The market is finally primed.

Jeffrey SherwinCable has steadily pursued dynamic ad insertion (DAI) to achieve better ad targeting and monetization. There have been learning moments along the way as vendors and operators have worked to make DAI a reality in different ways. One key learning that has come from this initial work – and will open up a significant business opportunity for existing and start-up players alike – is that the next phase of DAI needs to be built on campaign management systems (CMSs) that can process ad inventory from both Internet and cable systems.

DAI is important for cable because of what it offers: the ability to replace stale ads with fresh ones that drive more revenue, sophisticated measurement of individually (and partially) viewed ads, and true targeting to any audience grouping. While DAI activity has been primarily confined to VOD environments, this is changing as cable rolls out IPTV and TV Everywhere services, where DAI is just as applicable and valuable.

A key component in every DAI deployment has been the CMS, which analyzes available ad campaigns and makes the most profitable placement decisions. In unicast environments, this means a decision for every space and for every device, as opposed to every local linear channel.

As cable DAI systems were being put into place, the Internet was successfully expanding from search and display advertising to video ads. This introduced a new set of CMSs – except these were built for the Internet environment. This Internet-only focus was due, in part, to there not being enough unicast stream volume and DAI inventory in cable to justify playing in that space, as well. So it went, with the cable and vendor communities developing their own systems that were largely separate, yet tackled similar issues. Some cable CMS vendors took steps to jumpstart the industry by developing end-to-end DAI systems. Their focus was on speed to market with cable reliability, not on building a CMS for every platform and for every player.

A turning point and promise of a new way
DAI has steadily moved from experimental to early revenue stage, with the cable operators and programmers now recognizing opportunities for improvement. First, each group has online divisions with systems that perform similar functions and are usually less costly to operate. Because both the operators and programmers have ad inventory on multiple video platforms, cross-platform functionality in the CMS can optimize yield on each platform if the inventory is sold and managed together.

Additionally, cable operators and programmers don’t want to be pressured into using each other’s CMS of choice, which was a path that “the old way” was making inevitable. History suggests that the desire to use different systems will increase as the video CMS business matures. Programmers require different features and functionality in their traffic systems than cable operator local media sales divisions, and there will certainly be an increase in differentiated feature requests from each of those groups, and then again factions within each.

For all of these reasons, it’s become clear that it is time to retune CMS strategies instead of delaying and later having to do the equivalent of dismantling and reassembling a plane once it is already in the air with everyone on board.

The cable industry has worked to separate back office switching fabric from the CMSs to more easily work with multiple vendors and partners. It’s the strategic sourcing movie we saw before with VOD, only this time, all of the constituents realize that an open routing and placement opportunity information service (POIS) layer will avoid the painful unbundling of vertically integrated solutions down the road. The stage has been set, and the compatibility between Internet and cable has matured sufficiently, where cable systems are now technically capable of handling both systems. With the barrier to entry lower, Internet and cable campaign managers can interoperate natively.

Taking the next step
On both the cable and Internet side, the road has been littered with various CMSs from various vendors, while the business steadily but surely matured. Now, with IPTV, TV Everywhere, VOD, nDVR, VAST and SCTE 130 on solid footing, the market for a diverse range of CMSs has never been greater.

There’s an unprecedented opportunity to embrace multiple ad environments and compete on innovation, performance and pricing. There’s also a clear need for new technology and ideas in a changing landscape that demands innovative vendor products. The existing or emerging vendors that come to market with open and agnostic CMSs will experience the most success in this new environment. Yes, our industry is taking the next step toward the true promise of DAI. Only this time, we have the experience and lessons learned to nail it.


Next month, Ramin Farassat, RGB Networks’ vice president of product marketing and business development, will write about multi-screen VOD advertising.