Blog | Content & Streaming Providers
March 6, 2015

Demand for DAI growing across linear and VOD TV platforms

Todd Porch, Vice President, International

As Light Reading’s Alan Breznick observed last month, there are a number of signs that dynamic advertising insertion (DAI) is beginning to take off.*

A review of 2014 found the number of viewable VOD ad impressions increased dramatically during each quarter last year, jumping from 803 million in the first quarter to over 2.6 billion by the fourth quarter. Advertiser categories represented in 2014 DAI placements included the auto, QSR, financial services, consumer electronics, pharmaceutical, toy, shipping, hospitality, food, health & beauty, fitness, theatrical, retail, home improvement, beer & wine, spirits, and U.S. Armed Forces categories.**

The sharp uptick in the use of DAI technology illustrates its expanding role in enabling advertisers to insert their marketing campaigns into media placements available via archived VOD content. Rentrak reported 66% of broadcast primetime program viewing occurs after the third day of its original airing. The ability to insert timely ads across all episodes of a TV show represents “the opportunity to generate untold millions in additional advertising dollars for VOD.”***

Advertisers are using DAI to place ads on linear television as well as VOD content. This development illustrates DAI’s importance in supporting advertiser demand for what is referred to as “programmatic” ad buying. Essentially, programmatic buying represents a highly automated system that allows advertisers to make near real-time media buying decisions by using “big data” to help them project results for an ad avail and determine how much they should pay for it.

The industry is already beginning to respond to the demand for automated media buying. In January, ESPN became one of the first TV networks to sell part of its spot inventory via programmatic advertising.**** To illustrate how media providers like ESPN can actually benefit from programmatic selling, a recent posting by Lost Remote uses the example of selling an ad avail in the fourth quarter of the Superbowl to the highest bidder at the end of the third quarter. As the posting observes, “ESPN certainly does not have an inventory problem. What they see, then, is the potential for programmatic advertising to command much higher prices on the open market – not lower prices.”*****

On the flip side of the inventory spectrum, utilizing unsold slots, or “remnant” inventory, to increase impressions, can salvage campaigns that are under-producing over time.

When we consider the processes required to deliver and insert that ad in such a short time frame, we appreciate the importance of DAI technology to the future of television advertising. In a “TV Everywhere” world, where ads will be delivered across multiple platforms for both linear and on-demand viewing, in near real-time, the ability to dynamically insert advertising will be fundamental to optimizing the value of each ad avail for content providers and advertisers alike.