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Explaining the value in dynamic ad insertion

19 September 2016
Explaining the value in dynamic ad insertion

What exactly is dynamic ad insertion (DAI)? A couple of years ago, this is a question I was asked an awful lot at IBC. My reply tended to generate one of two responses; glazed-over looks of detachment, followed by a handshake and swift exit, or wide-eyed enthusiasm as the dollar signs flashed up, but without much in the way of detailed follow-up after that.

Lately, though, the ‘what’ has been replaced by ‘how’. It’s a sign of how far broadcasters have come in the OTT world that most people I meet now are well aware of what DAI means. The next question, inevitably, contains the phrase ‘business case.’ The response to which is easy, as we shall see.

The OTT market is now showing signs of maturity, and many broadcasters are on their second or third generation of TV everywhere services. Those who have relaunched in the last 12 months or so have almost certainly promoted live simulcast to a prominent position. The reasons are, for the most part, two-fold: they’ve uncovered a huge appetite for live streaming, they’ve deployed DAI and realised its value.

I’ll come on to the value of DAI for live streaming in a moment, but first let me explain exactly what I mean by that phrase. I’m talking about a user experience that is equal to, or greater than, that of traditional linear television. The viewer reaches an ad break, the viewer sees an ad break, the viewer is returned to the programme. There’s no disruption in that process that the user can see, such as buffering, stream stalling or added latency.

I’m also talking about ads tailored specifically to the interests of the viewer. The nature of OTT streaming, where viewers tend to have a screen each, means that targeting can be personalised, adding significant value. This is increased further with a call-to-action that encourages interactivity, such as a button on the screen that opens up a browser window associated with the ad being viewed.

I’m assuming three elements are in place; excellent user experience; full personalisation; interactivity. The resulting experience is one that the user is very comfortable with because it reflects one they are already used to; that of traditional linear TV viewing. They simply press play and then sit back and enjoy being fed premium content. Every now and then there’s an ad break, in the same way there has always been with linear, and that ad break is now much more relevant and, in turn, valuable, than it was before.

We consistently see customer view-through rates topping 98 per cent for personalised ad breaks in simulcast. That figure is higher than commonly seen in traditional linear television, and is the biggest reason why an ad spot created by DAI in live OTT streams, with full personalisation enabled, is worth significantly more than its equivalent on linear.

Just how much value is added is hard to say. CPM rates don’t tend to be publicly available, but there have been a number of indicators published over the last few years that will give you a general idea. In one article in Campaign, the CPM for major linear television was quoted at around £5-6, compared to around £25-30 for OTT; the increase is not just substantial: it’s huge.

From the broadcaster’s perspective, the business logic is a no-brainer. The average viewing session for a live stream is around 30 minutes, more in the case of a live sports event. That equates to around a million new ad spots being opened up per 100,000 viewers. That’s an incredibly impressive return, especially considering it represents a brand new revenue stream. When scaled to major audiences that are counted in millions, the revenue potential is enormous.

It’s easy to understand why so many broadcasters are keen to promote live channels in their TV everywhere services. It is also an area that is so far untouched by the giants of the SVoD world, though probably not for long. With that in mind, it is crucial for broadcasters to stake their claim in the simulcast space now. They need to protect their long-term ad revenues as audiences continue to migrate online. There is also an opportunity to gain a foothold in a lucrative new market in a way they were unable to do with VoD.

As the sun shines on a summer full of sporting action in which online streaming records are broken again and again, it promises a record-breaking gold medal for broadcasters.

By Paul Davies, manager of communications, marketing and commercial, Yospace

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