Dynamic ad insertion has long been the darling of industry conferences, papers and trade rags. However, we’ve seen very little of the technology actually deployed, and now the advertising world is in a tumult for other reasons. First there’s the issue of people skipping commercials with their DVRs, and second there’s the fact that online video sources are increasingly competing for consumer attention.
When Motorola closed on the acquisition of Terayon last week, one of the things the company got was a fully-formed technology platform for digital ad insertion. (Motorola has done its own work in this area, but Terayon’s has been much higher profile.) Sound like a waste of money? Hardly.
The future of ad insertion has to be looked at from both a short-term and a long-term perspective. In the short term, television advertising still retains significant power. Despite gloom-and-doom accounts, the reality is that only 24% of US households have DVRs today, and we won’t break the 50% mark until next decade. And, according to Nielsen, 93% of audiences still prefer TV on a TV set, rather than on a PC or portable media player.
In the long term, television advertising is going to change significantly, but ad insertion will play a role in that evolution. Advertising embedded in VOD programs is sure to grow, as is interactive advertising where promotional content is made available to consumers willing to click a button on a menu. Both of these technologies will depend on dynamic ad insertion to increase their value. Think Google ads for your television.
It’s not clear exactly how television advertising will evolve or on what timeline, but you can bet people will pay big money for the technology to make it work.