Imagine being an on-demand video provider in a new country, with a huge opportunity to make money on a major platform. There’s just one problem: the major platform is tech forward, and too much of the advertising industry that pays your bills isn’t.
That was the challenge bedeviling XITE, a decade-old Dutch company now based in Brooklyn. XITE delivers on-demand music videos to tens of millions of homes across the United States and Europe through various providers, including pay-TV giant Comcast through its cutting-edge set-top box, the Xfinity X1.
Through the X1, XITE videos are available to around 25 million households. It’s a great opportunity for a relatively small company to deliver highly targeted ads tied to not just those households but specific devices inside each household, and the likely users of those devices.
That powerful capability is possible with IPv6, the next generation of the foundational protocol that runs the Internet, effectively its address book that guides packets of data across the vast web. With IPv6, you can move beyond the house-level limitations of the predecessor protocol (IPv4), and target ads to specific devices, whether they be the living room TV, the smart refrigerator’s screen, or the iPad in the den.
That’s all pretty cool, and opens up all kinds of possibilities with the IPv6-enabled X1 box for more specific connections with highly segmented audiences. Except, someone forgot to tell a big swathe of the online ad industry to keep up.
“XITE lives in the X1 set-top box,” said XITE co-CEO Cees Honig. “But some issues (between IPv6 and IPv4) would act as a blocker for X1. The advertising market is not yet ready for IPv6. The market doesn’t believe this is a problem. But we basically couldn’t use this inventory.”
In the IPv4 universe, those ads couldn’t always find their audience, like a homing missile with an imprecise targeting sensor. Targeted ads that XITE wanted to send to the iPad in the back bedroom, say, rather than the set-top device in the living room couldn’t reliably that specific audience, because too many ad servers were still stuck in the IPv4 world.
IPv6 makes those sensors a lot smarter, able to tell the difference between all those smart devices increasingly popping up in American homes, each now possessed of their own, more specific IP address that can be, well, addressed.
Frustrated with the effective loss of “a big part of our inventory,” Honig and XITE tapped Beachfront, a New York company that for years has been connecting sell-side and demand-side companies in online video. After months of work, this week the companies unveiled a fix that ensures those targeted ads to Comcast customers actually get where they’re supposed to go.
“Really, what we’re doing is serving as a translator of sorts between these two protocols,” said Ben Abbatiello, Beachfront’s VP of advanced TV. “The process of building a target audience, or segments, or a creative audience, historically, we’ve relied on an IP address for the (entire) home. That process has become increasingly broken with the proliferation of devices in the home. The number of devices with IP addresses in the home has nearly quadrupled. It becomes a lot more difficult to segment against, target against.”
Ad trading desks were pushing for a fix to better access that giant audience, and ensure that marketers could trust that an ad sent to a targeted subset of that audience actually arrives, and is seen. Beachfront, which bills itself as a “video ad management platform” took on the problem.
The issue was particularly keen given that the online audience for Comcast is not only huge, but highly valuable to advertisers. Those remaining cord non-cutters likely have more disposable income, and are more likely to watch the ads served up through the system.
“It requires a lot more granularity,” Abbatiello said. “Any creative stored on a server supporting IPv4 just won’t deliver in the future. It won’t render on a device that supports IPv6. There’s a significant amounts of ad creatives that never get delivered, never tracked for, and these campaigns need a home.”
Abbatiello called it a “growing problem, increasing by the day” as the Internet of Things and IPv6 platforms such as the X1 transform more households, though the fix the two companies announced today is specific to “environmental factors” in the X1 that needed solving.
“It’s not really getting the notoriety, the attention that it deserves,” Abbatiello said. “I think we’re all focusing on privacy right now, which is really important, but this is one of those things where we’ll have no connectivity soon enough if we don’t solve for it.”
Beachfront’s technology fix will have significant application for XITE video and other publishers on other tech-forward broadband providers, such as Rogers in Canada, and Cox in the United States, Honig said.
“This will basically individualize each set-top box for itself,” Abbatiello said. “These are the things we’re fighting, a lack of granularity and specificity.”