Server-guided ad insertion (SGAI): Next-gen ad tech for streaming

Emerging streaming models, alongside advertising schemes like SGAI, CSAI, and SSAI, are fundamentally transforming the audiovisual market. Fueled by evolving consumer behavior and intense platform competition, they drive the demand for personalized, non-intrusive ads. This shift poses challenges but also offers opportunities for optimizing ad spend as advertisers and content providers adapt.

This article explores the emergence of server-guided ad insertion, or SGAI, as a next-generation ad insertion scheme. We examine SGAI’s rising popularity over existing methods like CSAI and SSAI, outlining how it addresses their limitations and offers a unified solution combining their strengths. Finally, we introduce you to PRESTOplay for Addressable TV Ads, an advanced solution by castLabs that enables SGAI for OTT and live IPTV, delivering targeted advertising on streaming services.

Join us as we navigate the intricacies of the streaming advertising landscape and explore the transformative potential of server-guided ad insertion in shaping the future of digital advertising.

PRESTOplay for Targeted TV Ads

A more ad-focused streaming landscape?

In the evolving landscape of the audiovisual market, streaming business models are redifining ad strategies. Subscription video on demand (SVOD) is increasingly challenging traditional pay-TV services for consumer entertainment spend. Similarly, transactional video-on-demand (TVOD) services have disrupted the transactional home entertainment market, replacing physical transactions with digital offerings. The emergence of advertising-based video-on-demand (AVOD) and broadcast video-on-demand (BVOD) services, offering access at reduced cost in exchange for advertisements, is further reshaping the advertising market.

Ad supported streaming services in the US

This raises concerns about the extent to which these new services are impacting traditional TV advertising budgets and whether a shift towards more individualized, targeted advertising is underway. Understanding these dynamics is crucial for stakeholders in the audiovisual and advertising industries to adapt and thrive in this changing landscape.

In concrete, the shifting streaming landscape presents challenges for ad spend due to evolving consumer behavior, increasing competition among streaming platforms, and the need for more personalized and non-intrusive advertising methods.

Evolving consumer behavior

With the rise of streaming services, consumers have grown accustomed to on-demand content and personalized experiences. The ubiquity of high-quality content accessible anytime, anywhere, on any device (ATAWAD) remains attractive, but things are starting to change.

Deloitte’s Digital Media Trends survey reveals a decline in the average number of paid streaming services per subscriber, suggesting a potential “subscription fatigue” among consumers. This shift is driven by several factors, including cost considerations and the inconvenience of juggling multiple paid services. Consumers are increasingly turning to ad-supported platforms, attracted by their large, easily accessible content libraries and improved ad experiences.

These platforms offer a sustainable business model, tapping into consumers’ willingness to view ads in exchange for free content. As technology advances, ad-supported streaming services are poised for a bright future, offering a compelling alternative to traditional subscription-based models.

Increasing competition among streaming platforms

The streaming landscape has become increasingly crowded with the emergence of new platforms and the expansion of existing ones. As competition intensifies, streaming services are vying for subscribers with everything from offering exclusive content and ad-free experiences to TVOD and AVOD/BVOD models. This transformation is leading to a disaggregation of value in the industry. Distributors and aggregators are adapting by diversifying their offerings across multiple platforms to protect their revenue streams. Broadcast networks are facing challenges in passing on rising content costs to distributors and are experiencing a decline in TV advertising revenues as budgets shift online.

This shift necessitates a greater focus on building direct relationships with consumers and creating content that appeals to either mass or niche audiences. For content creators and rights holders, this evolving landscape offers new opportunities to monetize their content through various platforms and forms of usage, beyond traditional TV buyers, thereby driving revenue growth and expanding their reach.

However, this also creates a challenge for advertisers as they must navigate multiple platforms to reach their target audiences effectively. Additionally, the fragmentation of viewership across various streaming services makes it harder for advertisers to achieve broad reach and frequency with their ad campaigns. Advertisers face the dilemma of allocating their ad spend across different platforms while ensuring maximum ROI and brand visibility.

Need for personalized and non-intrusive advertising methods

To overcome the challenges posed by evolving consumer behavior and increasing competition, advertisers must embrace personalized and non-intrusive advertising methods. This shift in consumer behavior poses a challenge for advertisers as they must find ways to engage with audiences who are resistant to traditional ad formats. Moreover, viewers now have more control over their viewing experience, making it crucial for advertisers to deliver relevant and non-disruptive ads to maintain engagement.

