The two companies are reportedly in advanced discussions over a partnership.
According to the Telegraph, Virgin Media will take a share of revenue for the advertising it distributes in exchange for the extra scale it will bring with its customer base. The sales side of the operation will continue to be handled by Sky’s media sales house, which is targeting £1bn in sales by 2020 after achieving £800m last year.
The deal would add up to 3.7 million homes to Sky's Adsmart network which allows TV advertisers to target consumers based on an array of attributes including their postcode, level of affluence and age. The service is intended to make TV advertising an affordable option for small businesses which have previously relied on local newspapers and radio as their main marketing tools.
Sky also hopes the partnership will allow it to better compete with Google and Facebook, whose advertising revenue has grown rapidly as a result of their ability to target highly specific groups of consumers online.
Sky has begun to rely more on its advertising revenue in recent years as its core satellite subscription business slows following the growth of rivals such as BT. The company has partnered with several TV channels with its Adsmart network including Viacom-owned MTV and Channel 5, which became the first major broadcaster to strike a deal with Adsmart.
The planned tie-up with Virgin Media is expected to be announced within the coming days.
Last month, Sky announced that it was embarking on a pan-European roll out Adsmart in countries including Germany, Ireland, Italy and Austria.