Dynamic ad insertion isn’t a sexy topic, but you should still pay attention to this announcement today from Comcast and NBCUniversal: It could become a milestone in TV’s evolution into a VOD business. The companies say that they will use a new technology to automatically update ads — initially from Chrysler and Kraft — that run just before and after shows from USA Network, E!, Syfy, Bravo, and Oxygen that viewers watch on-demand. Comcast expects to offer dynamic ad insertion in most of its cable systems by year end. If this is successful, then it could eliminate one of the big stumbling blocks for VOD: Advertisers often need to reach consumers right away, and don’t want to pay for spots on VOD that viewers may see days later. This has been a big concern for studios that want to promote new movies. If the Comcast-NBCU effort is successful, then more advertisers may decide to pay for VOD spots — and programmers will become more willing to offer their shows on-demand. Here’s the Comcast-NBCU release:

NEW YORK and PHILADELPHIA – July 26, 2011 – Comcast and NBCUniversal today announced that they are partnering to use dynamic ad insertion in On Demand programming, further leveraging the On Demand service as an advertising platform. Dynamic ad insertion, which is a service that allows for advertisements to be easily changed at any time, has begun rolling out in several Comcast markets, with plans to expand to the majority of Comcast markets in the coming year. Chrysler and Kraft are the premiere advertisers.

Content from USA Network, E!, Syfy, Bravo Media and Oxygen Media that airs On Demand on Comcast Cable systems will be part of the rollout, which will initially focus on advertisements that run prior to and after a show (pre-roll and post-roll ads) and include dynamic ad insertion for advertisements throughout the show (mid-roll ads) later this year. Content from additional NBCUniversal networks is expected to be added to the service in the coming months.

“On Demand programming is a key way to reach today’s consumers and an important part of an advertiser’s marketing mix,” said Ed Swindler, EVP and Chief Operating Officer, NBCUniversal Advertising Sales. “This capability helps make the service more advertiser-friendly, giving clients greater flexibility to ensure their ads remain timely and relevant.”

“With more than 20 billion views On Demand since we launched the service in 2003, and an average of 350 million views per month, the service is a proven platform to reach consumers,” said Marcien Jenckes, SVP and General Manager of Video Services, Comcast. “Enabling dynamic ad insertion will create more value for advertisers, content owners and Comcast, and allow us to further monetize the VOD platform while presenting more relevant advertising to our customers.”

Traditionally, ads are inserted manually into On Demand programming and remain in place throughout a show’s full window of availability. Technology from Black Arrow’s Advanced Advertising System allows ads to be easily changed or revised when necessary, allowing clients to more effectively target their marketing messages. Comcast will make this capability available to other programming networks on its systems in coordination with Canoe Ventures, which will also enable this capability to a broader footprint covering multiple operators by early 2012.

Comcast Spotlight, the advertising sales division of Comcast Cable, is bringing dynamic ad insertion to local advertising clients as well. Local advertisers utilizing the technology include South Florida McDonald’s, Richmond’s nTelos, Virginia Credit Union, NBC12/WBBT-TV and Batteries Plus.

“Our business is all about delivering the impressions our local clients need, across multiple platforms,” said Kevin Smith, Group Vice President, Spotlight Integrated Media Sales. “Dynamic ad insertion offers clients the opportunity to reach a highly engaged audience, with the accountability and efficiency they’ve come to expect from Comcast Spotlight.”