FreeWheel found that in ad-supported VOD, the majority of audience drop-off occurs during content, not ads. Specifically, only 22% of drop-off on long-form content occurs during ads, with a slight increase to 30% on short-form content. These figures suggest that the presence of advertising does not drastically affect a viewer’s engagement with the programming or their time spent watching, so long as the quality of the ad experience aligns with the premium nature of the content they’re viewing.

Additionally, monetizing additional inventories such as live events where there may be fewer ad breaks and preserving eyeball’s contact with high-value programming content opens the door to alternative “in-content” ad formats. Nonlinear ads examples include overlays, squeeze backs, and L-bands.

castLabs L-creative for ads
Newer ad formats, such as L-bands, improve ad impressions for live events.

By understanding viewers’ behaviors and preferences, advertisers can create more relevant and engaging ad experiences that resonate with their audience. However, striking the right balance between personalization and privacy is crucial to avoid alienating viewers and breaching their trust. Advertisers must prioritize transparency and consent when collecting and utilizing consumer data to ensure ethical and responsible advertising practices.

Client-side ad insertion (CSAI) and server-side ad insertion (SSAI)

Client-side ad insertion (CSAI) and server-side ad insertion (SSAI) are two distinct methods used in digital advertising to deliver and insert ads into streaming content. They have emerged as responses to the changing landscape of online video consumption, where viewers increasingly expect personalized and non-intrusive ad experiences.

CSAI involves the insertion of ads directly into the video player on the viewer’s device. When a viewer initiates streaming content, the video player communicates with an ad server to request ads. The ad server then selects appropriate ads based on viewer data and sends them to the video player, which inserts them into the content stream.

This scheme allows for real-time ad targeting and personalization, as ads can be tailored to individual viewer characteristics such as demographics, location, and browsing history. CSAI is popular among advertisers seeking greater control over ad targeting and measurement, although it is susceptible to ad blocking by viewers.

CSAI vs SSAI comparison

SSAI, on the other hand, involves inserting ads into the video content stream on the server side before it reaches the viewer’s device. When a viewer initiates streaming content, the content and ads are stitched together on the server side and delivered as a single stream to the viewer’s device.

This method ensures a seamless viewing experience without ad buffering or latency issues, as ads are integrated directly into the content stream. SSAI is favored by advertisers and content providers for its reliability and scalability, although it may pose challenges in accurately measuring ad impressions and viewer engagement.

CSAI and SSAI drawbacks

In today’s landscape, SSAI has emerged as the preferred option due to its advantages over CSAI. SSAI solves CSAI’s limitations related to ad-blocker resistance or seamless QoE and therefore being more and more adopted across OTT providers.

Nonetheless, despite its effectiveness, SSAI comes with notable drawbacks. One significant limitation is the substantial processing power required to handle ad insertion during large-scale events, such as live sports broadcasts, where ads need to be delivered to all viewers. This demand creates peaks of centralized processing power, which can strain infrastructure resources.

As already mentioned by Zachary Cava in 2019, manifest size was becoming a critical challenge at scale when clients were constantly polling for updated manifests, resulting in a concurrency challenge due to the highly cacheable responses generated. Similarly, after these peak moments, the ad insertion servers may remain idle, resulting in inefficient resource allocation, not to mention limited measuring. What’s more, the current ad insertion workflows for HLS and DASH are not optimized, leading to poor performance of SVOD and AVOD campaigns and scalability issues for live content

Moreover, content providers deploying SSAI for OTT need help in effectively monetizing their content due to limitations in client-side advertising and video capabilities. These limitations include inadequate tracking and measurement, subpar video ad quality of experience (QoE), and a lack of support for new ad formats. These challenges result in reduced demand side appetite and hinder the overall effectiveness of the advertising system.

To address some of SSAI’s hurdles, some larger media companies adopt a hybrid approach, combining CSAI and SSAI. CSAI distributes processing power across thousands to millions of devices, while SSAI optimizes delivery. More recently, to reconcile the benefits of CSAI and SSAI, the industry has begun exploring ad insertion within adaptive streaming formats (DASH/HLS). This enables seamless ad stitching directly within the viewer’s video player while consolidating the management and configuration of the experience within the content provider’s service. This innovative approach is known as server-guided ad insertion (SGAI).

