Smitten with the freedom of OTT and the increasing ability to essentially be their own programmers, viewers are cutting the cord on traditional TV services. This has emerged as an opportunity. Because not only do national advertisers want to reach people on OTT platforms, they’re willing to pay higher rates to do so.

According to a recent market forecast by Magna, IP-delivered OTT advertising campaigns will reach just over $2 billion in 2018—a 40% jump—while growth for traditional TV ad sales remains flat nationwide. These trends are not surprising given the power of addressable, targeted advertising, which IP-based streaming platforms were born to do well. It’s a dream come true for advertisers that want to target viewers who are more likely to have an interest in their products and services.

Broadcasters and cable operators have long recognized the benefit of moving viewers to IP-based platforms. Now, after many years of being hamstrung by legacy network infrastructure, we’re seeing many competing solidly in the increasingly crowded OTT arena, buoyed by the ability to offer those once-elusive, more lucrative, targeted ads. It hasn’t been all upside, however. Because IP streaming requires a completely different approach versus traditional MPEG-2 transport stream (UDP) distribution, it’s been necessary to adopt a separate, IP-based workflow to handle both distribution and ad delivery.  

SOLVING THE DUAL AD TECH WORKFLOW DILEMMA

Though OTT ad dollars are flowing, operators are still cash-strapped as a result of having to shoulder two separate, siloed workflows—UDP to set top boxes (STBs) and OTT to connected devices.

Of course, supporting two delivery platforms makes it difficult for operators to upgrade facilities or invest for growth. And with millions of QAM-based, legacy STBs on the market, it’s often just accepted that this inefficient, dual-siloed distribution model is not going anywhere until next-generation STBs can be deployed at scale.

What if there was a smarter approach? One that unifies UDP and OTT distribution, streamlines operational inefficiencies, and makes them more competitive than ever?

By adding a HTTP-to-UDP stitcher at the edge of the OTT distribution network, IP-based adaptive bitrate (ABR) content can be converted into the MPEG-2 transport streams still needed for legacy linear delivery. Using manifest manipulators in the OTT chain, it also becomes possible to dynamically insert ads into that UDP-converted content. This approach enables national advertisers to get more granular in targeting than they can today to reach audiences based on geographical zones, demographics, or other criteria. Meanwhile, video service providers gain increased OTT ad revenue, while reducing operational costs. It’s a win-win.

A VIRTUAL NO-BRAINER

Since an edge-based approach is software-driven and based on commodity off-the-shelf (COTS) hardware, it’s more cost-efficient to operate than racks and racks of ad splicers, encoding boxes, and other proprietary hardware. And, whenever new features and capabilities are needed, software is more agile and easier to modify or upgrade than hardware.

Really, we’re talking about a whole new world of opportunity. The ability to replace legacy ad splicers and blackout systems with more flexible, software based solutions means easier migrations to bandwidth-saving codecs, reduced maintenance and support costs for dedicated hardware. It’s about saying goodbye to the rigidity that keeps business models in a box and instead fueling an evolving, more dynamic ecosystem that isn’t so fragile that it gets thrown out of balance amid the slightest change.

Suddenly, programmers can insert regional ads to derive higher value and operators can create more, smaller zones of distribution for each video delivery edge endpoint to power better geotargeting. Best of all, this approach frees up capital currently being wasted on redundant distribution efforts for more strategic investment.

As a long-time leader in both UDP and HTTP workflows, Imagine Communications developed this HTTP-to-UDP Gateway as part of a broader family of end-to-end software solutions. The HTTP-to-UDP Gateway provides an endpoint to enable cost-efficient, painless OTT migration path that unlocks new advanced advertising and content monetization possibilities.

In our final blog of this three-part series, we’ll dive into how this innovative approach empowers traditional video service providers that want to boost ad revenue in the multiscreen OTT arena.