The Rise of Server-Side Ad Insertion. An interview with Penthera’s Scott Halpert

Scott Halpert, Senior Vice President Product and Partnerships at Penthera is focused on finding video streaming solutions for OTT providers. His company, Penthera, which spans across 36 countries and more than 100 million devices, offers technology to address last-mile streaming issues such as buffering and low video quality. Recently they released a cloud-based product called 2^nd Look that uses Server-Side Ad Insertions to further improve ad serving delivery.

Charlene Weisler: In looking at the full landscape of ad serving, what do you see as the current state for advertisers?

Scott Halpert: Video is widely recognized as the best way for brands to connect with audiences and advertisers want their messages to be presented to the right audiences in a non-jarring way where  image quality is as high as possible. Targeting technology handles the first part, but ad insertion and delivery technologies are responsible for the second part. No advertiser wants their ad to look fuzzy, or worse, causes a video stream to break. With that in mind, the biggest trend we’re seeing that impacts advertisers is leading OTT/streaming publishers shifting away from Client-Side Ad Insertion (CSAI) to Server-Side Ad Insertion (SSAI/DAI) for Video on Demand (VOD) because it provides a premium viewing experience while offering the same level of advertising targeting as CSAI.

Weisler: What is the state of the market for CSAI and SSAI?

Halpert: CSAI is not effective for Live or Linear delivery because of the latency it introduces, and also is subject to interference by ad blockers. For all of these reasons, publishers are moving away from CSAI and adopting SSAI. SSAI delivers a broadcast quality video stream which creates a superior end-user experience. Also, the image quality of the advertising and content closely match each other while latency is all but eliminated. SSAI is capable of supporting VOD, Linear, and Live streaming and provides a centralized communication point between the publisher’s device ecosystem and their ad decisioning stack.

While it’s a far superior option than CSAI, a challenge that SSAI faces is in how ad decisions must be made for VOD delivery. When using SSAI for VOD, all of the ad decisions for the requested stream are made between when the user presses play and the first frame of that video showing up. This fundamentally limits the ability of the publisher's ad infrastructure and programmatic partners to maximize the value of the inventory.

Weisler: What are some of the challenges and opportunities from SSAI/DAI in VOD?

Halpert: The biggest issue is the ad decision timing issue I mentioned earlier. Publishers are telling us that they are seeing these issues in their KPIs, specifically low render rates, which are impacting the value of their inventory. Regarding opportunities, I believe that VOD inventory is the highest value for a publisher. Viewers are “leaning in” and actively choosing what they want to watch. There is a massive opportunity for SSAI vendors to help extract this value for publishers. This is why we developed the 2nd Look product. It empowers publishers to make real-time ad requests with their existing SSAI infrastructure, resulting in higher yield and increased revenue.

Weisler: How much does AI (or will AI) and machine learning play in the decision regarding ad serving in the VOD environment?

Halpert: In the future, more and more ad decisions are going to be made by these algorithmic-based machine learning buying systems. Our goal is to improve how a publisher's inventory looks to these systems in order to drive increased revenue.

Weisler: Tell me about Penthera’s 2nd Look and its solutions in the VOD space.

Halpert: 2nd Look’s core value proposition is that it provides a mechanism to make the ad decisions closer to when ads actually will run instead of at the start of the video. We do this while preserving the best user features of VOD, such as rewinding and fast forwarding through the video. 2nd Look is implemented with the publisher’s existing SSAI vendor, requiring little work on the publisher’s part. We believe that 2^nd Look significantly improves render rates as ads are only inserted just before they will be viewed, makes VOD look more like Linear, allowing budgets to flow across both, reduces timeout issues caused by the existing short timing window to make decisions and works better with programmatic systems across multiple dimensions, enabling more bidders to participate and higher values to be placed on the inventory.

Weisler: Where do you see the advertising landscape in VOD in the next 3 years?

Halpert: Currently, there is a lot of warranted attention on Free Ad-Supported Streaming Television, or FAST channels, such as Pluto, TUBI, and Xumo. They are relatively cost-effective to launch, their advertising insertion processes are done in “real-time,” and they provide publishers, platform operators, and TV manufacturers, who are launching more owned and operated channels, with a view into the content to which people have gravitated. FAST channels drive VOD viewing which leads to the fact that  VOD will continue to be a critical component of the landscape as it delivers increased levels of highly engaged viewers that consume lots of content. As we help fix the monetization challenges associated with VOD, publishers, platforms and TV manufacturers will certainly drive more consumption.

This article first appeared in www.Mediapost.com

Artwork by Charlene Weisler

 

A Deep Dive into AVOD. An Interview with Penthera’s Brian Kline

Technology is improving the quality and ability of viewers to customize their media usage in both online and offline environments. In this ecosystem, ad tech is advancing especially in AVOD, according to Brian Kline, President of Penthera.

Charlene Weisler: What are the greatest opportunities for advertisers in AVOD today?

