New York — Canoe Ventures is gearing up to launch
a national advertising platform for video-on-demand
later this year that will represent a “pragmatic” approach
to monetizing billions of free VOD views, said Arthur Orduña,
Canoe Ventures chief technology officer.
“It is clear that VOD is a huge, yet unrealized, opportunity
for all of us in this room,” he said.
Orduña added: “We must fi gure this out or the train will
leave the station without us. … Our Darwinian driver is not
just survival of the fittest. It’s the appeal of lovely, filthy lucre.”
Orduña delivered the afternoon keynote, “Making
Real Money With VOD: Increasing VOD Monetization
Via a Standard Industry Platform,” at last week’s On Demand
Summit 3.0 here.
Canoe, the joint venture of the six largest U.S. cable
operators, is currently in the “crawl” stage, having identified and started to assemble the pieces necessary for
national VOD dynamic ad insertion, he said. The service
will use the systems and processes MSOs already have
in place, with support for multiple ad management and
ad-decision systems.
“We want to make it easy for ecosystem participants to
say ‘yes,’ ” Orduña said. “The complex reality of the business
demands we be smart and realistic about deploying this
system. We are not interested in disrupting what MSOs and
programmers are already doing with their carriage deals.”
As part of the pragmatic approach, Canoe initially will
allow for the replacement of ad loads in free on-demand
assets, while “in time, it will also grow to meet additional requirements
at scale for advertising served based on the way
buyers and sellers can more easily accommodate,” he said.
Later in 2011, Canoe intends to test the VOD dynamic
ad insertion stewardship
platform, first in the lab
then in the field. As part
of that, the company will
standardize and normalize
process and reporting
for VOD DAI; establish operations
requirements for
commercial launch; and
test out the end-to-end
flow of processes necessary
to replace ads in VOD
assets on a national basis.
Imagine if the cable
industry were able to
generate “just a single
dollar of ad dollar for every currently unmonetized VOD
view — the mind reels,” Orduña said. “If we have learned
one thing from online video, it’s that people will tolerate
advertising if they get to watch what they want to watch,
when they want to watch it.”
Last year, according to measurement firm Rentrak, operators
served approximately 5.8 billion free VOD views, representing
74% of 7.8 billion total VOD transactions; the firm
does not report what portion of those included ads.
Orduña acknowledged that it has been incredibly difficult for the cable industry to make money from ad-supported
free VOD, for a variety of reasons.
Among those he cited: lack of accepted business models;
content owners’ reluctance to offer premium content
on free VOD; and the fact that cable operators have
deployed disparate VOD back-office systems in standalone
silos.
“There are key operational and technical reasons why
a market for free on-demand advertising does not exist,”
he said. He pointed out that cable networks have systems
for monetizing video content for every platform at scale —
except cable VOD. One of the next issues for the industry
to tackle is to figure out the “structure, ownership and
valuation of new on-demand inventory,” Orduña said.
He urged programmers and cable operators to work
“collaboratively and quickly” to get the business frameworks
in place that will enable national VOD ads. He also
called on advertisers and ad agencies to work with on-demand
ad inventory owners to expand their campaigns.
“Together, I think we can take the practical, pragmatic
steps forward to create a national VOD advertising market,”
Orduña said.
