SERVER-SIDE AD INSERTION Use the Cloud to Increase Monetization of Video with Targeted Advertising

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CONTENTS

Introduction ................................................................................................................................................... 3 Advertising Is Key to Content Monetization ............................................................................................... 3 A Brief History of Online Video Advertising ............................................................................................... 3

The Challenge: Balancing Premium Viewing Experiences with Monetization .............................................. 4 Evolving from CSAI to SSAI .......................................................................................................................... 5

The Progression to Client-Side Ad Insertion (CSAI) and How It Works .................................................... 5 Defining Server-Side Ad Insertion (SSAI) ................................................................................................. 7

Standards ...................................................................................................................................................... 9 Scalability with the Cloud .............................................................................................................................. 9 Solutions from AWS Elemental ................................................................................................................... 10 Conclusion: SSAI Monetizes Content and Delivers a Premium Viewing Experience................................. 11

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INTRODUCTION

ADVERTISING IS KEY TO CONTENT MONETIZATION Advertising is an integral part of video monetization strategies for broadcasters, pay TV operators, content programmers and other video providers. Though primary screen advertising has long been optimized, the art of making money while delivering video content to consumers on connected devices is still evolving. Traditional content providers are accustomed to linear TV monetization models. But the internet is an unmanaged network with unclear paths to monetization. A cat and mouse game is in play between video providers and consumers around advertising, with new solutions being met by new ways to circumvent them – including ad blockers – as consumers work to improve their viewing experiences. Ad blocking grew 30 percent globally in 2016, with more than 600 million devices running ad blocking software around the world, sixty-two percent of which are mobile devices. This poses a significant threat to online video service monetization.1 The challenge of monetizing over-the-top (OTT) video content will only continue to grow as viewership on multiscreen devices is expected to increase in the near future. Today, an estimated 1.6 billion people worldwide watch online video on connected devices.2 Seventy percent of these global consumers watch television and video on smartphones—twice as many as in 2012.3 By 2020, half of all video consumption will be done on a mobile screen.4 For broadcasters and video content providers, an inherent tension exists between delivering a premium viewing experience – complete with start-over and time-shifted TV functionality – and monetizing streaming video offerings and services. Market research shows that to optimize revenue opportunities for streaming video, advertising needs to be targeted to the individual user and delivered in a way that enhances the quality of a viewer’s experience. Indeed, seventy-eight percent of consumers say they prefer personalized ads.5 Personalizing ads reduces the consumer desire to employ ad blockers and increases the value of the overall video streaming experience.

A BRIEF HISTORY OF ONLINE VIDEO ADVERTISING Earliest attempts at online video advertising had a commercial spot “burnt in” to the video asset. This so-called static advertising did not take demographics into consideration and advertising was always attached to specific content long after an on-air campaign had ended. Advertisers saw no additional benefit to this and were reluctant to pay fees over and above on-air slot charges.

1 2017 Adblock Report 2 The OTT Playbook | Parks Associates 3 TV & Media 2017 | Ericcson ConsumerLab 4 TV & Media 2017 | Ericcson ConsumerLab 5 Adobe Digital Insights Advertising Demand Report 2016: North America

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As a result, providers of online video services moved to a model in which the client – the user device or browser – inserted specific, relevant advertising into the video stream at the point of playback. This ensured that advertising was appropriately targeted and timely because a commercial could be changed for each viewing. This is generally known as client-side advertising insertion (CSAI). Server-side advertising insertion (SSAI) is, in a way, a return to the origins of online advertising, because the material – both content and commercials – arrives as a single stream from a single source. The difference is that the advertising is no longer static. It is dynamically inserted before the video stream is delivered. Commercials are personalized for each individual stream at the moment of delivery. The video ecosystem as a whole is now moving in this direction. This paper examines the architectures required to achieve SSAI at scale so that thousands or even millions of concurrent, individually-tailored advertising manifests can be delivered in a timely fashion, even for live streamed events. This scale is essential to delivering targeted and secure dynamic advertising and can therefore best be achieved with cloud-based solutions.

