According to a recent report by Cisco, internet video will account for 91 percent of all consumer internet traffic by 2014. Historically, short clips and video-on-demand (VOD) have accounted for this growth, but the study also indicates that live content will account for 8 percent of consumer traffic.
Extrapolating from these numbers and using eMarketer's forecasts as a guidepost, of the $5.2 billion spend on internet video advertising in 2014, around $379 million will be on live video. Whether it's the success of Hulu, the "stream now" model that Netflix has embraced, or the availability of live content such as MLB.tv or the NCAA Tournament, rights holders and broadcast networks are beginning to see that online content augments traditional business models. Now the business models and technology exist to help content owners fully realize the monetization potential of all types of live content.
Major League Baseball is clearly an innovator in the space, driving a reported $500 million in annual revenues. Roughly half of that comes from seasonal subscriptions and the rest comes from advertising. Major League Baseball Advanced Media (MLBAM) supports digital viewing experiences across a wide variety of platforms, including the iPhone, iPad, laptop, and even a set top box like the Roku. What differentiates this content from its broadcast brethren? The ability for viewers to touch the content, interact with it, and share it with friends.
While MLBAM has the ability to charge a subscription fee for its content, not every rights holder has that luxury. March Madness On Demand from CBS Sports is another example of how viewing habits and business models have evolved in the broadcast space. Not only does this annual event drive some of the largest streaming traffic numbers, it also generates the lion's share of annual digital revenues for CBS.
Additional success stories for monetizing live content include NBC's online coverage of the 2010 Winter Olympics as well as its Sunday Night Football Extra, which allowed viewers to choose between multiple camera angles and watch instant replays.
The common theme with these examples is that they all adopted a hybrid monetization strategy consisting not only of traditional banner ads, but also in-stream advertising models that are similar to what you would see in a broadcast setting. Let that sink in. Utilizing the same advertising components as they do for traditional broadcast, these organizations have been able to derive additional revenue from the digital components. For small incremental capital expense, the broadcaster can create infrastructure that will deliver significant returns on investment for years to come.
Moving toward better monetization of live content
There are a few reasons to insert an ad specifically meant for content that's being distributed over the internet. The primary reason is that if a broadcast feed containing an ad is simply encoded, then distributed, and viewed on the internet, that ad impression can't be measured according to standards established by the Interactive Advertising Bureau (IAB). The IAB has set up a number of guidelines to help standardize audience measurement and reporting, which is an important step in attracting big name advertisers to the medium.
Display ads may bring in a few digital dimes, but what if we could offer broadcasters the flexibility to replace the ads in a TV broadcast with different content that's more appropriate for the online audience watching the streamed version?
Previous experience tells me that the reluctance to deploy more live content is based on the operational cost of delivering it with little or no opportunity to monetize. Again, not every content owner has the resources of an NBC or CBS or the scale and profile of the Olympics or March Madness. However, as the technology and workflow necessary to insert advertisements into live video and to target consumers has become more commonplace, organizations of all shapes and sizes can better monetize their live content.
This is the real promise of internet advertising. Ad serving technologies excel in targeting consumers with relevant messaging, allowing networks to monetize each view of every piece of content as effectively as possible.
For example, while a national Coke advertisement plays in a live TV broadcast, an ad for discounted tickets to a Dallas Mavericks game would run for Texas-based viewers watching the same live content online. Alternatively, another online viewer in a different geographical area might see an ad unit for a local Ford dealer. Furthermore, once the live content is repurposed for on-demand consumption, new ads could run in place of those that aired during the original broadcast, allowing the same ad opportunities to be monetized repeatedly.
Steps to internet ad insertion for live video:
- Detect ad opportunity: The method for this often varies by content or by content provider. Some broadcast signals contain markers (SCTE-35 /104) that can be used to automatically detect ad opportunities. If the content does not contain these markers or if the content is less predictable (as with live sports), operations staff can monitor a feed and mark ad opportunities as they arise.
- Remove broadcast ad: If you're repurposing a broadcast feed that contains advertising, oftentimes it's necessary to remove that ad. This can be accomplished with a slate, which blacks out the original ad.
- Insert new ad marker for internet ad: At this point it's necessary to insert a marker for the new internet ad. Different rich media platforms, including Apple, Adobe's Flash, and Microsoft Silverlight, call for different ad markers.
- Detect the new marker: Use internal development resources or work with a partner to build a video player that responds to the new ad markers.
- Insert new ad: The video player should detect the new marker, and make a call to a third-party ad serving company, which will help target ads for viewers.
Other tips and tricks:
- Make sure that ad inventory and reporting mechanisms adhere to IAB standards. If you can't verify viewing numbers with third-party accounting, it's hard to justify your CPMs to potential advertisers.
- Use enterprise-grade streaming appliances. This is a live event. You have one chance to wow your audience, so you can't afford any downtime.
- Adaptive bit rate is your friend. Adaptive bit rate streaming ensures that end users are watching video at the highest possible quality for their network connection and computer.
- Don't skimp on bit rates for ads. Make sure the video quality of ads matches the quality of the live content. A lack of continuity will result in a poor user experience.
On Twitter? Follow iMedia Connection at @iMediaTweet.