As screens have gotten smaller and easier to use – whenever and wherever we want – we’ve traded the quality of the TV viewing experience for the choice and convenience of anywhere, anytime access on computers and phones. And while the appeal of convenience cannot be underestimated, it turns out choice is the killer application. In a world of too much of everything and too little time, being able to choose what you want to watch, listen to, or buy – when you want it – is a game-changing proposition.

This is particularly true for the Millennial generation, the 18-24 year olds who’ve never had a landline telephone, never researched a paper without a search engine and never sat through an entire televised ad unless the soundtrack was sick. For Millennials, everything they’ve ever wanted or needed has always been a keystroke or channel-surf away.

TV and ad execs have been hard-pressed to adapt to Millennial style. Millennials don’t watch TV ads – certainly not the hallowed 60-second spot. They’re more apt to generate their own content about products that interest them or their friends, blogging, creating short-form videos and using social networks such as MySpace and Facebook and social media tools like Twitter to exchange information. This self-absorbed and deeply referential environment creates unprecedented challenges for brand marketers, advertising agencies, and broadcast TV and cable operators charged with linking need and product in a 15 or 30-second interaction.

In this difficult environment, video-on-demand (VOD) may be the best tool for presenting consumers with marketing messages and choice. In fact VOD – available to 75 percent of digital cable subscribers in the US, according to estimates from Forrester Research – is driving a profound effect in viewership among the Millennial generation. VOD hands choice back to viewers without cutting out advertisers and marketers, unlike most time-shifting technologies such as direct-to-video recorders (DVRs).

DVRs, which allow viewers to decouple TV viewing from network schedules and advertising, support a variety of ad formats, from traditional embedded ad spots to ad overlays, bookends and even long-form, on-demand ‘showcase’ ads that deliver information and some degree of interaction. What is missing is the AdWord-style clickable link between the traditional ad and the showcase – the sweet spot for VOD advertising, and the way in which, as Forrester’s Josh Bernoff has observed, VOD can finally deliver an advertising model that makes sense for viewers and advertisers.

How will this work? VOD advertising has the potential to marry the immediacy and interaction of the Internet, the location sensitivity of the mobile phone, and the deep content of cable and network TV programming. From the much-reported Sunflower project in Kansas to Virgin Media’s recently-announced dynamic advertising trial, VOD brand marketers and advertisers can now see their ads inserted in real time around selected on demand programs.

Challenges to finding relevant content

Unlike the interrupt-driven Internet, TV’s immersive experience encourages viewers to lean back and relax into the environment, while computer users lean forward and continually shift focus. Increasingly, however, families are placing a laptop in front of the TV screen to take advantage of the Internet while channel-surfing in an effort to avoid the challenging user interface of electronic program guides. As tech-savvy viewers search for interesting content on their computers before they turn the TV on, advertisers suffer. The mass-spectrum model of advertising fails with these sophisticated viewers who come to TV with a viewing agenda and a strict timetable. What’s needed is a way to deliver relevant content, at the right time, to the right viewer, with relevant advertising messages that link interest, intent and action. One solution: an advanced advertising ecosystem, powered by technology that exists today, that joins content owners/publishers – the networks and cable operators – with media buying agencies and their advertising clients who are willing to take the bet that reaching audiences on the best screen in the house is the right move today, not in ten years’ time.

Not The Man, but My Man

The web is the fabric that will tie this ecosystem together at the user’s level of perception. Powerful new social media tools are in the works – some in test deployments – that allow viewers to personalize the TV experience. The tired 50s model of family viewing of proscribed network content – content selected by ‘The Man’, the suited network executive – will be replaced by content suggested by ‘My Man’ – the viewer’s network of friends and social media contacts.

In trials of VOD delivery systems today, the addition of recommendation engines and social-media style components is enabling viewers to create a personalized viewing experience informed by choice, not dictated by broadcast or cable schedules. Although this new world order for TV might seem to put operators, advertisers and content providers in conflict for ad dollars, it actually opens up the prospect of cooperation for those who see the value of the ecosystem. Because a good percentage of viewers who are more invested in watching through VOD have proven to be willing to watch advertising during VOD segments, new measurement systems of ad effectiveness – for example measuring viewership up to three days after the show is recorded (live-plus-three) or, in some cases, seven days after the show is downloaded (live-plus-seven) – are taking hold.

Addressability is Key to Choice

With VOD and other time-shifted, self-selected viewing, consumers are making choices about what they view and when, choices that operators can mine for deep information about consumer preferences. What programs did they choose to watch? How many times did they watch them?

Addressable advertising allows those in the TV ecosystem to target viewers with precision, using advanced advertising platforms that take advantage of bandwidth available through Switched Digital Video (SDV). As the US turns to digital TV – connected through a digital cable or IPTV – cable and MSO operators will be able to collect huge amounts of behavioral data, which can be overlaid with demographic data to yield segmentation information that will help advertisers create campaigns that closely match viewer interests and needs. Systems already exist which marry web functionality to the content that sits in a viewer’s VOD catalogue or set-top box. As partners in the advanced advertising ecosystem extend this capability through viewer PCs at home or on mobile devices, viewers will be able to see what is coming up on TV, what is recommended by their networks of friends and contacts, and what meets their own interests. Add to these personal recommendations addressable advertising, localized down to the zip code, and these more invested viewers will increase their consumption of paid content and the targeted advertising that supports it.

Addressability is a powerful tool because it uses viewer choice to present operators and advertisers with a more precise view of who is watching what when. Using existing technology that matches ads to program genres – and thus to viewer interests – operators like Cox Communications and Virgin Media have placed themselves at the forefront of a revolution that will align advertiser and viewer as never before. In the coming world of personalized TV, we believe choice truly is the killer application.

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