Broadcasters and advertisers have a symbiotic relationship, with broadcasters monetising their content through selling ad-space, and advertisers benefitting from the large captive audiences that broadcasters attract. While this relationship hasn’t changed much over time, the way ads are delivered has changed significantly. Additionally, viewing habits have also changed, and this is presenting both opportunities and challenges when it comes to ad insertion.
Advertising revenue is set to soar over the next 5 years, and many broadcasters and media companies are looking to extend their business model to either include, or to increase ad revenue. In this blog, we’ll consider how TV ad delivery and insertion has changed over time, reflecting on the challenges and opportunities that these changes bring.
The TV advertising process has come a long way since the 1940s when the first ad was broadcast. The emergence of new technologies over the last decade has created new ways to deliver and manage TV ads. Traditional TV viewing, where viewers watch linear format programming via cable, satellite or terrestrial digital, uses linear TV advertising with ads breaks inserted into the content at regular intervals. With this type of advertising, user targeting is limited to contextual advertising which shows ads that viewers of a particular channel or programme are likely to be interested in. Put simply, kids’ toys are advertised on kids’ channels, and home furnishings ads might be shown during programming about home improvement.
Linear TV advertising is limited in its ability to target users most likely to convert. The impact of ads is also difficult to measure. As viewing habits have evolved and other forms of ad insertion have emerged that allow for much more personalised and targeted advertising, it’s not surprising that the revenue generated from linear TV advertising is on the decline.
The growth in popularity of VOD services has changed the advertising landscape inexorably. Broadcasters had to adapt to falling linear TV ad sales as viewers spent less time watching traditional TV and more time watching VOD services, many of which were subscription-based, rather than ad-funded. More recently, the emergence of FAST services, together with the growing popularity of AVOD and hybrid subscription/ad-funded services are opening up new monetisation opportunities for broadcasters, who can monetise their content through ad-insertion on digital platforms.
Streaming technology also makes it possible for advertisers to engage with viewers on a much more personal level. With a connected TV platform for example, the proliferation of user data allows advertisers to not only precisely target audiences by buying ad-space in real time, but also accurately measure the impact of ad campaigns. This type of advertising insertion, known as programmatic ad buying, involves automatic bidding process for buying and selling of ad space so is a cost and time efficient way for broadcasters to maximise revenue from ad sales. Unlike linear TV advertising revenue, advertising spend on programmatic TV ads is soaring.
The widespread adoption of streaming has also paved the way for Dynamic Ad Insertion (DAI). This method is used to deliver ads to digital content either through client-side or server-side ad-insertion. Similar to programmatic ad buying, DAI allows advertisers to buy ad space in real time. The process for purchasing differs however, because DAI doesn’t involve automatic bidding, so gives advertisers more flexibility and control over ad placements.
With digital ad spend projected to increase year-on-year, the monetisation opportunities open to broadcasters and content owners are in abundance. Yet, digital ad space is only valuable to advertisers when broadcasters have got user data to enable personalisation, as well as the tools to easily allow advertisers to measure and optimise the performance of ads. Broadcasters can only maximise ad revenue if advertisers get top return on advertising investment.
For ad revenue to be optimised, it’s critical that ad-insertion tools are sophisticated, and fit seamlessly into the broadcast workflow. This in itself can be challenging, particularly with such complex workflows with many different components.
To maximise monetisation opportunities, broadcasters are continually looking to boost audience numbers. This will often mean expanding to new regions. Whether ads are being inserted into traditional broadcasting or streamed content, they need to be localised to ensure compliance with SCTE and all required regulations. This can be particularly challenging for broadcasters when content is distributed across multiple countries or regions.
Veset Nimbus is a feature rich SaaS cloud playout solution for advanced linear channel origination and management. It enables broadcasters, media content owners and service providers to create professional linear TV channels and deliver them to any television distribution platform from OTT to satellite.
Through Veset’s partnership with Ad Insertion Platform, Veset Nimbus users can originate professional linear channels and dynamically insert targeted server-side ads for live and on-demand content.
To find out more about Veset Nimbus, get in touch.