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  • December 5, 2022
  • By Scott Halpert Senior Vice President, Products and Partnerships, Penthera
  • Blog

Increasing Liquidity for Streaming VOD Inventory

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When one looks at the world of CTV/OTT ad buying, an odd trend emerges: There appears to be more buying against linear streaming inventory than against VOD streaming inventory. This seems odd because viewers are much more engaged with VOD titles—that is the very nature of on-demand viewing. With linear streaming, TVs are often left on in the background, capturing only passive attention from viewers. Viewers select VOD assets with the intention of viewing them and, as a result, are more likely to see the associated ads. That VOD inventory should be more desirable from an advertiser’s perspective and therefore more valuable may appear to be, a priori, a truism. However, this is not what is happening in the market.

When you look deeper at the mechanics of VOD vs. Linear inventory, you begin to understand why this is occurring. A likely cause is that VOD and Linear ad inventory are decisioned under different timing. The mechanics of VOD ad decisioning are quite different from linear and, in fact, quite different from all other digital delivery in a meaningful way. Unlike all other digital ad decisioning, which occurs on a “just-in-time” basis, VOD ad decisions (except when using client-side ad insertion) are made before playback begins, well ahead of when the ads will be seen by the viewer.

An important implication of making all the ad decisions up front is that a substantially longer Time To Live (TTL) window must be set for these ads. Whereas typical TTLs are set on the order of 36 minutes, VOD TTL’s are often set at 60120+ minutes. The reason for this is obvious: Ads that run toward the end of a show/movie will be viewed well outside the standard 36 minute TTL window.

From a practical standpoint, this means that separate campaigns/line items must be set up for VOD delivery. Essentially, this segments off VOD from the rest of the inventory that a campaign is consuming. There are meaningful implications of this situation that result in the inability to easily “flow” budget between Linear and VOD.

Another approach at solving the problem is to enable the ad decisioning for VOD to be similar to linear by triggering much closer to when each ad pod will run, while maintaining these important user-facing functions. This is a more difficult way to do it, and it was a difficult nut to crack, but the team at Penthera has done it. In doing so, both of the blocking criteria outlined above have been eliminated. Advertisers can now keep shorter TTLs, and know within minutes if their ads have been delivered on VOD streams.

Another challenge of the time displacement between ad decision and ad playout is that uncertainty regarding the likelihood of delivery is introduced into the process. In other words, they may sell ads that are never viewed because a user abandons the stream for some reason. Advertisers generally don’t want to hold out budget for long periods of time, waiting to find out if it was spent or not. They want to see their money spent and get delivery, or know that it wasn’t spent as soon as possible so they can purchase other opportunities. With VOD, they have to wait, sometimes for well over an hour, to find out if delivery occurred. This can be a meaningful disincentive to purchasing VOD advertising, even if it is very attractive from a content/user engagement standpoint.

To fix this problem, you would need to make the mechanics of the ad-decisioning process for VOD more closely match those of Linear. It’s not an easy problem to solve though, given how VOD delivery works today. One approach that I’ve seen in the market is to turn a VOD manifest into a linear manifest (e.g., HLS -> HLS Live). While this approach does enable decisioning on a “just in time” basis, there are some significant downsides. For example, users lose the ability to “scrub” back and forth within the video as well as the ability to see the entire video duration.

As a result, VOD ad buys become indistinguishable from Linear. This would seem to be the goal for both advertisers and viewers alike.

[Editor’s note: This is a contributed byline from Penthera. Streaming Media accepts vendor bylines based solely on their value to our readers.]

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