The UK's TV market might be several years from adopting a programmatic solution that resembles the efficiency of digital ad-serving, but that doesn’t mean the medium is short of innovation as Sky steps closer to making addressable TV ubiquitous.
Sky has a clear roadmap for when digital TV (video-on-demand, mobile) will have the technology in place to be served programmatically. It’s programmatic platform, Sky Audio Visual Exchange (AVX), currently offers advertisers the ability to purchase spots in real-time on its mobile app Sky Go, as well as in a limited capacity on video-on-demand (VOD). It plans to incorporate all VOD in its programmatic platform soon.
This path muddies when linear TV is introduced into the folds. That’s because TV’s infrastructure has historically been defined by predetermined, landmark ad campaigns rather than real-time ad delivery.
For linear programmatic to take shape, a piece of adtech unique to the medium needs to created, one that is much more complex than the current digital programmatic solutions on offer.
The adtech needs to understand the content of the ad and whether it is legal to be broadcast before or after the 9pm watershed, it must know the audience that is watching and what ads are appropriate, and be able to detect whether those ads are compliant with the programme broadcast before or after the break, as well as the other types of advertisers bidding on that airtime to ensure two ads from similar companies are not broadcast back-to-back.
Currently, there is “no technology that is able to think about those things in one go and fill an ad break programmatically”, says Graeme Hutcheson, director of digital and Sky AdSmart at Sky.
Sky has partnered with video ad platform Videology to tackle just that, but with no clear idea of when the technical hurdles facing linear programmatic will be tackled, Hutcheson said Sky has no timeframe on when it will arrive.
“It is a complex build," he says. "The environment is a very different to digital in terms of rules we need to adhere to in the broadcast space. We are building it and we are confident it is going to happen but not immediately, but there are so many technical developments we need to employ that it would be stupid to predict a date.”
Instead, it is taking a measured approach to programmatic TV in the midst of an industry-wide digital debate. As marketers question the value of trading media within the digital duopoly of Google and Facebook, following a series of ad misplacement and metrics misreporting scandals, traditional publishers and broadcasters have talked up the value of their own trusted environments.
Rather than apply the same principles of digital programmatic to the linear space, Sky is investing “huge amounts of capital expenditure” - around £25m a year - into adtech solutions that value context as much as immediacy.
“TV and the processes and the regulation – stuff we all take for granted – has created this trusted environment that has driven loads of profitability for brands. Its role, its responsibility is ensuring that maintains,” says Rachel Bristow, director of client partnerships and collaboration at Sky.
“Brands wouldn’t want the same as what they have on linear TV. Why would you want to throw out all these great results from TV because you think it all has to be programmatic? It's about not losing that ability to have that context. We will get there, just with the right solution. Like AdSmart, it will be successful for the years that are put in before,” she adds.
Bristow claims that AdSmart, which launched in January 2014, took four years to go from concept to execution, a hint of the timescale the broadcaster might be looking at to launch a linear programmatic solution.
But where programmatic television at scale “remains a distant promise”, according to Rob Norman, global chief digital officer at GroupM, addressable TV offerings like AdSmart have radically changed the way that TV adopts data, allowing advertisers to trade on granular target audiences rather than the broad audience profiles offered by traditional linear TV.
As Norman put it in his Interaction report: “TV still serves advertisers well. Addressability just makes it serve them better.”
Advertisers can layer their own first party data with Sky’s subscriber data to target specific audience segments, understand which homes were exposed to an ad and which weren’t, and tailor campaigns in real-time accordingly. Essentially, it offers advertisers the trusted environment of TV with the immediacy and granular targeting of digital.
“We have historically built a lot of marketing campaigns as an industry around this idea of reaching a certain scale of audience, being able to control frequency to a degree and buying at the cheapest price possible...Now we have built the adtech, we have this canvas of content you can put your ad around, we can understand a lot about who you want to target, and can build a campaign around that particular KPI,” Hutcheson says.
While TV will never be 100% addressable, says Hutcheson, since there will always be advertisers who want the reach of TV, adtech solutions can provide access to those audiences “in a far more effective way” than shooting blindly in the dark.
But the broadcaster has a way to go to reach scale, something it needs to convince enough advertisers to shift budgets into the tech. AdSmart currently reaches seven million homes and includes 100 channels. This week’s rumoured deal with Virgin Media could add a further 3.7 million homes to the AdSmart network.
“Scale of channels is really important because advertisers love this idea of having an addressable solution but it is meaningless if you can only do it on a couple of channels or on a low proportion of the population. We are currently under 30% of the population. If you pit that against the US who are 42% addressable, we need to start looking at ways we can boost that,” says Hutcheson.
He adds that Sky is “in discussion” with other broadcasters in the UK, including Channel 4 and ITV, about adding their channels to Sky AdSmart in order to reach more homes. If GroupM’s predictions are anything to go by - where addressable TV could be a $2bn medium by the end of 2017, or 1% of total TV investment - those broadcasters will follow the money.