THE CHALLENGE: BALANCING PREMIUM VIEWING EXPERIENCES WITH MONETIZATION Today’s content delivery industry includes traditional broadcasters such as the BBC, NHK and CBS, relative over-the-top (OTT) newcomers such as Amazon, Hulu and Netflix, and specialist content companies such as UEFA, which provides comprehensive Europe-wide soccer coverage. These organizations all share two key issues that drive operational and technical planning. First, these companies want to ensure a consistently high quality of experience for their subscribers. The expectation for multiscreen viewing today is that it be akin to broadcast television – which more or less “just works,” provides a consistent level of image quality and has very few service disruptions. Today’s expectations for video delivery, even for IP over broadband video delivery, are video-centric with increasingly intense demands for bandwidth to support this. Second, content providers need to earn revenue from the internet. This idea runs counter to consumer expectations that the internet is “free.” In the earliest days of the internet, content was provided by hobbyists and people seeking to build brands. Now, content needs to generate a commercial return. This is further complicated by the growing complexity and bandwidth requirements of the video era. Today, delivery costs for content are significant, ranging up to as much as US$0.10 to US$0.25 per gigabyte (GB) for low volumes of delivery, depending on region and CDN provider. For higher volumes, rates of US$0.01 per GB are commonplace. These rates only account for the CDN, and do not include processing and storage costs. It is also not possible to apply multicasting approaches to OTT video distribution. With current IP architectures (IPv4) and over the internet, it is necessary to use “unicast” (one-to-one) delivery and not multicast (one-to-many). This is because most ISPs block multicast. This may change in the future as IPv6 becomes more widely adopted. Now, with each piece of internet-delivered video constituting a unique point-to-point connection, delivering video at scale incurs significant costs. Commercial operations in the business of streaming video must be able to cover these costs and make a margin.

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The most common source of revenues for OTT video services is spot advertising. In traditional linear TV models, advertisers leverage broad demographics and geographies to target commercials for the right country or region. With the ability to more precisely identify the subscriber to an online video service through a mix of information gathering and cross-site tracking techniques, there are many ways to achieve a much more personalized advertising strategy. With traditional linear TV advertising strategies falling short, the optimal approach to increasing OTT video delivery monetization is to tailor ads at the individual level based on viewing histories and other “big data.” Audiences today expect advanced features from OTT providers including time-shifted TV, start-over TV and catch-up TV. This offers extended content availability and more opportunities to refresh and replace targeted advertising so ads remain relevant. An ad for a promotion that ends on a specific day, such as the end of the month, may be irrelevant as the new month starts. Content, however, may have a longer life span. It is important that video operators have the ability to replace this specific ad when the new month starts to ensure relevance and to continue generating revenue. Traditional methods of personalizing advertising fail the quality test because they depend on primary content coming from one video source and advertising coming from a different source. Combining the two when viewed on a consumer’s device may not only compromise the viewing experience, but it also empowers that user to install clever ad-blocking software that can identify advertising content and skip it entirely. Finally, video streaming and OTT business model depends upon “impressions” – specific consumer views reported from the client to the player. If there is no way to acknowledge that an advertisement has been played on a specific device, then no money is due from the advertiser to the service provider. Of course, there are other revenue models employed by OTT providers. Subscription programs have been successfully monetized by brands such as Netflix and Hulu that attract consumers with large content offerings available for on-demand or live viewing through convenient monthly packages. Companies like Apple, with its iTunes service, have found success with transactional models that charge consumers a fee for each viewing or download. Compared to advertising, these approaches entail massive upfront investments in content, as well as administrative and customer service infrastructure. They also remove the opportunity to tie revenue, and profitability, directly to distribution costs. For most video providers, advertising is an easier, more efficient way to monetize their content. For this reason, this paper is focused on advertising and how SSAI can make advertising more effective.

