Open Mic: Path to addressable ads goes through virtual zones
Virtual zoning makes sense in the march toward personalized advertising.
Cable operators continue to look for ways to enhance TV advertising, which has remained a valuable source of income with an annual growth rate of around 5 percent. Today’s economic climate requires any new initiatives, advertising-related or otherwise, to keep capital and operational expenditures to a minimum while offering shorter payback periods.
The migration path from today’s zone-based advertising to the end goal of TV advertising – one-to-one addressable advertising, which entails interactivity, accurate measurement and national coverage – has a necessary intermediate step: virtual zoning. Virtual zoning leverages infrastructure already in place to give operators the ability to deliver increased granularity with a scalable and migratory path to implementing fully addressable advertising in the future.
In taking the next logical step beyond the coarse targeting that today’s ad zones provide, MSOs need to be able to match a specific ad version with a greatly reduced number of households. This ability to match a small number of versions needs to offer a greater level of household granularity – also known as virtual zoning. The main advantage of virtual zoning is its ability to provide operators with additional addressability and revenues with modest capital expenditure requirements.
One approach to implementing virtual zoning is to leverage existing narrowcast infrastructure already in place for video-on-demand and switched digital video and apply it to linear advertising. Virtual zoning allows MSOs to send each narrowcast group of households (service group) a dedicated feed from the splicer. This gives MSOs the ability to match ad versions to a level of 500 to 1,000 households, instead of the 50,000 households provided by today’s ad zones. The key advantage here is that within a service group, there is still only one copy of the channel, and therefore there is no additional spectrum required for increasing the targeting granularity, nor are there changes required on the set-top box side.
Virtual zoning is also flexible. It is not dependent on the deployment of SDV and can be applied to systems with or without it. Virtual zoning can perform both SCTE 30 and SCTE 130 insertions within the same channel, allowing operators to gradually migrate inventory from zoned to more virtual zoned – or more granular – delivery while protecting current revenue streams.
While virtual zoning does not provide the full addressability potential for cable, it is a good intermediary step that allows for a gradual migration to what many consider the end goal for cable advertising – linear unicast, or full one-to-one addressability.
Full addressability means being able to match ad versions to subscribers on a household or tuner level. In order to provide complete one-to-one addressability without complex integrations in the set-top box, MSOs will need to transition to a unicast stream delivery model. Delivering a dedicated stream to a subscriber allows for placement of specific ad versions, or even customized ad versions, per subscriber. Linear unicast also allows for other video personalization enhancements, such as personalized overlays, mosaics, messages and tickers.
Linear unicast is based on SDV technology. When a subscriber switches to a channel, the set-top box requests the tuning information for that channel from the SDV server. The SDV server, in conjunction with an Edge Resource Manager, decides whether that request should be fulfilled using a shared stream (multicast) or a dedicated stream. For a dedicated unicast stream, the process is similar in nature to the creation of a VOD session from a VOD server through an edge QAM.
Linear unicast changes the bandwidth allocation model for cable from the traditional supply model, based on the number of channels offered, to a demand model that is based on the number of active tuners. This allows MSOs to gradually migrate their channels from multicast to unicast over time, selecting specific channels, or even specific tuners, for unicast while keeping the remainder in multicast.
As operators advance their advertising offering and approach full ad addressability, they must gradually migrate from their existing zone-based infrastructure to a full unicast delivery model while maintaining revenue streams and minimizing their capital and operational expenditures.
Virtual zoning allows the industry to take advertising forward, while at the same time offering increased addressability with low capital expenditure requirements and with no need for additional spectrum. It is a natural next step on the path to linear unicast. SDV was originally deployed by MSOs to reclaim spectrum and allow for the introduction of new services, but it has now evolved to become a powerful tool for reporting and a vehicle for migrating from multicast to unicast – otherwise known as personalized television.
Next month, SCTE Board Chairman Tom Gorman,
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