No room for mistakes once you start increasing addressable advertising inventory

Advertising agencies have been slowly migrating towards more addressable advertising media and are now looking for addressable campaign opportunities across the full digital and traditional television landscape. They want to target against a multitude of consumer attributes, going way beyond demographics, and harness more than just panel-based measurement. Understanding this momentum, broadcasters and platform operators have been collecting data about their viewers and customers  – and the time has now come for them to activate their audiences for addressable – and at increasing scale.

That is the view of Videology, whose technology enables programmatic trading of television inventory, with a special emphasis on addressable TV inventory. The company is best known for its work with agencies and advertisers over the last six years, helping them plan and buy targeted campaigns that are compliant with regulatory and commercial rules (like prohibition of certain advertisements within children’s television, and avoiding competitor brand ads in the same advertising break). The programmatic platform was built with television and addressability in mind, so supports the upfront and guaranteed fixed-price, fixed-volume deals that underpin the TV economy. The buy-side Videology platform is designed to find enough suitable inventory, matched against audiences and at the right prices, to help agencies achieve their campaign goals.

Now Videology is harnessing the same core technology found in this agency solution to provide a sell-side programmatic platform aimed at traditional broadcasters and platform operators. The Enterprise Solution was launched in March and will enable broadcasters and platform operators to activate first- and third-party data, identify and aggregate audiences and accurately forecast inventory availability and pricing against those audiences. Like the agency solution, it supports the compliant, guaranteed fixed-price and fixed-volume trading that the television industry demands. 

The new Enterprise Solution allocates audiences (and the campaigns they form a part of) against inventory using real-time decisioning that takes business rules into account. It works across all platforms and screens, enabling broadcasters to target people rather than screens (or programmes). And it provides yield management to maximize the value of the whole broadcaster or service provider advertising portfolio – covering linear and on-demand across set-top boxes and digital (multiscreen). 

Yield management is considered a critical function. Although it is now assumed that viewers appreciate targeting (given studies showing lower tune-away during targeted ad breaks), this is not enough justification for offering addressable inventory. There is no point in doing this unless you can increase the money you make from ad spots.

To give the market confidence that the company can serve both the buy and the sell-side of the market, Videology has created a new division that will be home to the Enterprise Solution. Staff will work within one market or the other. As Jon Block, EMEA VP of Product & Platform at Videology, points out anyway, “The systems will be totally separated. Just as you cannot have any data leakage between buy-side competitors [i.e. different advertisers or agencies who make use of the programmatic platform], you cannot have any data leakage between the buy-side and the sell-side.”

So while the underlying algorithms and technology that Videology developed for buy-side requirements are being re-used, the company is stressing that these are totally different solutions. And judging by the early customers for the Enterprise Solution, there are no concerns about the company operating on both sides of the advertising fence. Yahoo Japan, part owned by SoftBank Group and a digital video giant, is an early customer.

Sky Media, the sales division for Pay TV operator Sky, is running a proof-of-concept in the UK, with Videology as a technology partner, on a Sky-designed programmatic system covering its video inventory. Harnessing capabilities found in the Enterprise Solution now available from Videology, the system will provide inventory management, optimization and prioritization, including frequency management, and will cater for broadcast compliance requirements and spot clash rules. This project is viewed as phase one of a larger converged video advertising solution at Sky Media. 

[Sky Media has also announced that it is enabling dynamic ad serving for the linear streams on Sky Go for the first time, using Yospace’s live ad insertion solution. That deployment means Sky Media can now offer the benefits of Sky AdSmart, its addressable TV advertising solution, across connected devices. You can read the full story about that, here.]

Videology is also involved in a proof-of-concept with a traditional broadcaster in Europe, using the Enterprise Solution, and we should expect an announcement regarding a major U.S. broadcaster using the new platform. At least two major platform operators in the United States are using Videology now for their sell-side programmatic requirements. 

Videology claims its new product does not disrupt the advertising ecosystem and is complementary to ad server platforms, which provide a range of functions from transcoding and ad insertion to content and rights management and fulfillment capabilities. Ad servers can also provide compliance, decisioning and yield management but the whole point of the Enterprise Solution is that it would take care of the data-driven ad decisioning and the yield management for the addressable TV inventory. 

“We concentrate on audience decisioning and our platform would be the data-driven ad decisioning layer that sits on top of the ad servers,” Block explains. “A broadcaster might have multiple ad serving platforms and we would be the layer above.” 

According to John Tigg, SVP Commercial Development at Videology, “We are getting a lot of traction for this product. The timing is really good; it is happening right now. The customer base on the Enterprise side reflects where different markets are in terms of understanding their users and collecting data and the demand for addressability. After the UK, the Nordic and Benelux markets are very progressive in embracing this kind of technology.”

Tigg says broadcasters are being asked to respond to agency RFPs (request for proposals) about enabling addressable campaigns across their full television portfolio. As a result they are looking for partners who can help them activate their data and audiences across their digital (e.g. desktop, mobile, connected TV) and traditional broadcast (e.g. set-top box) inventory. “They want to be able to show the agencies that they can deliver the audiences they want against their valuable content across all devices.”

Broadcasters acknowledge the fact that viewers seem to like addressable advertising, too. “This is absolutely key – the user experience. That resonates with broadcasters,” Block declares. “Targeting and relevant advertising is more pleasant.”

He refers to data from Sky Media showing that channel switching during Sky AdSmart commercials was 48% lower than for standard ads in the first three break positions, which is where most Sky AdSmart spots appear. Overall, across all positions in breaks, channel switching during ‘AdSmart’ ads was 33% lower than the norm. The effect was consistent regardless of channel, household type and amount of viewing. This data comes from a study of Sky Media’s 500,000-home Sky Viewing Panel and covers 50 million viewing occasions from May to August last year.