EVOLVING FROM CSAI TO SSAI

THE PROGRESSION TO CLIENT-SIDE AD INSERTION (CSAI) AND HOW IT WORKS In the evolution of online video advertising, CSAI offers two main benefits over static advertising. The first is that the cost per thousand impressions (CPM) is higher than with static advertisements because the demographics are better identified. But that is not all: end users find a personalized advertisement less intrusive because it offers something specifically aligned with their interests. A luxury car fan will be much more interested in an ad from BMW or Mercedes-Benz than in a generic soda or grocery store spot. To implement CSAI, video providers moved to a manifest-driven means of delivering content. When a consumer makes a request to view a particular video, the response from the provider is to send a

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manifest – an XML or plain text file that lists the elements which make up the requested video – along with the IP addresses from which each can be obtained. As the video plays, the player makes the necessary calls to obtain the next chunk of content to be shown from the manifest. In a well-designed player, where segments originate from the same source, there should be a seamless display and a reasonable – certainly a consistent – quality of experience. If advertising is to be included in video content, then the manifest includes tags to mark calls to advertising servers. The player then stitches ads from external ad servers into the relevant portion of the manifest for the individual viewer. The established standard for this is video ad serving template (VAST) published by the Interactive Advertising Bureau (IAB).6 The fundamental architecture of client-side ad provisioning is shown in Figure 1.

Figure 1: Client-Side Ad Insertion Infrastructure

Inherent in this architecture is the necessity for different parts of what is, to the consumer, the same stream to originate from multiple sources. Requested content to view comes from the service provider while spot commercials come from one or a number of different servers specializing in delivering commercials. This inevitably causes significant quality issues for the end user. Advertising servers may not use the same compression codecs – or even the same aspect ratio – as primary content servers, which can result in a visible shift in quality between program and commercial. There may be differences in the encryption (or a lack of encryption) of commercial messages. Given that it is now common for streaming video to be delivered using an adaptive bitrate (ABR) scheme such as HTTP Live Streaming (HLS), it is likely that there will be a change in bandwidth as the receiver moves from server to server and the optimal bitrate is established.

6 Interactive Advertising Bureau

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All of these factors contribute to the risk of delay in content display (both when switching from program to commercial and back again), presenting the consumer with a frozen video or a spinning wheel. It is likely that these factors also cause shifts in video quality due to changes in codec, resolution and bitrate, resulting in a frustrating drop in quality of experience. That can be catastrophic when watching live streaming such as sports. Viewers will inevitably feel they have missed key parts of the action while their computers or phones buffer on a return from a commercial break. As any broadcaster who has had the misfortune to lose a key piece of sports action through a technical glitch will tell you, audiences are extremely unforgiving. Upsetting audiences is a sure way to lose future revenues. Further, explicitly telling the receiving device which parts of the manifest are advertising – through the IP addresses for those calls –makes it easy to skip the advertising, manually or through ad-blocking software. Changes in video quality can also be used to trigger ad blocking. Some content owners attempt to circumvent this for mobile device delivery by offering custom players in the form of native apps that prevent ad blocking. But the trend is for this content to be viewed via the mobile web rather than through dedicated apps. In 2017, mobile web audiences in the United States were more than two times the size of app-viewing audiences.7 On the other hand, client-side advertising insertion – adding commercials in the consumer’s device – has one significant advantage. It provides very accurate metrics for the advertiser because the individual consumer in effect calls for the specific commercials. CSAI makes it very simple to see exactly who has watched each spot and exactly how many people have viewed it, making revenue attribution clear and precise. Having said that, there is always a risk of clever software spoofing the advertising server by claiming the commercial has been viewed when it has actually been skipped. What is required, then, is a method of inserting targeted advertising into individual video delivery paths that provides clear metrics, protects against advertising blocking or skipping, and maintains a consistent quality of experience for the consumer.

