A Complete Guide to SCTE 35 for OTT Ad Insertion [2021 Edition]

In the U.S. alone, TV advertisements are a $71 billion industry. But for cable TV, that revenue is shrinking.

Americans are increasingly cutting the cord, leaving traditional ad-supported broadcasts and cable to plummet. Whether this is due to the overwhelming sentiment that TV advertisements are not relevant, or to the convenience offered by OTT services, fewer Americans have cable TV in their homes than ever before.

In response, advertising dollars are increasingly shifting away from cable TV and toward digital streaming to meet customers in their preferred settings – but that’s not the only challenge to overcome in regaining revenue.

Americans still consume an average of four hours of TV per day, but they’re now doing it in an environment where each player device can deliver ad personalization (given the user identification methodologies unique to the web). For broadcasters still using hard-coded advertisements in their streams, they run the risk of showcasing dated or irrelevant ads that need to be replaced.

For broadcasters looking to offer advertisers -- and viewers -- personalized ads using dynamic ad insertion best practices, the broadcast standard SCTE 35 signals are a modern solution to this problem. 

Here’s everything you should know about how OTT content distributors can use the cue tones built for analog broadcasting to power ad-supported linear streams across platforms such as Pluto TV, Samsung TV Plus, The Roku Channel, IMDb TV, Plex, and Xumo. 

What is SCTE 35? 

SCTE 35 is a standard created by ANSI and the Society of Cable and Telecommunications Engineers that lays out guidelines for inline cue tone insertion in streams. Also referred to as markers, these signals indicate where content distributors could insert or splice content into a stream.

For example, if a local news station received a stream from a national news broadcaster, the stream might be marked in areas where the station could replace national ads with others that were more relevant to the community.

Cue tones originated as a means to signal commands to equipment, particularly when to start or stop. This was especially useful with cartridge tapes, as the tape would otherwise play in a loop. Originally, cue tones occurred as DTMF tones, or subaudible tones that could not be heard by normal listeners. As broadcasting shifted to digital means via IPTV, cue tones likewise became digital. Now, the markers are read by computers and no actual subaudible tone exists.

Applied to QAMP/IP, Title VI/TVE, and live or time-shifted delivery, SCTE 35 is the core signal standard for advertising, programming, and content distribution control. It was originally designed for ad insertion, but the digital nature of SCTE 35 markers brings greater flexibility to their use.

SCTE 35 vs. SCTE 104

SCTE 104 and SCTE 35 work together to help with personalized ad placement, but many people are still confused about their relationship and differences.

In short: SCTE 35 cues exist within the MPEG transport stream. In contrast, SCTE 104 messages are sent between systems via TCP/IP.

SCTE 104 markers are inserted by an automation or playout system prior to sending the baseband video feed to the inserter. Once the feed reaches the encoder, those markers get translated into compressed stream markers to be transmitted with the content. The compressed markers are what SCTE 35 defines.

Think of it this way: the markers inserted under SCTE 104 are requests for content insertion. The markers inserted by SCTE 35 are what helps to fulfill those requests.

How Does SCTE 35 Work?

When an SCTE 35 marker appears in the program, it signals to broadcasters where they may splice other content into the feed. Typically, these spaces are predefined in 15-, 30-, or 45-second chunks  (though they don’t have to be). Broadcasters then decide what to do with that slot. Some options include:

  • Advertising breaks
  • Replacing low priority national ads with more relevant local ads
  • Other programming content
  • Blackouts
  • Stream switching
  • Program segmentation

The diagram below illustrates a SCTE-35 embedded programmed HLS stream.

SCTE 35 embed hls stream

Program Segmentation & SCTE 35

Besides ad insertion, SCTE 35 lends itself well to program segmentation. In program segmentation, content distributors split up content into different chunks for management purposes. The most common and readily visible example of this is chapters in recorded TV shows or movies.

Once segmented like this, a content distributor can add, change, or remove different parts of the program depending on their needs. For example, legal reasons might require a local station to black out a chapter of a movie. 

A content distributor could make a segment of content unavailable for web delivery. Likewise, another chapter might be replaced with a provider ad or local content that’s more relevant. 

These segments are unnoticed by the end viewer but give stations and content distributors significantly more control over the content they show.

SCTE 35 & the World of OTT

OTT has some natural advantages for ad insertion. Specifically:

  • Unicasting means that each device connects to the server independently. It’s possible to leverage this to deliver more personalized ads because the device can read the SCTE 35 marker and reach out to the server for an ad.
  • Sequences of fragments are individually decodable – they don’t require the segment before or after it. That simplifies splicing and increases flexibility with how the ads are inserted.

OTT, SCTE 35, & Your Server

Ad insertion with SCTE 104/35 works with SVOD, TVOD, and AVOD – it’s not server-dependent because the actual marker insertion happens before the server receives profiles and constructs manifests.

Likewise, OTT feeds are able to carry SCTE 35 markers that they receive from the transcoder. In other words, you’ll still handle SCTE 35 markers on the programmer side. 

When profiles get created, the transcoder will need to create segments that align with these markers. However, once compiled into the manifest, you’ll simply determine whether the playback device requests an ad (client-side insertion), or whether to manipulate the manifest itself to insert the ad (server-side insertion).

And since splicing is so simple, testing your ad insertion for live streams becomes a breeze. Any good live streaming platform available out there will have the ability to read markers, let you insert ads, and test beforehand what the final playback will look like.

Why Personalize with In-Stream Ads?

It doesn’t take a well-funded research study to tell us what we already know: people hate ads. However, the data can support two very important considerations surrounding viewer behavior:

  1. On-demand viewers are more averse to ads: 56% of on-demand viewers say they tend to mute ads on the TV versus 48% of live TV watchers. 54% of on-demand viewers say they don’t trust ads on TV, while only 48% of the live TV watchers share a similar view.
  2. Despite consumer disdain for ads, Americans still tolerate them: 47% of Americans now subscribe to free ad-supported streaming TV services, or “FASTs.”

On one hand, we have on-demand viewers reporting their anti-ad viewing habits. On the other, we have almost 50% of Americans tolerating ads if it means they get access to free TV. Both of these points can lead us to the same conclusion: the better or more targeted the ads, the more engagement and money broadcasters can make off them.

SCTE 35 can help with that. If you have the power to serve up personalized ads to viewers, then SCTE 35 markers make it easy to identify where in the stream you can put them.

Personalized, On-Demand Content Just Became Realistic

With the rise of OTT streaming, content distributors have a new set of tools for easily delivering on-demand content. And SCTE 35 has found new relevance, promising the means to serve up personalized, on-demand ads to the viewer. Say goodbye to irrelevant or hard-coded ads in your OTT stream. Say hello to a new way to insert content and grow your revenue.

If you want to learn more about Zype's video platform and how our monetization solutions can help you leverage technologies like SCTE 35 to send targetable data back to your ad server for pinpoint ad targeting, click here.