What is server-guided ad insertion (SGAI)?

Server-guided ad insertion, or SGAI, is an advanced ad insertion technique used in digital advertising and streaming services. Unlike traditional methods where ad insertion occurs either on the client side or server side, SGAI combines the advantages of both approaches to provide a more efficient and controlled ad delivery process.

This ad insertion scheme is not completely new, but it’s gaining traction across streaming providers. Services like Disney+ have already deployed SGAI on a large scale. SGAI offers enhanced client-side capabilities to tackle challenges in live-feed ad personalization and improve both SVOD and AVOD monetization for OTT.

How does SGAI work?

In SGAI, the primary content, such as a video stream, contains predefined points known as resolution points (HLS interstitials and DASH Media presentation insertion events). These resolution points serve as placeholders where additional content, such as advertisements, can be seamlessly inserted. The description and control of the ad insertion process are centralized within the content provider’s service, ensuring consistency and reliability across different devices and platforms.

When a viewer initiates playback, the streaming manifest provided by the content provider includes information about these resolution points. As the primary content is streamed to the viewer’s device, the video player follows these resolution points and requests additional content from the content provider’s service as necessary. This allows for dynamic ad insertion tailored to the viewer’s preferences and ensures a smooth viewing experience without interruptions or buffering.

One of the key advantages of SGAI is its ability to balance personalized ad experiences with efficient resource utilization. By centralizing control within the content provider’s service, SGAI enables targeted ad delivery based on user-specific information while minimizing the impact on network bandwidth and server resources. Additionally, SGAI facilitates the caching of content, optimizing performance and reducing latency.

Overall, SGAI represents a next-generation ad insertion scheme that combines the benefits of client-side and server-side approaches while addressing their respective limitations. It offers advertisers and content providers a more sophisticated and scalable solution for delivering personalized and engaging ad experiences in the evolving landscape of digital streaming.

PRESTOplay for Addressable TV Ads

Meet castLabs’ new SGAI solution for OTT and live IPTV providers: PRESTOplay for Addressable TV ads.

An extension of castLabs PRESTOplay suite, available across web (browsers, smart TVs, game consoles), Apple (iOS, iPadOS, tvOS), and Android (including Android TV). This solution adopts the latest ad-insertion scheme – SGAI, together with selected partners, utilizing HLS Interstitials and DASH media presentation insertion events to enhance ad insertion performance. By decoupling programming manifest delivery from ads manifest delivery and offering enhanced ad tracking capabilities, content providers can attract more advertisers and support new ad formats, thus increasing transparency and trust for ad budgets.

castLabs PRESTOplay for Addressable TV Ads workflow

As pictured above, PRESTOplay for Addressable TV Ads makes it easier to show targeted ads on streaming services by enabling client-side/server-guided ad insertion. It allows ads to be detected and requested right when they’re needed, instead of beforehand, making the process way more efficient. With this update, only the necessary ad information is sent, reducing the amount of data exchanged and ensuring smooth transitions between regular programming and ads. Similarly, for targeted ads on live IPTV, PRESTOplay hybrid Android TV player detects the ad avail (signaled with SCTE-35) client-side, triggers the ad request through the SSAI/ADS integration readily in place for OTT and ensures fully seamless transitions between live programming and ads.

Conclusion

The demand for personalized and non-intrusive advertising has never been more pronounced. With the emergence of advertising-based video on demand (AVOD) and broadcast video on demand (BVOD) platforms, advertisers and content providers face new challenges in engaging audiences effectively. However, amidst these challenges lies an opportunity for innovation, and that innovation is embodied in the advent of SGAI and solutions such as PRESTOplay for Addressable TV Ads.

SGAI and PRESTOplay for Addressable TV Ads represents a paradigm shift in ad insertion technology, combining the best of CSAI and SSAI advantages. With PRESTOplay for Addressable TV Ads, content providers can maximize revenue potential while providing viewers with a seamless and personalized ad experience, ushering in a new era of advertising in the digital streaming landscape. If you want to see it live, don’t miss our demo at the 2024 NAB Show in Las Vegas on April 14-17 at booth W2312.

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Jean Navarrete

Jean Navarrete
Digital Marketing Manager

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