Tigg says the new Enterprise Solution meets a market need as broadcasters and platform operators cope with more non-traditional viewing, whether on-demand or increasingly multiscreen. They are under pressure to maximize the value of this non-traditional inventory and addressable capabilities help them do this. Meanwhile, Jon Block reckons there is an opportunity within linear content – whether digital or broadcast – to reduce waste for advertisers using dynamic advertising insertion and targeting. “As you get this capability to target, and you can deliver more granular audiences, it makes sense to charge more for those granular audiences.”

Videology claims its Enterprise Solution enables broadcasters and platform operators to take addressable TV advertising to the next level. This starts with convergence, with unified audience targeting capabilities across all screens and across linear and on-demand, eliminating advertising siloes. As much as anything it is this that delivers scale. But scale presents its own problem, which is reduced margin for error, and Block claims his company is uniquely well positioned to solve this. 

The challenge is that when you move from targeting content or devices in order to reach people, and instead start targeting people (i.e. audiences) wherever they may be, and when you then create hundreds of audience attributes and assign multiple attributes to each person, so that each individual belongs to multiple audiences rather than a single, simple demographic grouping, you create a lot of complexity in terms of campaign planning.  As Block explains it, you go from one-dimensional decisioning (e.g. one person on a device, one person watching one piece of content) to multi-dimensional decisioning. 

“One person used to belong to one audience – one of the 14 demographics acknowledged by BARB. Now other attributes like household income, interest, behavioural history, brand loyalty are layered on top. You have to work out in advance and in real-time which of the 200-400 [new] audiences you belong to and therefore which advertisements you should see. One person could be a member of hundreds of audiences now.”

Then you have the complexity of inventory allocation, where all the audience identification and matching must be blended with campaign and business objectives, from frequency capping to viewability requirements and even click-through rates, plus the need to maximise yield across everything the media company owns. All of this complexity means programmatic trading of addressable TV is difficult to get right, which means that scaling it becomes a risk. 

As Jon Block explains: “All of this complexity is not an issue if you are only targeting on 5% of your inventory. You can go after a motorbike or cooking enthusiast and get away with getting it wrong because you still have 95% of the inventory – which is not targeted – with which to fix your mistakes. When you move to 20% or 30% of your inventory used for targeting, and eventually 100% addressability, you lose that ability to hide mistakes.”

Videology believes this is the point at which its heritage helping agencies comes into play. “Agencies in Europe have been using us for six years because we enable them to trade close to 100% of their advertising with targeting.” 

So, claiming to have mastered the art of programmatic trading and addressable TV advertising, the company wants to help media companies who are looking to increase their addressable inventory to a point where they cannot afford any mistakes. As John Tigg puts it: “They have dipped their toes in the water and are now moving beyond that.”

The world will become increasingly addressable, Videology reckons. The company expects 100% of digital television inventory to become addressable over time, while Rhys McLachlan, SVP Global Head of TV Strategy for the company, is predicting that by 2020 around 70% of all the linear set-top box inventory in the UK will be addressable (although this will be the full extent of its expansion – the final 30% will remain non-targeted). All this addressable linear inventory will be traded programmatically, he believes. 

Videology champions direct programmatic and supports traded deals but the Enterprise Solution will also help any broadcaster that wants to sell some of its inventory via a marketplace, where third-parties can bid on it. A typical scenario today might see a broadcaster selling 95% of its inventory via its sales team but releasing 5% into a marketplace in order to ‘play’ in the programmatic market. According to Block, they would make an arbitrary decision on which 5% of inventory goes into the marketplace but the Enterprise Solution can do much better than this and forecast the prices that inventory will get in a marketplace. Broadcasters can therefore sell the 5% of inventory that they know will make them the best margins in a marketplace.

The platform uses the marketplace as one potential option for how the inventory is allocated. Block explains: “We allocate to marketplaces depending on business rules, like, ‘It is better to satisfy traded deal X or direct sale Y or instead send to a marketplace because we have forecast that this inventory will achieve a high clearing price – and therefore margin optimisation takes precedence.”

Thus the system dynamically forecasts the outcome of auctions as a monetisation opportunity alongside other monetisation opportunities like direct sold campaigns and traded deals. It makes these decisions in real-time.

It is worth pointing out that the Videology Enterprise Solution can also be used for inventory that is not addressable, and which does not rely on dynamic advertising insertion. Data is still used to optimise the audience composition to match a campaign, and then find those audiences and get the best price for the audiences, but this time the knowledge is used to buy standard advertising spots (so you buy the ads that are being broadcast with the show, without any ad replacement). In effect you are buying against networks, shows and day parts, revealing networks, for example, that are more likely to reach the target audience. That is the ‘traditional’ approach to linear TV ad buying, only now it is more data-optimised.

It was revealed recently that AT&T will be applying programmatic techniques to standard linear TV ads in its U-Verse (cable) and DIRECTV (satellite) TV homes along these lines. Advertisers will be able to buy via a private marketplace using their own data and third-party data. Videology is providing the programmatic platform behind this roll-out. 

Videology stresses that it can provide advanced audience-driven ad decisioning against any kind of inventory, and claims it has the leading solution for ‘converged TV advertising’. The company is now looking to counter any perception that its technology is only for agencies and advertisers. John Tigg says these companies were simply the first to embrace it and that, six years ago, Videology would have been laughed out of the room if they had pitched the Enterprise Solution to a broadcaster. Yet the technology that buyers have long relied on is now needed to make addressable TV advertising a mainstream, large-scale activity. “Broadcasters realise that the time is now,” Block concludes.