Platform operators are well aware of the widely diverse demographics of the users of their set-top boxes with DVR capability. For example, one box is in the home of a young professional couple with two children. Another box is in the home of a wealthy retired couple. While they may all watch the same channel, they represent different consumer types to different advertisers. Operators may present an ad that is relevant to one of the homes but not the other. This mismatch between the target consumer for an ad and the viewer type actually viewing it is called wastage.

NDS is developing a way to reduce wastage while making the most of the 30 second advertising spot. xADs™, the NDS solution that delivers different ads to different boxes is based on ad substitution. The way it works is that ads stored on the disk of each subscriber’s DVR are shown to the appropriate viewer when there is an advertising break in a particular program. The display of these ads is personalized based on bit settings in the viewers’ smart cards.

What is ad substitution?    

Ad substitution uses business rules to target ads to individual subscriber homes in a pay TV network. Instead of all viewers receiving the same live channel ads, each subscriber can now be shown targeted ads that have been stored on their DVR disk.

The fact is that all players in the advertising world - platform operators, networks, advertisers, and agencies -- face the challenge of halting the revenue loss resulting from ad skipping. NDS xADs ad substitution is a DVR interactive advertising solution that aims to reverse this trend by showing subscribers only the ads allocated specifically to their household’s geographic, demographic and personal profile.

“Today’s intelligent consumers have built-in authenticity meters to help them navigate between genuine and hyped communications, offers, and promo­tions. The converse is equally true: A really great initiative, website, campaign, or community will spread like wildfire when a connection is made between sender and receiver.”

                                     

Joseph Jaffee in Life After the 30-Second Spot

With xADs, NDS aims to present different ads to different TVs within a population that is viewing the same channels, based on the original concept of targeting which is an integral part of XTV™, NDS' DVR. The major innovation is granting the set-top box the ability to change the ads displayed when ad breaks occur. That is, sequences of ads are presented according to tangible business criteria. The result is maximizing the viewer experience by presenting ads based on the anticipated business benefit which they impart on the viewers who are actually watching those ads. 

Why is NDS in advertising?

The question arises how did NDS, whose core business is content security, get into advertising? According to David Whittaker, NDS Director of Business Development and Advertising Technologies, NDS is entering the advertising space because for many platform custom­ers, a significant portion of their revenue is attained by being involved in the delivery of ads on pay TV channels, and even free-to-air channels.

Whittaker says that for those platforms where advertising comprises a significant portion of revenue, “the executives responsible for advert activity have a corresponding influ­ence in managing operations of those platforms.” The upshot is that the percentage of revenue these execs generate affords them a proportional impact within those organizations.

Strengthening NDS’ position

NDS recognizes that through its position in the advertising business, its customers and operators can deploy technical solutions that can improve their business efficiency. Currently, NDS solutions are used in four major aspects of TV advertising:

• VideoGuard® - CA, through geographical delivery management, ensures that the right local market version of a channel is delivered to the right homes
• iTV applications – enable platform operators to enrich their ads
• AMS™ (Audience Measurement System) – provides accurate gauging of actual viewing within a home
• xADs – enables use of the DVR disk to present managed ad subsets within XTV-enabled homes

“With XTV, NDS has a uniquely strong position because CA provides the ability to identify and characterize each individual subscrip­tion,” Whittaker says. The smart card, which indicates who the subscriber is, and the disk, which stores the content, are both enabled by NDS.

“As a result, XTV operators have a much deeper understanding of the subscriber in NDS platforms than the CE manufacturers who sell set-tops to a wide variety of retail outlets,” Whittaker says.

xADs explained

Until DVRs started becoming popular, xADs was a good idea in search of a market. “At first the concept of serving specific ads to specific homes was rather revolutionary,” Whittaker says. That was back when NDS was exploring new ways to use DVRs – beyond their storage capabilities. “That was the past,” Whitaker says. “DVR technology has now reached a critical mass worldwide so that applying XTV to advertising is a viable business opportunity for our customers.”

The primary economic model of TV advertising is when those providing the means of delivering ads to consumers - the platform operators or channels - are paid by those who wish to communicate their message to those consumers, meaning the advertisers. This model is based on a measurement of how many consumers in a particular target group actually see a specific ad.

Bear in mind that the business objective of a platform is to optimize a particular channel’s placement of ads with an anticipated audience demographic. You don’t get paid for just transmitting the ad. Compensation is based on how many viewers in the target group actually viewed the ad.

How does ad substitution work?

A successful ad substitution mechanism must be seamless. This means no time gaps, visual cues, or disruptions in viewing. The idea is not to “trick” the viewer, but rather to harmonize the presentational style of the channel, advertiser, and broadcaster. These essential requirements raise some challenging technical questions. How does the NDS technology in the set-top determine what ad to display? How does it use that technology to place a particular ad into the subscriber’s home, present it, and ensure that it is watched? How does NDS do this in a manner that avoids any disruption to the TV viewing experience? And finally, how does NDS handle delivery and presentation of the ads in a secure manner?

NDS XTV offers a dual approach that aims to maximize the number of viewers reached by platform operators, while extending the amount of time these viewers remain tuned in. First, the DVR disk offers economy of band­width and scalability because it can be deployed in millions of units. Additionally, NDS CA technology facilitates the secure addressing of subscribers in a manner that is highly accurate. This enables platform operators to target down to a specific group of subscriber homes sharing common demographics or interests. The NDS approach also provides security, since the CA components are extremely robust. This is essential in the advertising business because targeted ads are predicated on trusted delivery and the capability to audit viewing.

The challenge ahead

According to Whittaker, the future of xADs is linked to the anticipated growth of XTV penetration. That is, opportunities for xADs deployment will progress along with the growth in adoption of DVRs. “As with other solutions, in order to succeed in advertising NDS needs to identify the business community that wants an ad substitution product. Once the deployment of XTV DVRs on relevant platforms reaches a critical volume, NDS xADs should be a logical choice,” he says.

For more information:

XTV DVR