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Survey: Free VOD advertising has bright future, but work needs to be done

Wed, 05/11/2011 - 8:10am
Mike Robuck

Advertising in free video-on-demand can emerge from its nascent stage into a game-changer for the various stakeholders in the TV ecosystem, but there's plenty of work to be done in getting there.

This morning, the Advanced Advertising Media Project (AAMP) released the results from the first phase of its survey. AAMP was formed earlier this year – with BlackArrow and the 4A's as the co-founders – to figure out better ways to monetize free video-on-demand TV programming.

In order to form a better understanding of dynamic advertising strategies for free VOD, AAMP embarked on a three-phase approach. The first phase was designed to provide a level-set understanding of industry perceptions and opportunities related to dynamic VOD advertising.

Phase one of the study included more than 20 in-depth interviews with media industry thought leaders, including A&E Television Networks, Cablevision-Rasco, CBS, Combe, Comcast, Digitas, Discovery, Fox, General Motors, Interpublic Group (IPG), Mediasmith, MediaVest, NBCU, Rainbow Media and Starcom.

"There was a clear sense among all participants in the study that VOD offers unique strategic advantages to service providers, programmers and advertisers," said Mike Donahue, executive vice president of the 4A's. "At the same time, there was widespread affirmation that VOD is advanced television – not simply an alternate form of Web-based video, and as such requires specific agency approaches that maximize its value to consumers and the media industry."

The study found that while the VOD advertising platform had a huge upside, it's currently hampered by a lack of established business practices, including a defined set of metrics to help advertisers understand the value of on-demand ad placements.

The study also said that full-scale research was required to gauge consumer awareness and usage of VOD, as well as reactions to advertising in a VOD context – where little visibility exists today.

An abbreviated version of the detailed phase one study is now available for download from the AAMP website.

The second phase, which is underway, is focused on engaging consumers in simulated VOD and linear environments, with results available later this summer. The second phase, which will end in June, comprises 500 consumers in Los Angeles and 500 in New York City.

Phase three, an in-market test, will employ the collected media lab data as a basis for comparison with real world results in a live consumer trial. The live consumer test will take place in late summer and will include cable operators.

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