Over the last couple of years Smartclip have focused on dynamically inserting video advertising into both ‘traditional’ broadcast linear TV streams as well as VOD content. Here Ricky McClellen, CTO at Smartclip, explains how the technology works, how Smartclip is working with broadcasters and how dynamic advertising is perceived by broadcasters: is it an opportunity to ‘grow the pie’ or are they being forced to do it in order to keep pace with the digital competition?
Smartclip have been focusing heavily on integrating dynamic advertising into linear TV streams and VOD content. Could you explain how the technology works?
These technologies have quite a bit involved. For our technology, we have components that are installed on the broadcaster side which embed data into the multiplexed DVB stream. That data then allows a launch of our framework on the device side which manages the communication with our ad server. In this manner, we can synchronize the ad delivery with specific points in the broadcast stream.
Since the triggering, scheduling and constant event data is embedded in the actual broadcast, we are also able to work around situations of different delays in the different broadcast mediums (cable, satellite and terrestrial all have different delays and offsets…).
We have basically created a way where the broadcaster can provide real-time data to a framework loaded on the device that can coordinate and manage the ad experience in conjunction with the TV station viewing experience. The challenging in general is adapting an IP based world to the highly available world of TV across many types of devices (manufactures, models, year of model) which all have different capabilities. It is a very interesting problem to solve and has taken been in development for almost 2 years. The main challenging is delivering the ad at the right time to “fit” into the broadcast stream. And, of course, we needed to make sure that it could all be delivered via a programmatic platform (the SmartX Platform).
[As a lot of the terms are new, VAN asked Ricky to provide some links to resources explaining the terms for those you are interested in learning more] DVB covers the transmission of signals over cable, satellite and terrestrial channels as well as other attached technologies. The best place to look to understand the actual mechanisms behind everything that is part of DVB is at https://www.dvb.org/
So, must the content also be IP-delivered in order to serve ads into it?
No. The beauty of the work we have been doing is that it is specific to traditional broadcast (1-to-many) content. Of course we can still serve ads into content that is delivered via IP (like linear on demand, etc.), but that is the “normal” digital advertising scenario. It works much like PCs/Mobile/Game Consoles except for some issues around content encoding and enabling distribution.
We serve ads in all these cases. From a broadcast TV perspective, the transmission of the ad content is, of course, IP delivered, but with our technology we are able to inject it into the video/audio stream of the broadcast at the device side. The importance is that we can provide 1-to-1 ad delivery. With our relationships to the largest OEMs (LG, Samsung, Philips) we can provide quite a bit of insight into user consumption of content at the TV station level for those broadcasters who choose to work with us. For example: there are roughly 20% of the households in Germany for 2014 that are addressable through HbbTV, so a smaller broadcaster who is not highly represented by other measuring techniques (or maybe not even rated) can track the real reach and usage of by their audience through our technology. Of course, we can monetize that audience.
Would your relationship with the broadcaster be the same as an ad network relationship (i.e. are you aggregating and selling supply), or would they typically use your SmartX platform for direct sales?
You can group our relationship with the broadcaster into two main areas:
We will provide real reach and audience data for the general consumption of their broadcast content by their audience. This data is very significant and will allow the smaller broadcasters to become relevant in a traditional broadcast world that is typically dominated by 2 to 4 larger broadcasters. From a research perspective, it seems like the dominate broadcasters in a market have about 40-50% of the viewership, but somewhere between 80-90% of the advertising spend. That is usually a function of the fragmentation of the lower end of the broadcasting market and the inability of the advertiser to book the necessary reach efficiently.
We are representing these small to midsize broadcasters from a sales perspective by a) helping them reach national and international budgets which they have no access to at the moment b) providing protection for their premium quality content by making sure the value is recognized using our holistic yield optimization platform (the SmartX Platform) to get the best possible yield through a combination of direct sales and programmatic delivery and c. integrating their reach into an entire multiscreen proposal where an advertiser can buy video reach and audience across all platforms including broadcast TV.
How do broadcasters feel about introducing dynamic advertising? Do they see it as something that will ‘grow the pie’ or is it simply that they have to adapt in order to keep pace with digital competition?
Well, you have to look at the overall advertising market to answer that question. Over time, as traditional broadcast TV continues to have challenges with decreasing reach (especially in some target audiences), those audiences will need to be found somewhere else. Especially on TV devices, the more people use the interactive functionality that is provided by the connected devices (portals, apps, etc.), the less time they spend actually watching traditional broadcast TV, even though they are utilizing the same device.
So, that is time that is “lost” from a broadcast TV perspective when thinking about advertising and addressing the audience. Our technology allows for broadcasters to monetize that “lost” time in coordination with all other advertising on the device. It is natural that the traditional broadcast world and the world of IP delivered content comes together.
As we see more capability in higher density encoding utilizing lower bandwidth (especially in order to push new standards like 4k), that will also make the possibility of content over IP much more cost effective… so, for the larger broadcast world it will be “grow the pie” by bundling more capabilities together while also “protecting the pie” by keeping some control of the budgets they already receive. For the small to midsize broadcasters it is completely a case of “grow the pie” as they don’t get an equal share of advertising from their share of viewership. So, we aren’t just talking about the fragmentation of devices and content, but even the fragmentation of audiences within target groups and “time spent” in areas that are not addressed by the traditional broadcasters.
The broadcasters that more quickly move towards 1-to-1 advertising in the addressable space for their broadcast content will be able to participate in the aggregation of fragmented audiences. They will be able to fill the reach goals and provide efficient and effective advertising opportunities. The overall accuracy of the GRP model has probably been broken for quite some time, but the market has “priced in” that inaccuracy. So, buying reach through GRPs in traditional TV is very inaccurate buy highly efficient. So, knowing the relative inaccuracies means the efficiency gained outweighs the waste that is lost. IP delivered ads changes the entire model in broadcast TV and probably even requires a new way to measure.