Is DAI Already DOA?

mikehaight_tv_videoOn TV And Video” is a column exploring opportunities and challenges in programmatic TV and video.

Today’s column is written by Mike Haight, an executive at Infinitive.

In the ad tech world, hot new technologies regularly run up the hype cycle. The pushback and skepticism begin long before they reach wide adoption. Such is the short and exciting life of digital advertising tools and technologies.

Among this year’s rapidly rising stars, dynamic ad insertion (DAI) is definitely following this curve. DAI allows networks to swap ads in and out of live, linear or on-demand video content as it is being delivered to end users, with the goal of more precise viewer targeting and seamless ad delivery.

On the one hand, buy- and sell-side stakeholders both get the DAI value proposition, which ranges from the tactical, such as reduced ad blocking, to the strategic, in that it’s an important tangible step toward convergence of digital and linear advertising sales, operations and technologies.

But DAI’s downsides seem just as clear. For one thing, DAI isn’t convergence itself, but rather a milestone on the way. There is also a long implementation timeline for DAI, which makes it unlike many other digital plug-and-play technologies with which publishers have become accustomed.

Knowing how quickly the ad tech landscape changes, the question boils down to whether the time and effort required for DAI implementations will be paid back with sufficient value for the business. Is there a positive ROI for DAI?

I believe the answer is yes. And for many publishers, there are three specific reasons to embrace this new technology rather than wait for the next big thing.

Convergence Is The Future, Which Is Already Underway

Even if DAI isn’t the final answer, publishers can’t afford to sit out this critical evolutionary step and fall behind.

DAI is important because it is the first true technology product to bridge linear and digital teams in a tangible, tactical way. In the past, companies seeking to join broadcast and digital dollars did it largely on the back end, mostly in a bubble-gum-and-duct-tape fashion, with workaround processes and re-entry of order information in multiple systems. Even for publishers that unified their organizational charts, DAI is a clear step forward because it places everyone in the same room and gets them using the same technology.

The point is, the sooner you adopt DAI, the further along you’ll be on the long-term journey to convergence. Recent M&A activity confirms the integration pace is already picking up.

Exhibit A: the purchase of Operative, which provides digital order management, by SintecMedia, a company with a linear media background. Exhibit B: Comcast’s purchase of FreeWheel. This is how buzzwords become part of operations, with specific product offerings and more integrated processes.

To be clear, DAI products are still in beta and definitely not ready for prime time. But rapid maturation is likely, largely because interest is naturally high in any technology that brings linear and digital dollars together.

TV Quality Content + Data-Driven Targeting = Linear Pricing Power

DAI’s ability to boost linear ad prices over their current plateau is another reason for its rising interest. The potential to wed the data collection and targeting capabilities of digital ads to the power of linear offers huge upside monetization potential. The full promise involves the combination of TV-quality content and data-driven digital marketing techniques. The precision targeting and retargeting of consumers will now be available for linear sales teams. If once that sounded like a unicorn, DAI brings us much closer to the reality.

The clearer insights media companies gain into their viewers and end-users promises the ability to adjust prices intelligently and in much more targeted fashion. Linear pricing will rise because measurability and transparency will increase. That may not be good news for Nielsen, whose measurements will face even more scrutiny, but it certainly is for any publisher seeking increased pricing power or marketer seeking better targeting capabilities.

Reduced Ad Blocking  

The low-hanging fruit of the DAI value propositions – reduced ad blocking – is an important and obvious benefit of the new technology and one publishers can take advantage of in the near term. DAI gives publishers new means to retain or regain control of how they monetize their properties.

Interestingly, it helps both sides of the industry debate on how to deal with ad blocking. On the one hand, it makes it impossible for users to block ads and therefore eliminates the complexity of “solutions,” such as whitelisting or requesting (or begging) users to not block ads.

On the other hand, it allows for more relevant presentation of offers and messages, which many industry observers believe is the long-term answer to ad blocking, based on the theory that when you give users more of what they want in terms of quality and relevancy, they will be less likely to block ads.

The bottom line is that the bigger your ad-blocking issue, the more DAI may appeal to you.

Long-Term Process With Near-Term And Mid-Term Benefits

Some in the industry believe DAI is already DOA, long before it’s achieved critical mass. That view looks shortsighted because DAI is an important and tangible milestone on the long-term journey to linear and digital convergence. Even recognizing that full convergence remains in the fairly distant future and that DAI is not the final solution or only component of that vision, it is the most formal and robust connection to date between groups and revenue streams that are managed separately.

Plus, DAI offers real benefits in the near term, in the form of reduced ad blocking, and mid-term benefits, including pricing power based on better insights into linear viewing habits, all of which justify the significant work of implementation. The vision of the future is compelling: TV-quality commercials available via IP pipes becoming the new normal for ad serving.

Even more compelling is the strong business case and the tangible ROI that publishers will be able to produce along the path to that future vision.

Follow Infinitive (@InfinitiveRocks) and AdExchanger (@adexchanger) on Twitter.

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