumption and what’s viable.”

He hopes to be able to make a more informed decision about continued VOD spending by next year’s upfront.

That’s because Chase, like many other marketers, is casting a critical eye on its network spending and is reconsidering where its ad dollars have the greatest traction.

“Where our network ads have failed is the shotgun approach. That doesn’t work for us,” Mr. Field said. “I am not sure if the answer is VOD either, but I think the right answer is going to be a series of seven to eight opportunities-Internet, VOD, new technology and the old way of doing things.”

Pfizer is also taking its maiden VOD voyage in the Discovery on-demand service, said Scott Grenz, director of media for Pfizer’s consumer health-care division. “We want to start to get some knowledge about what the upside is and it really represents a start for us,” Mr. Grenz said. “At this point in time we have a hypothesis that this is someplace we need to be.”

Aggressive on Advertising

Discovery is by no means the first ad-supported network to deliver a free VOD offering that includes ads. Turner’s CNN and Cartoon Networks, the Scripps Networks and A&E, among others, include ads in their offerings. But Discovery has been the most aggressive in seeking the ad community, Mr. Field said.

Mitch Oscar, executive VP at Carat Digital, counts Chase and Pfizer among his clients in the initial round of Discovery On Demand. Advertisers are interested in the VOD medium because more viewers are migrating to watching TV on-demand and marketers need to follow the consumer behavioral patterns, he said.

Next year Discovery On Demand will likely count four to six advertisers rather than 12, because it wants to work closely with them to create more tailored ads as VOD advertising evolves, said Clint Stinchcomb, senior VP, Discovery HD Theater and VOD.

Brands that advertise in quality on-demand content will reap the benefits, said David Ernst, executive VP and director of futures and technology for Initiative Media. However, while it’s a natural first step to deposit tried-and-true 30-second spots into VOD content, the risk is that consumers become conditioned to watching the same old ads in the new on-demand medium, he said. He expects advertisers will be better positioned within a year or two, armed with usage data and new creative, to dispatch the next generation of messaging-long-form branded content for the VOD platform.