On-Demand Nets Vie For Own Ad Meet

Feb 6, 2006  •  Post A Comment

The video-on-demand business will have its own advertising upfront this spring if several VOD networks have their way.

Three networks that distribute their programming exclusively via VOD-Anime Network, RipeTV and Music Choice-are working on initiatives to fashion a marketplace for VOD ad buying and selling this year.

Anime Network may hold an upfront in March. The popular video-on-demand outlet that essentially provided the business model for VOD-exclusive channels after launching in VOD’s infancy in 2002 is beginning to create a consortium with other like-minded nonlinear networks, such as Studio 4 Networks, to set a standard for advertising sales.

Emily Olman, national advertising manager for Anime Network, said she’d like to create standards for the way VOD ads are valued, such as by cost per thousand impressions, unique impressions or guaranteed impressions.

Today, most VOD advertising is sold on a cost-per-impression basis. The problem with doing business based on impressions is that programmers arrive at the count in different ways. An impression could mean an ad has been viewed in its entirety or in part. It can also mean two bookended ads were lumped together as one impression.

What’s more, whether as part of a consortium or on their own, VOD executives are likely to meet some resistance to the idea of a VOD upfront from advertisers and agencies, who like the freedom and flexibility of the loose way VOD business is conducted today. That’s primarily because the lack of common ground gives advertisers leverage and flexibility.

“There are great inefficiencies in the ITV/on-demand advertising marketplace right now … that a savvy advertiser can take advantage of to achieve favorable pricing and sponsorship elements,” said Rob Aksman, director of creative development for BrightLine Partners, an ITV and on-demand marketing firm that has placed VOD buys for Unilever’s Axe and for Reebok.

The range of pricing models means VOD programmers and operators are competing with each other for advertiser dollars, and that’s good for the advertiser, he said.

Standard pricing would also hamper the biggest benefit that VOD advertising holds for advertisers: creativity.

The benefit of VOD is that advertisers aren’t boxed in by 30-second spots. They can try different lengths and types of creative as well as sponsorships and integrated messages, Mr. Aksman said.

Having a blank slate is useful for now as the business evolves, but as VOD advertising becomes more mainstream there will need to be standards and practices to give agencies a consistent way to evaluate all VOD channels, said Mike Bologna, partner and director of emerging communications at media agency Mediaedge:cia.

Several efforts to organize VOD ad sales are emerging simultaneously.

Ryan Magnussen, CEO of Ripe, said he’s working to create an on-demand upfront that would enable buying and selling of advertising in any type of on-demand content. That would include not just VOD but also broadband and mobile TV. He envisions it taking place as part of the traditional broadcast buying upfront.

Music Choice said it is approaching this year’s hot ad-selling season as a chance to gets its own message in front of advertisers in advance of the commitments that usually begin in April and May. Small networks like Music Choice need to find ways to get noticed amid the upfront buying fray, said Christina Tancredi, senior VP of Music Choice, which has seen its viewership increase by about 20 percent in the past six months to between 25 million and 28 million views per month.

Anime Network is working to devise a VOD upfront for March to get the ad community to commit more dollars in 2006, Ms. Olman said.

Anime Network reaches 22 million VOD homes. That’s nearly fully distributed because VOD reaches about 23 million digital cable homes total, according to Leichtman Research Group. Anime is offered on an ad-supported basis in 17 million of those homes.

Unlike a Discovery Networks or Turner Networks, which have both traditional and VOD content, VOD-exclusive channels live and die by VOD. A network like Music Choice or Ripe must succeed in the VOD space and can’t fall back on a linear counterpart.

That’s another reason agencies are working to educate themselves about such networks. Mediaedge:cia has invited several nonlinear networks into its New York offices in the last few weeks to meet the agency’s national broadcast buyers, Mr. Bologna said.

He’s the point person for new media advertising, but wants the traditional TV buyers to get to know the players in VOD since VOD advertising dollars will increasingly come from traditional TV budgets, he said.

“If this is going to go mainstream, the people who run the business are going to have to be the ones who get involved,” he said.

The fact that various sectors of the VOD advertising business are actively working toward more collaboration and education suggests that VOD advertising will continue to move forward meaningfully this year and that more ad dollars will move into all of VOD, including non-linear VOD networks.

So far, Ms. Olman’s upfront camp includes Studio 4 Networks, which is launching its ad-supported VOD network-with fitness, kids and educational content-to more than 10 million homes in early March.

Ed Stansfield, CEO of Studio 4 Networks, would like to work with other networks to offer a package of VOD content to advertisers across several VOD networks.

“At a minimum we can pool best practices, standards and the upfront,” he said.

Offering a package of networks could help grow the VOD advertising business as it solves one of the big hurdles of VOD for some advertisers-a smaller audience than traditional TV, said Braxton Jarratt, senior VP of marketing and business development at Tandberg Television, a technology firm offering VOD advertising solutions.

“You could aggregate a buy and get a bigger audience across networks and demographics and geographies. Especially in the early days of VOD advertising, that’s important,” he said.

Ripe’s Mr. Magnussen is not fond of standards for pricing, but he does believe the market is ready for an on-demand upfront. Ripe has already sold out its inventory through the first half of this year.

“The on-demand upfront needs to happen this year. The advertising market is very robust right now around on-demand,” he said.

Mr. Magnussen envisions a centralized marketplace for buying, selling and education about on-demand media across different platforms. But he said he wants it to exist within the regular upfront because that’s when buyers are ready to do their dealing.

Some buyers would prefer that too.

Mitch Oscar, executive VP of Carat Digital, said a separate upfront should not be created by fiat, but rather should evolve naturally. Deals will occur in the same fashion they have so far- on a case-by-case basis, he said.

He pointed out that progress still is being made to incorporate new media deals into the agency buying framework. For instance, national broadcast buyers are including VOD as part of larger buys on linear networks and local buyers are starting to incorporate interactive ads into their local spot buys.