Advanced Advertising for IPTV Services
Quarterly Technology & Content Report — November 2006
Published by MRG, Inc.
November 2006, 56 pages
Hard Copy Print Edition $1,995.00 US
PDF Single-Departmental License $2,995.00 US
PDF Corporate-Wide License PDF $3,995.00 US
The report is available free as part of MRG's IPTV Tracking Service
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To order click here or contact Rob Smith at rsmith@mrgco.com
Executive Summary
Advanced Advertising services are part of the third phase of an IPTV deployment program. These three phases consist of:
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Phase 1: Technology - Deploy the IPTV technologies and get the IPTV service into a scalable and operational state.
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Phase 2: Content and Marketing - Gather a compelling set of content, create packages and marketing programs that attract subscribers.
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Phase 3: Applications and Advanced Advertising - After a crititical mass of subscribers is achieved, then applications and Advanced Advertising services will be introduced.
This transition is important and will significantly change the revenue sources for IPTV services. In Phase 1 and Phase 2, 100 percent of all IPTV revenue will come from the subscribers. As the IPTV service providers move into Phase 3, they will start to move toward a situation where 50 percent of their revenue will be generated from subscriber revenue and 50 percent from advertising. This will clearly improve the business case for IPTV services.
The opportunity for IPTV Advanced Advertising strategies is being helped by the challenges that the advertising industry is facing today that have been created by the introduction of new technologies. The DVR is the most obvious challenge that has arisen in the last few years since TiVo introduced the first DVR device in 1999.
There has been rising mistrust and dislike of advertising by TV users. The DVR just gave viewers a way of acting upon that mistrust and dislike by providing a convenient way to skip ads as a by-product of time shifting TV programs in order to watch them at a more convenient time.
Table 1-1: Shifting Advertiser Strategies
Company |
New Strategy |
Procter & Gamble |
Cut broadcast TV ad budget by 5 percent and cable TV by 25 percent in 2004. |
American Express |
Cut TV advertising spending from 80 percent of total budget in 1994 o 35 percent in 2006. |
Verizon |
Increased Internet Ad spending from 3 percent in 2001 to 11 percent in 2005; scaled down broadcast TV spending from 33 percent to 20 percent during the same period. |
Ford |
Commits 15 percent of budget to Internet advertising. |
McDonald's |
Used to spend two thirds of budget on network TV, now only one thrid. |
Source:
Alcatel
The advertising industry is trying to fight the DVR by disallowing its ability to skip ads. This is not a strategy that will be effective for very long. There is an inevitability to technology that should be embraced rather than attempting to suppress it.
The opportunity for IPTV service providers is to help the advertising industry to develop new techniques and new business models that take advantage of new technologies to provide more interesting and more effective advertising to TV viewers. This report examines technologies and strategies that IPTV service providers can implement to accomplish this.
In fact, the telephone companies are well positioned to to offer Advanced Advertising services. The telephone companies already have strong relationships with the large enterprises that fund the advertising industry to create TV ads. The telephone companies are also major buyers of TV advertising, so they have considerable experience and expertise in TV advertising that they can bring to bear on these services.
Another advantage that the telephone companies have is that they tend to be national organizations. This is true in most countries in Europe and Asia, where both the incumbent carriers and the competitive carriers have national networks.
This means that an advertiser can go to the IPTV company or companies in these countries and create a comprehensive national campaign. The cable companies in or out of North America nearly always serve only smaller regions of each country. Often, there are multiple cable companies in each country that create a patchwork of coverage. It is difficult to create a national campaign across this patchwork.
This report is part of the IPTV Tracking Service published by the Multimedia Research Group, Inc.
