The shift in consumer viewing habits is driving major advertisers to redirect ad dollars toward OTT-based streaming services. A new study from Advertiser Perceptions reports that 51% Of advertisers intend to increase spending on video – up 10% from a year ago. Digital video will be a major part of this.

We know that advertisers are typically willing to pay higher CPMs for those ad avails because HTTP-based OTT services offer advanced advertising and personalized targeting capabilities. Being able to segment viewer groups of interest while offering viewers more relevant content is a win-win.

This is a utopia we’ve talked about in the ad-tech business for years now. What’s changed is that we’re finally seeing it come to fruition, driven by competitive markets, content that wants to be everywhere, and viewers calling more and more of the shots.

BIG STRIDES HAMPERED BY SEPARATE SILOS

TV ad revenues have declined as traditional (UDP-based) broadcast and cable TV distribution workflows struggle to match the hyper-targeting capabilities of emerging and established digital platforms. In an effort to adapt to changing consumption habits, realize network efficiencies and recapture this lost income, many national broadcast and cable companies have built out a parallel IP-based OTT workflow. This has opened the door to opportunities around delivery of branded content, along with targeted, personalized ads, to an audience that continues to grow.

There’s a problem, though. The need to maintain separate, siloed infrastructures—one feeding UDP legacy audiences and one feeding HTTP/IP-connected devices—has put these traditional providers in a bind. While the IP infrastructure is trending and brimming with many new revenue possibilities, traditional service providers must still support the long-standing business model of sending video to QAM-based set top boxes and infrastructure until they are eventually replaced with IP-compatible technology.

A LEGACY OF OPPORTUNITY COSTS

Many such service providers do not believe they can justify the cost of switching tracks from UDP to HTTP workflows, especially in light of declining ad revenues. Stuck in this paradigm, they face persistent pain-points, like:

• Higher costs associated with operating parallel workflows
• Continued investment in dead-end, proprietary UDP legacy hardware, like ad splicers and encoders
• Redundant efforts, such as managing advertising insertion in multiple ways
• Inefficiencies, such as the lack of a unified, multi-screen advertising sales effort
• Inability to fully capitalize on HTTP’s virtualized, Commodity-Off-The-Shelf (COTS) based, and cloud-based workflow that could save operational overhead
• Inflexibility to advance proprietary hardware on the legacy side as rapidly as is possible with software-based solutions
• Missing out big-time on personalized advertising capabilities, such as the ability to insert targeted, personalized ads and other content into UDP transport streams serving traditional TV and set top box audiences

Imagine a solution that’s cost-efficient, easy to deploy and doesn’t disrupt the legacy workflow. One that provides a return on investment covered by increased ad revenues. Imagine Communications is working with service providers to deploy just that: a unified distribution architecture that adds a UDP Gateway onto the HTTP workflow. It converts the adaptive bitrate IP stream over to an MPEG-2 transport stream at the edge of the video distribution network. When combined with other complementary Imagine monetization products, video service providers, and MVPDs can insert dynamic advertising over legacy infrastructure and set top boxes to generate higher revenue with more focused audience zones. For programmers distributing national ads, now they can regionalize these ads and increase monetization.

The next blog in this series takes a closer look at how this HTTP-to-UDP Gateway solution can be implemented, followed by an overview of the business benefits posed by this next-generation solution.