Brian Kline: Streaming can offer similar or greater reach than traditional TV distribution while at the same time offer much more granular targeting and data availability. As large segments of the population migrate to be “streaming 1st”, AVOD publishers can offer advertisers a mechanism to reach these audiences that are difficult to find on traditional TV platforms. Beyond this, there are a number of innovations coming that will enable advertisers to have a broader spectrum of creative delivery options/audience ownership. While the initial iteration of CTV/OTT has relied on a traditional TV advertising model, this is changing and evolving to bring innovative approaches that will deliver more flexibility and customization for advertisers, at scale, with the ability to micro-target audiences.

Weisler: What are the greatest challenges to advertisers in AVOD today?

Kline: Fragmentation across inventory sources and technology platforms and budget control / management. As streaming becomes a more important part of the media mix, the decision on where to manage budgets is becoming critical. What we’ve seen in the market to this point is friction between an advertiser’s TV and digital agencies. TV agencies view AVOD/Streaming as “digital” and aren’t generally used to buying media in the way that AVOD is sold (data driven, not measured by Nielsen, using programmatic systems, etc). Digital agencies are generally very comfortable with these points but find themselves fighting for access to “TV quality” ad assets and budget. Much of this could be resolved at the advertisers direction, but the decision on how to handle this new channel, from an agency standpoint needs to be made.

Beyond this, technical and platform fragmentation presents a challenge for advertisers. Each platform can have their own creative technical specifications, publishers tend to use multiple programmatic selling platforms (SSPs) and advertisers often use more than one buying platform (DSP) which opens the potential for an advertiser to bid against themselves for the same piece of inventory. There are paths for solving this problem, but it’s important for advertisers to be aware that it exists and to find mechanisms for measuring the occurrence of self-competitive bidding.

Weisler: You have a new product called 2nd Look. What does it do?

Kline: In VOD with SSAI, all of the ad decisions are made in between the time that the user presses “play” on their device and the first frame of the video showing up. This is because the ads must be “stitched” into the stream (technically the stream’s Manifest) before playback begins since the player will only request the stream’s Manifest once at the beginning of the process. Offering the stream’s entire inventory simultaneously and well ahead of when the ads are going to run has a number of negative effects including  1. Forcing a large volume of decisions to be made in a compressed timeline which increases the chance of timeouts and failure to fill inventory, 2. Placing ads in the stream that will exceed their timeouts (e.g. ads in the second hour of a movie that required a <10 minute time-to-live) causing publishers to go unpaid, 3. Forcing ad systems to evaluate all of the inventory at once instead of on a pod by pod basis, leading to uneven or reduced advertiser participation through the stream. 4. The net result of these issues to an AVOD publisher is lower fill, lower CPMs on ads that are filled and missed revenue opportunities.

2nd Look is a cloud service designed to address these issues. We accomplish this by eliminating the requirement to make decisions upfront, and enabling decisions to be made immediately before each pod. In doing so, we enable the publisher’s ad server and programmatic systems to operate more efficiently. It does not replace any part of the publisher’s ad stack and is interoperable with any VOD stream, from any type of device (CTV, mobile, PC, etc.) that uses SSAI.

2nd Look also addresses low render rates which measures the % of ads presented to the viewer relative to those that were decisioned by the ad server. As mentioned, with SSAI, all of the ads are decided for the stream up front. If the viewer leaves after seeing half of the ads, the render rate would be 50%. Render rate is important for two reasons. The most obvious is that the publisher may be paying serving/stitching fees on all ads, but only being paid by advertisers for half in our example. The more concerning issue is that render rate is used by DSPs and other programmatic systems to model the attractiveness of inventory. Low render rates cause less bidding volume, and lower CPM bids because the bidder is less confident the ad will be seen. AVODs using SSAI are disadvantaged in these algorithms.

2nd Look, positively impacts all of these challenges. In offering each pod independently, we enable the publishers’ ad decisioning systems to operate more efficiently resulting in higher fill rates and more advertiser participation across the stream. This drives up CPM, fill rate and overall yield. 2nd Look integrates with a publisher's player via simple HTTP interface and the publisher’s ad stitcher (via their standard APIs).

Weisler: Do you collect any data and if so, what and how is it used?

Kline: We will be collecting session level data to include; session ID, # of pods in the stream, # of pods requested, duration of ads requested, duration of ads filled, % of pods filled based on time duration (e.g. 2 min requested, 1:30 min returned = 75% fill based on time). Depending on the ad stitcher, we can also report on # of ads filled. The data we are collecting is more publisher performance oriented. There are 2 key data points that we use/impact that advertisers will leverage are the session ID and the render rate as described above.

Weisler: Where do you see AVOD in the next 3 years?

Kline: We expect AVOD to continue to grow and account for the majority of viewing hours and expect  more hybrid subscription models that are partially or entirely subsidized by advertising. As SVOD publishers reach market penetration limits, they will be forced to explore new revenue models that can enable their continued revenue growth. The market will influence how much SVODs can charge for a subscription and user’s disposable income will dictate how many subscriptions they can afford. To capture additional users who have allocated $$ elsewhere, SVODs who offer AVOD tiers will lower the bar to entry and see expansion in the number of users interacting with their service.

 

This article first appeared in www.Mediapost.com

Artwork by Charlene Weisler