DEFINING SERVER-SIDE AD INSERTION (SSAI) The solution lies in upstream insertion of advertising into video content before it is delivered. This activity takes place on the “server-side.” A continuous stream of content arrives at the consumer device, eliminating any possibility of discrimination between content and commercials while avoiding freezes, black screens and spinning wheels. In the CSAI model, the receiving device makes the calls to ad decision servers (ADS), switches from the content stream to play ads, and provides the responses for the impression count. In the SSAI model, the call to the ADS is done upstream of the video being delivered to the client. This is done based off of the same SCTE 104 or 35 cues or other cues that CSAI models would also use.

7 The 2017 US Mobile App Report | ComScore

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Figure 2: Server-Side Ad Insertion Infrastructure

An encoder would receive broadcast content with SCTE 104 or 35 cue markers identifying the start and duration of ad breaks, and send compressed output with the cue markers preserved. This compressed stream can be sent to a just-in-time packaging step if the stream is required in multiple formats and delivery protocols or required content protection with Digital Rights Managements (DRM). This packaging step also enables the DVR like features audiences have come to expect on OTT platforms, like start-over and time-shifted TV. The packager would be the origin for the main video content of the stream as well as a templated manifest. During an ad break, any client information that is available is sent to the ADS to determine which ad to insert. This information could be as minimal as the device’s geography based on IP, or much more detailed if the user is signed in on a client device. The ADS responds with the ad information as well as tracking beacons to report ad impressions. The templated manifest is then manipulated and ad segments are stitched in, with program content delivered via the packager and ad content from the source of encoded ads, both distributed via the same content distribution network (CDN). This creates a single packaged stream that contains program and commercial content being delivered to clients. This type of video stream simplifies the requirements of the player at the target device, which enables lighter-weight apps and reduced demands on web players. The clear trend is that web clients will use HTML5 to call and display video as devices converge upon OTT and internet-based delivery formats. That means that a service can be deployed faster because there is no need to develop a player for every target platform. It also provides a more future-proofed approach because it mitigates the need to develop new players for newly launched devices or for updates to existing devices’ operating systems. With SSAI, it becomes the responsibility of the video provider to offer the reporting and metrics on delivered advertising. But the architecture does support highly targeted advertising, even down to the individual viewer if the advertising campaign software has that level of granular data. Targeting at the individual level is seen as the holy grail of advertising and is likely to command a significant premium.

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STANDARDS One of the most significant challenges in delivering online video and ads is the large number of combinations of screen resolution, codec, target device operating system, and streaming type. The complexities of mobile devices must be accounted for because mobile is forecast to become the principal digital platform for media access. In fact, mobile broadband penetration is set to overtake fixed broadband, reaching 58.3 percent of total broadband penetration by 2019.8 This is a complex endeavor. The Apple iOS is relatively well-managed, but it is far from universal that users upgrade to the latest available release. Android, because of its complex ecosystem of hardware, software, and release management, results in many more permutations. Underscoring the concern, there are at least four different Android operating systems that currently have more than 10 percent market penetration. Beyond mobile, a number of streaming devices for television are in the mix: The Amazon Fire TV and Stick, Apple TV, Google Chromecast and Roku, each with significant market share. Games consoles and Connected TVs are increasingly common, and each manufacturer has different ways of handling OTT content. For most video providers, an effort to provide dedicated services for each platform would be extremely complex and simply not viable. The practical solution to maintain reach across platforms is to share outputs between platforms. Apple’s HTTP Live Streaming (HLS) will cover a broad range of devices, not just the Apple ecosystem, but connected TVs, set-top boxes, and some Android devices. Adding support for MPEG-DASH would cover almost all other modern devices that cannot play HLS or have limited or unpredictable HLS support. Both protocols deliver content over HTTP or HTTPs, so they scale well, taking advantage of the HTTP capabilities of large CDNs and caches. Both also support adaptive bitrates, which means they ensure viewers get the best quality video experience possible for a given bandwidth. Developments with the Common Media Application Format (CMAF) and Apple’s adoption of that standard for HLS, as well as support for fMP4 within HLS, has increased the similarities between HLS and MPEG-DASH, making it possible to share the same encoded video between the two protocols, each still using its own manifest format: m3u8 for HLS and mpd for DASH.

