December 18, 2006

On-Demand Paradox

Cable's on-demand platform is the ideal vehicle for advertising, but the industry's local nature impedes progress

By Pat Dunbar

I recently moved from the suburbs of San Francisco to the city. The same cable company serves both locations, so I called and asked if I could just take my set-top box, with its integrated DVR and a number of shows I had yet to watch, from one location to another. "No," was the response, in the nicest voice. "The systems are incompatible."

Advertisers find it difficult to navigate cable’s patchwork quilt of unique local characteristics, particularly when it comes to on demand, which has the potential to be a high-engagement, ad-friendly environment. As a result, it’s yet to reach its potential.

What changed about me? Nothing, in terms of my interests: All that changed was I moved 10 miles. This response reminded me of the situation a marketer faces when trying to advertise on the on-demand platform: Just when a marketer finds an on-demand solution that works, he or she often has a tough time rolling out ads on a large scale.

While we generally think of most television as a national viewing experience, for all sorts of reasons cable systems are locale based. On-demand ad features have evolved on a regional basis, with wide variations from system to system. However, consumers— and the preferences of consumers, which is what advertisers are interested in— are only marginally oriented toward their locale. Technology and mobility have enabled consumers to pursue their interests with less and less regard to where they live.

Advertisers, who naturally target segments of consumers based on interest areas, find it difficult to navigate the patchwork quilt of cable with its unique local characteristics, particularly when it comes to on demand. The irony is that over the last 20 years cable has spawned lots of interest-targeted channels. These channels are perfectly tuned to pairing interest-based ad content and drawing consumers in for the advertiser’s prize: engagement.

Yet on-demand interactive features have only been enabled on local ad avails. This means that as an industry, cable is losing out on potential revenue by not supporting the enabling of all ads in on-demand. Meanwhile, the world of media continues to diversify, and advertisers are presented with more and more ways of reaching their target markets. Each platform’s ability to attract advertising is based on two factors: the kinds of consumers served by that platform, and the ease of deploying ads (and verifying deployment) on that platform.

When asked at a recent Innovations in Digital Advertising Program meeting, "What would make you more likely to use on demand for your clients?" Demian Brink of the Martin Agency said, "Give me one person to call to place an ad." Alan Schulman of Brand New World added: "Two pillars of media are missing: consistent distribution and measurement."

On demand has the potential to be a high-engagement, ad-friendly environment. At the moment it is still a work in progress.

Pat Dunbar is president of the DiMA Group, which helps companies develop advertising strategies for on-demand and digital media.