Local Digital Ad Insertions Begin to Make Waves

Cable World,  April 17, 2000  by Rani Long

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New technologies promise more opportunities for advertisers to target their market

The number of digital customers is rising rapidly: AT&T Broadcast Internet Services is nearing the 2 million threshold. Time Warner Inc. has enlisted about 500,000 to date, and Cablevision Corp. plans to convert all its subcribers from analog to digital this year.

Although national advertisers have already found an outlet for their messages on the digital channels, the industry is only on the cusp of local digital ad insertion. Cutting-edge technologies spawn new uncertainties, but one thing is certain: Local ad sales will be impacted in a major way. Cable operators' systems will be able to deliver more channels, offer more advertising space ang give local advertisers the ability to pinpoint their audiences.

The fist indications of these kinds of benefits are beginning to take shape with MediaOne Group systems in the Los Angeles market. There, nCube Ltd., which specializes in video delivery systems, along with Terayon Communications Systems, the broadband networking company, are beginning to install digital-into-digital ad insertions into MediaOne's and 12 Los Angeles systems. The first of their kind, these installations, which also involve Adlink, will cover some 480 channels, that will reach over 900,000 subscribers.

John Boland, VP-sales at nCUBE, said that nCUBE initiated a field test of its new advertising "Digital Program Insertion" technology or DPI, which inserts messages into the digital stream, last month. "We started testing `digital into digital' in late March," he said, "and it'll be turned up live to customers by mid-April."

nCUBE's Skyvision DPI capability will enable cable systems to insert local ads into digital networks from the same systems deployed from their analog networks. "What we bring to the table," said Boland, "is that we can accomplish DPI from a single-server platform. That's important because all of the servers that already have the equipment can basically be retrofired. Their installed base can very easily be upgraded, and systems can keep their existing equipment intact. Basically, the transition to DPI is an upgrade kit, for lack of a better term."

SeaChange International Inc., which claims to control an 80% share of the ad insertion by running almost 3 million ads daily over 25,000 channels, is striving to surmount some technological concerns before it can enter the digital-to-digital arena.

James Kelso, director-ad systems at SeaChange, acknowledges that some glitches remain with the company's technology, but he is optimistic these problems will be ironed out shortly, asserting that the major technological issues have been resolved. At press time, he said the biggest impediment to SeaChange digital ad insertion is tied to the lack of cue tones in the hits.

The good news is that it's easy to have digital tier networks," says Kelso, "The bad news is those encoders don't support cue tones. Those encoders also do progressive refresh. With progressive refresh, there's never one frame where you report the entire picture (in the TV screen). You progressively refresh it, you're reporting the changes ... What happens is when you cut to the commercial, it'll look really good, but when you cut back to the network, the network is pixilated in, so it fills in the little blocks -- which can last for a second or two - and looks really bad. There are plans to fix that, but right now that's really holding back the adoption of digital streams insertion, since in some instances you can't even get the cue tones. Still, the really hard technology has all been handled."

Cable operators are waiting for SeaChange's entry, according to Jim Sheehan, manager-public relations at SeaChange. "The market is definitely primed for this. The MSOs are looking at this technology and planning for it this year."

Kelso said its the MSO community that needs to resolve the cueing problem. "We can hear any cue tone they care to send. It's just getting one over that wire ... It's not even the networks; the networks originate cue tones. It's really the turnaround, the transport in between the networks and the subscribers where we need to have that cue tone present, and then we're ready to go."

He noted once SeaChange gets rolling, the upgrade from its existing analog systems to ones incorporating digital-to-digital capabilities won't prove problematic. "We'll happily help them with it in any way they want, but the hard stuff is all behind us," he said.

If the technology is poised for rollout, what about the advertisers? Are they hesitant to be pioneers in putting their message out on digital networks, which don't yet have large audiences?

"No," claims Todd Siegel, VP-national sales at the Discovery Networks. "Because the audience is modest, the out-of-pocket is modest. So, if the programming is compelling enough, there's a reason to do it. The digital world allows us depth and breadth. From a content point of view, if an advertiser is really interested in a particular topic, they can buy the big reach on the big service. Then if they want to reach the true enthusiast, they can extend their buy for a modest out-of-pocket cost onto the digital services. We will extend the national buy from the big channel by giving it some legs on the little channel."