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Introduction

The broadcast sector is evolving. Broadband adoption, transforming consumption habits and convergence is creating a diverse landscape for entertainment consumption. Advertising continues to play a significant part in revenue generation, but as the drivers challenge traditional paradigms, there is considerable pressure to adapt to new business models using advanced technological solutions.

Scope

Addresses the current broadcast advertising market in Western Europe and North America.

Outlines different methods of addressable advertising and their potential for ROI.

Highlights new standards and technologies, such as DVS 629, in boosting addressable advertising potential adoption.

Provides an overview of the addressable advertising value chain and key market vendors, outlining recent M&A activity set to transform the sector.

Highlights

Addressable advertising does not involve immense capital expenditure. However, it does use additional bandwidth, and considering the limitations of the resource in cable and IPTV systems, outlining an effective return on bandwidth (ROB) is a key priority for broadcasters.

The competitive landscape in VOD and ad insertion vendor market has changed significantly over the past few years. Market growth potential has resulted in considerable M&A activity. In particular, larger market players have made a variety of strategic acquisitions to bolster their ad insertion and VOD product portfolios.

Reasons to Purchase

Gain insight into key trends transforming the broadcast advertising sector including audience fragmentation and evolving consumer behavior.

Understand key priorities for broadcasters and advertisers in an evolving digital TV advertising landscape.

Gain visibility into the addressable advertising value chain and highlight key technology vendors in a variety of specific segments.

Overview 1
Catalyst 1
Summary 1
Key Messages 2
The broadcast advertising market is adapting to new services and consumption habits 2
Home addressability creates potential to boost NAR and increase ROI positives 2
DVS 629 and 'Project Canoe' potentially help revolutionize the ad insertion market 2
Generating value from addressable advertising: return on bandwidth 2
Merger and acquisition activity begins to consolidate the VOD and ad insertion market 2
Assessing the addressable market: MSOs and non-traditional distribution platforms 3
Table of Contents 4
Market Opportunity: the evolving broadcast advertising sector 5
The broadcast advertising market is adapting to new services and consumption habits 5
Digital Cable and IPTV services are expected to illustrate strong growth until 2010 5
On demand service offerings begin to gain traction - benefiting addressable advertising potential 5
Audience fragmentation and shifting consumption habits challenge traditional broadcast advertising 6
PVRs will continue to create challenges for the broadcast advertising sector 6
Revenue makeup of the broadcasters is transforming in reflection to new challenges 6
Total advertising revenue for the broadcast sector set for growth 7
Regional market dynamics create challenging nuances for the broadcast advertising market 7
Revenue diversification grows in importance for pay-TV service operators 7
Advertisers have a variety of options to distribute campaigns through broadcast networks 8
Home addressability creates the potential to boost NAR and increase ROI positives 8
Increasing ROI positives can boost advertisement effectiveness 8
Different types of media buying result in different potential ROIs 9
Thematic targeting is loosing effectiveness due to evolving consumption habits 9
Geographic addressability can generate significant premiums 9
Home addressability increases effectiveness but lack of understanding remains a challenge 10
Technology Evolution: transistioning to New standards and formats 11
On demand addressability: outlining the technological value chain 11
Broadcasters are not expected to need to make large CapEx investments for home addressability 12
New standards and formats potentially help revolutionize the ad insertion market 12
'Project Canoe' and SCTE DVS629 closes the gap between DPI and addressable advertising 12
MPEG-4 / H.264 has both benefits and challenges in lowering costs and implementation 13
Flash-based on demand servers could lower OpEx for broadcasters although questions remain 13
Flash-based servers compete with DRAM solutions 13
Customer Impact: Addressing business models and generating ROI 14
Generating value from addressable advertising: return on bandwidth 14
Outlining addressable advertising effectiveness is crucial as advertisers are faced with new mediums 14
Adding value by boosting target rating points: Highlighting the OpenTV and Comcast trail 14
Return on bandwidth as generating a return on investment in home addressability 14
Case Study: Positive results emerge from the Sunflower Broadband initial deployment 15
System deployment boosts revenue, client base and CPMs for Sunflower Broadband 15
Replicating to larger cable and IPTV systems might prove a challenge 15
Outlining business models will be the biggest challenge moving forwards 16
Broadcast led and service operator based models provide different VOD models 16
Addressing the free VOD gap: making money from free content 16
Competitive Landscape 18
Major players continue to populate the entire addressable advertising value chain 18
Merger and acquisition activity begins to consolidate the VOD and ad insertion market 18
Google moving into the interactive TV reporting market 19
Addressing the future competitive landscape: Economies of scale and linking DPI 19
Competitive pressures will potentially drive down the cost of implementation 19
Gaining advantage from installing both DPI solutions and addressable advertising 20
Go to Market 21
Assessing the addressable market: MSOs and non-traditional distribution platforms 21
US Cable MSOs are expected to be the most lucrative market for the near term 21
Multi-platform addressable advertising market: mobile video expected to hold considerable opportunities 21
Non-traditional installations could prove a particularly attractive offering: Hotels and Hospitals 22
Outlining quantifiable benefits with moving to addressable advertising will be crucial 22
Highlighting ROI: outlining higher TRPs to advertisers 22
Highlighting ROB: addressing competitive advantage and higher premium charges to broadcasters 22
Recommendations 24
Outline the benefits to both the buyer side and seller side 24
Provide understanding on ease of instillation and business models at C-level executives 24
Highlight results from current trials and deployments 24
APPENDIX 25
Definitions 25
Methodology 27
Further reading 27
Ask the analyst 27
Datamonitor consulting 27
Disclaimer 27