Forecast: VOD Ads Are Slow to Take Off

On-demand forms of digital television represent an underserved channel for advertising, according to forecast released by Mediabrands research unit Magna.

The forecast defines advanced TV advertising formats as Video on Demand (VOD), requests for information (RFIs), long-form showcases, DVR advertising, interactive program guide advertising, addressable advertising, creative versioning, and advanced trafficking systems.

Advertising revenue on advanced TV is expected to stay flat this year at $138 million. In 2010 the segment is likely to increase to $168 million. The projected increase is attributed to improvements in infrastructure and an increase in inventory.

The report compares advanced TV to mobile advertising, pointing out that both are fragmented. “It reflects a collection of widely varying media types all centered around one key consumer device,” the report states.

The report also compared advanced TV to online video — each involves proactive consumer viewing of traditional TV creative assets. But advanced TV is still consumed in a lean back manner, unlike online video.

One of the major cable providers, Comcast, reports it has some 17 million subscribers with VOD access; the group consumes 150 million hours of VOD content per month over approximately 300 million VOD assets.

While advanced TV, including VOD, has been promoted for several years, it has yet to be efficiently sold. Fragmented cable franchises and satellite TV services make the platform a local buy or at least a media buy with each individual cable provider.

Canoe, an advertising partnership between several major cable firms, will potentially address those challenges by selling across cable operator inventory. At the same time it should allow media buyers to more accurately target audiences. Canoe has formed a deal with Mediabrands, which Magna is part of.

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