Table of Contents
| 1 |
Executive Summary |
| 1.1 |
Cable Advanced Advertising |
| 1.2 |
Advanced Advertising Strategies for IPTV Service Providers |
| 1.3 |
Adding Advanced Advertising to IPV Services |
| 1.3.1 |
Service Issues |
| 1.3.2 |
Technical Issues |
| 1.3.3 |
Business Issues |
| 1.4 |
Opportunities and Recommendations |
| 1.4.1 |
Opportunities |
| 1.4.2 |
Recommendations |
| |
|
| 2 |
Cable Advanced Advertising Technologies and Strategies |
| 2.1 |
Status of Advertising in the U.S. |
| 2.2 |
Cable Technologies for Advanced Advertising |
| 2.2.1 |
Long-Form Ads |
| 2.2.2 |
Interactive Telescoping Ads |
| 2.2.3 |
DVR |
| 2.2.4 |
Integrated Ads |
| 2.3 |
Cable Strategies for Advanced Advertising |
| 2.4 |
Approaches to Advanced Advertising |
| 2.4.1 |
Cable Company A |
| 2.4.2 |
Cable Company B |
| 2.4.3 |
Cable Company C |
| 2.4.4 |
Cable Company D |
| 2.4.5 |
Cable Company E |
| |
|
| 3 |
IPTV Advanced Advertising Technologies and Strategies |
| 3.1 |
Adopting Cable Strategies |
| 3.1.1 |
On-Demand Technologies |
| 3.1.2 |
Interactive Technologies |
| 3.1.3 |
DVR Technologies |
| 3.2 |
Personalization and Targeting Strategies |
| 3.2.1 |
Advantages of IPTV Services |
| 3.2.2 |
Viewer Profiling Technologies |
| 3.3 |
Middleware Technologies |
| 3.4 |
VOD Targeting Technologies |
| 3.5 |
Broadcast Targeting Technologies |
| 3.6 |
TV Commerce Strategies |
| 3.6.1 |
PCCW's TV Commerce Strategy |
| 3.6.2 |
Itaas TV Commerce Software |
| 3.7 |
Network Impact of IPTV Advanced Advertising Technologies |
| 3.8 |
Effectiveness of IPTV Advanced Advertising Strategies |
| |
|
| 4 |
Adding Advanced Advertising to IPTV Services |
| 4.1 |
Service Issues |
| 4.2 |
Technical Issues |
| 4.3 |
Business Issues |
| |
|
| 5 |
Opportunities, Risks, and Recommendations |
| 5.1 |
Opportunities |
| 5.2 |
Risks |
| 5.3 |
Recommendations |
| |
|
| 6 |
Appendix I: Companies Interviewed for this Report |
| |
|
| 7 |
Appendix II: Case Study — Generating Cash with Local Advertising |
Table of Figures
| Figure 2-1: |
2005 U.S. Advertising Industry |
| Figure 3-1: |
Alcatel 5959 for Ad Insertion |
| Figure 3-2: |
Picture-In-Picture Ad Insertion |
Table of Tables
| Table 1-1: |
Shifting Advertisers Strategies |
| Table 1-2: |
Cable Advanced Advertising Techniques |
| Table 1-3: |
Timeline for IPTV Advanced Advertising Technologies |
| Table 2-1: |
U.S. DVRs, VOD Subs & Digital Subs — 2005 |
| Table 2-2: |
2005 U.S. Advertising Industry |
| Table 2-3: |
Cable Advanced Advertising Techniques |
| Table 2-4: |
Cable Company A's Advanced Advertising Strategies |
| Table 2-5: |
Cable Company B's Advanced Advertising Strategies |
| Table 2-6: |
Cable Company C's Advanced Advertising Strategies |
| Table 2-7: |
Cable Company D's Advanced Advertising Strategies |
| Table 2-8: |
Cable Company E's Advanced Advertising Strategies |
| Table 3-1: |
Personalization and Targeting Strategies |
| Table 4-1: |
Timeline for IPTV Advanced Advertising Technologies |
| Table 6-1: |
Companies Interviewed for this Report |
Advanced Advertising for IPTV Services — November 2006 is 56 pages and is available in a printed English language edition for $1,995.00 US, a PDF single-departmental license for $2,995.00 US, a PDF corporate-wide license for $3,995.00 US and is available free as part of MRG's IPTV Tracking Service. For more information or to order the report, contact Rob Smith at 408-453-5553 or rsmith@mrgco.com.
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