SCALABILITY WITH THE CLOUD High-value streaming video content can attract large volumes of viewers, and responding effectively to peaks in demand is essential. It requires the ability to scale video delivery seamlessly while maintaining performance and the best quality of service. Sporting events, for example, can create enormous demand. During the 2017 NFL season, Amazon Video streamed 11 Thursday Night Football games to Amazon Prime subscribers, recording as many as 2 million live viewers for a single game, with an average minute audience (AMA) of more than 310,000 viewers. The company reported a total consumption among all viewers at 12.5 million hours for the season, across a total reach of 18.4 million subscribers in 224 countries and territories.

8 McKinsey Global Media Report

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To cope with fluctuations in demand for just-in-time server-side ad insertion, a highly scalable architecture is required. Demand will inherently vary over time, but for broadcasters, there will inevitably be sharp peaks: a breaking news story, or the return of a highly popular television series. Like many sporting events, Thursday Night Football is well-suited for a highly scalable, cloud-based video infrastructure that can be spun up or down as needed. With games taking place once a week, a traditional on-premises video infrastructure would represent a poorly utilized investment. When events are underway, the number of concurrent viewers can vary greatly and unpredictably. For example, viewership for a closely played game may remain steady for much of the contest, then surge by hundreds of thousands of new viewers during the last five minutes of the contest. The solution lies in encoding and packaging that can be virtualized for rapid deployment and hosted in a cloud infrastructure for immediate auto-scaling. Dedicated single path hardware encoders and packagers lack flexibility. The only practical solution is to spin up instances of software-based video processing as they are needed. For Amazon Video’s Thursday Night Football, encoding, packaging, and server-side ad insertion were executed by AWS Elemental software within the Amazon Web Services (AWS) Cloud. The cloud is uniquely well suited to creating millions of individually tailored manifests of content and advertising, even for live streamed events.

SOLUTIONS FROM AWS ELEMENTAL With AWS Media Services, AWS offers a highly scalable, reliable solution for live video encoding, packaging, and delivery, with integrated server-side ad insertion. An example of such a video workflow would begin with an AWS Elemental Live encoder, either an appliance or software, taking a live feed and compressing it to a mezzanine format. At this stage, the source video should have the SCTE 35 or 104 ad cue markers embedded in the feed. If it does not, then these cue markers can be programmatically inserted by a playout system using the AWS Elemental Live API interface. The compressed mezzanine stream is sent to AWS Elemental MediaLive, a broadcast-grade live video processing service, which compresses the video to the adaptive bitrate streams that are designed to playback on client devices. Here the ad cue markers are important, as they mean AWS Elemental MediaLive can ensure the ad content is blanked out if required, and that the output streams have decorated manifests that continue to describe the start of the ad break and its duration. The cue marker also enables AWS Elemental MediaLive to put an Instantaneous Decoder Refresh (IDR) frame in the encoded output after the ad break is complete. This ensures audiences get a broadcast-like experience with video quality being retained, without blockiness, when streams switch from ad content to primary content. The ABR-encoded streams and the decorated manifest with ad markers are published to AWS Elemental MediaPackage, a just-in-time packaging and origination service which prepared and protects video for delivery over the internet. AWS Elemental MediaPackage serves as the origin for all the video and will create templated manifest for the personalization and monetization service AWS Elemental MediaTailor. These templated manifests include discontinuity tags at the start of ad breaks to identify where an ad break starts as well as the duration of the ad break. AWS Elemental MediaTailor is the origin for the manifest, and at an ad break, will receive targeting information from a client, which it uses to make a

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request to an ADS using the VAST standard. The ADS, in turn, responds with the ad for that client as well as information that tracks how impressions will be measured and reported for that ad. The ADS response includes a reference to a high-quality version of the ad that AWS Elemental MediaTailor can use as source to transcode an output version that matches the resolution and bitrate of the content on the templated manifest. This ensures audiences don’t see any jarring transitions in quality or aspect ratio when switching to and from ad content. The compressed ad content is stitched into the templated manifest, replacing the original segments. Even though the ad segments are not originated from AWS Elemental MediaPackage, like the content stream, they are served via the same CDN hostnames, so AWS Elemental MediaTailor produces a manifest where content and ads look the same and play back without buffering. As stated above, reporting ad impressions is a vital part of monetization workflows, and AWS Elemental MediaTailor offers server-side ad impression reporting by default, using Amazon CloudWatch logs and CloudWatch metrics to determine impressions. An available API enables clients to determine where ad breaks occur and supports client-side reporting as well as any advanced playback features, such as ad timer countdowns or disabling scrubbing for ads with on-demand content. Using AWS Elemental MediaTailor removes the complexity of scaling for peaks in viewership and supports reliable ad insertion and delivery. Negotiation with ADS and CDNs, and measuring and reporting ad impression, are all managed by the service.

CONCLUSION: SSAI MONETIZES CONTENT AND DELIVERS A PREMIUM VIEWING EXPERIENCE Online and mobile consumption of video content continues to rise at an inexorable rate. Broadcasters, pay TV operators, content programmers and other video providers want to deliver a premium viewing experience to capture this growing audience. With advertising expenditures moving to new platforms, they need to protect their ability to monetize video content amid the challenges of an online landscape. Client-side ad insertion allows video providers to monetize content, but at the cost of quality of experience and at the risk of skipped commercials. Server-side ad insertion creates a higher quality viewing experience by delivering a single video stream that contains both content and commercials in the same resolution, aspect ratio, codec and encryption. End users do not experience video buffering, freezing, blocking, spinning wheels, or other viewing interruptions. It is especially important when streaming live content to deliver a consistent quality of

VAST, VMAP, and VPAID

VAST is able to tell the video player, or AWS Elemental MediaTailor in this case, which ads to use. What it cannot do, however, is define the ad breaks and their timings. This is where VMAP comes in. VMAP was published to address this very specific gap. It is suitable for use with VOD workflows where assets don’t necessarily have ad markers already in place.

In addition to VMAP, another protocol that can be used with VAST is VPAID. VPAID allows for ad interactivity in the form of executable ads (Javascript / HTML5 and Flash are supported), which VAST in itself doesn’t provide. Though VPAID can be used independently, it is often used with VAST to take advantage of both the ad tracking and reporting that VAST supports, and the interactive and reporting features from VPAID. For more information, read this blog post on VAST, VMAP, and VPAID.

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experience so audiences do not feel they have missed something vital. This consistency and reliability increases audience engagement, which ultimately increases viewing time and market share. Video providers are able to monetize content with a greater chance of advertisements reaching the viewer with SSAI. Through the use of individual viewer profiles and carefully targeted campaigns, it is now possible to deliver personalized commercials to end users. Because commercials are dynamically inserted into each video stream at the point of delivery, server-side ad insertion opens up the possibilities of real-time bidding for ad spots, an important benefit of the rapidly growing practice of programmatic advertising. Implementation of server-side advertising in a practical and cost-effective manner across a broad range of platforms and delivery fabrics demands a software architecture. This enables manifest manipulation and content encoding and streaming to be performed in real time. This processing needs to scale instantly to meet the demand of concurrent users, which could rise into the millions. The resulting service is likely to use a cloud infrastructure to provide flexible capacity and to minimize content delivery costs by packaging at the edge. Learn more about monetizing online content offerings using catch-up TV services in the AWS Elemental white paper Implementing Live-to-VOD Services.