The UK’s largest commercial broadcaster, ITV, appears to have ruled out a deal with Sky to make its inventory available for addressable advertising via the Sky AdSmart platform. Speaking at Future TV Advertising Forum last week, Carolyn McCall, CEO at ITV, said it did not make much strategic sense for the company to sign-up, as it would have to give away too much in ‘commission’.
She made it clear that ITV would prepare itself for addressable advertising across broadcast infrastructure (as opposed to on the digital ITV Hub, where it is already possible) but it would rely on its own ad-tech. “We believe we have to do this for ourselves. We will be talking to Channel 4 [the UK’s second most important commercial broadcaster] about doing that, and anyone else that is interested. It will be different technology.” Watch the entire video of the CEO panel back here.
This is not what Chris Williams, CEO at Publicis Media Exchange UK, the trading and investment practice for the Publicis agency group, wanted to hear. Later at the same conference, he said: “The big thing that would help enormously to scale [addressable advertising] is to have AdSmart as the unified platform for the UK. That would necessitate ITV and Channel 4 to get a deal with Sky. Otherwise the market remains fragmented.”
Asked what he would like to see in the UK advertising landscape during 2019, he reiterated: “We need ITV and Channel 4 to solve their commercial differences with Sky so we can have a scaled AdSmart platform.”
Williams welcomed the deal between Sky and Liberty Global-owned Virgin Media (bringing together two of Europe’s Pay TV giants) that sees Virgin households added to the AdSmart footprint, both in the UK and Ireland. One immediate effect will be to enable channels that are already addressable in Sky homes (like those provided by Viacom {including Channel 5}, Fox International and A+E Networks) to become addressable in Virgin Media households. “It is great that they are aggregating more homes,” said Williams.
He pointed out that much of the growth in new TV advertising is coming from disruptive digital brands and when they are investing their budget they look for more data to prove the performance. This partly explains his interest in a more targeted offer that also makes attribution easier. His interest in a unified addressable platform is about more than scale though; it is also about ease of buying.
“We can apply data to enable our clients to target more effectively, and apply some automation so agencies do not have to run multiple reports all the time. That is so complicated. Clients should not have to pay us for that; they should be buying high-level strategy consulting on how to grow their business.”
Publicis Media Exchange wants a market-wide addressable solution that is simple and easy to use. Williams called several times for ITV and Channel 4 to help make that happen. “We have to get those deals over the line, so AdSmart is available to use with ITV and Channel 4 inventory.”
He extended the call to other UK broadcasters, too. On a global scale, Publicis wants broadcasters to help generate the scale for addressability that would make agency life easier.
Chris Williams center of image from the Future TV Advertising Forum
Laurence Miall-D’Aout, VP Advanced Advertising at Liberty Global, said of Virgin Media’s collaboration with Sky: “We fight with them for subscribers on a day-to-day basis, but building this partnership was relatively easy. It is about building reach and bringing scale to addressability. I believe our cooperation with Sky on AdSmart will see a step-change in the market.”
Earlier this month, Liberty Global announced that it will be using the Cadent Advanced TV Platform to support addressable advertising on set-top boxes and other IP devices across its multiple Pay TV operator footprint. The Cadent technology is being deployed first on Virgin Media in the UK, using its open APIs (application programming interfaces) to enable the integration needed with the Sky AdSmart platform.
Collaboration is a big theme in the ad-tech market right now and both Williams at Publicis and Henry Rivero, VP Advanced Advertising and Innovation at RTL Group [one of Europe’s commercial TV giants] expressed their admiration for the OpenAP initiative in the U.S. This enables audience-based buying at scale across multiple broadcaster group inventory, via a single platform.
Fox, Turner, Viacom, NBCUniversal and Univision collaborate on the project. They agreed commonly defined audience segments, so brands/agencies can buy against user interests and need-states rather than just demographics, making ‘travel enthusiast’ or ‘luxury shopper’ or ‘first-time car buyer’ a target group, for example.
Audience-based buying is not the same thing as addressable advertising, even though both deliver against granular and custom segments. Notably, what is termed audience-based buying (as used in OpenAP) does not target people by location or on a household-level basis. Instead, data is applied to enable smarter planning and audience discovery for classic linear TV buying. Thus, if particular channels, programmes or dayparts over-index on ‘home chefs’ or ‘DIY enthusiasts’, you can buy into that inventory across different channels. This is what OpenAP enables.
Williams said: “These U.S. television networks got together, and it took six months. You can apply custom [audience] segments. I would love to see that in the UK.” He feels this is another model where Sky Media could be an enabler. Rivero at RTL said of OpenAP: “That is a great collaboration around [audience] segments and planning.”
OpenAP has admirers globally. As we reported here, three major channel owner groups in Canada – Corus, the public broadcaster CBC {which is part ad-funded} and Blue Ant Media – have publicly backed a Canadian version of it.
Turning back to addressable TV advertising, Rivero at RTL agrees that the market is currently fragmented and suggested there needs to be a more cross-platform approach to get addressable moving. Explaining RTL’s approach to this opportunity, he revealed: “We are not closing ourselves off. We encourage all our broadcasters to engage with local partners [platform operators] on addressable, but it is early days.”
Picture: Full panel including Laurence M’Miall-D’Aout (far right), Justin Gupta, Google; Henry Rivero, RTL; Michael Kubin, Invidi; Chris Williams, Publicis and moderator, Keith Kryszczun, Cadent. 
Editor’s comment
ITV originally kept its options open for broadcast addressable TV advertising, telling Videonet last year that it could not confine itself to a single technology or universe and that “this may well require several technical solutions which work together.” This autumn the position hardened, with Jason Spencer, Business Development Director at ITV telling an audience of Manchester agencies and brands: “The choices are either to invest in technology or build it ourselves, so we are looking at the options around those.”
The company has made it clear that its priority for addressable advertising is on ITV Hub, where of course it has complete control of its own ad-tech, and has demographic details about all registered users. ITV Hub viewership and advertising revenue is growing quickly.
Assuming you can monetise your inventory as effectively in the digital domain as on broadcast – and all broadcasters who speak publicly on this issue say they can – it is now a sensible strategy for any major broadcaster to aggressively expand their ‘direct-to-consumer, owned-and-operated digital properties, where they are in complete control of their own destiny.
The problem is that while young audiences are moving to digital quickly, the vast majority of total viewing is still on broadcast TV. If you want to enable addressability on your broadcast channels (i.e. those delivered over terrestrial, satellite or traditional QAM cable spectrum, and indeed classic multicast telco IPTV) you need to invest in different technology.
If ITV can get Channel 4 onboard for a broadcast addressable solution, the obvious next step seems to be to create a kind of Freeview/Freesat style consortium for ad-tech, or get those existing platforms involved, since someone is going to have to manage software and messaging on the set-top boxes and all the free-to-air terrestrial set-top boxes in the UK are sold via retail, with different manufacturers offering devices.
Freeview and Freesat – which were created to ensure a first-class free-to-air service after television went digital multichannel, would in effect continue their roles of ensuring the major broadcasters have the platform and technology to remain relevant and healthy in a period of disruption (in this case, advertising market disruption). The commercial broadcasters would have to bear the cost.
Even with a free-to-air solution (of whatever kind) there is still a hole in the reach for ITV addressability, since Sky and Virgin Media homes would not be enabled for addressable advertising in ITV channels – unless household members happen to be watching on a free-to-air TV/STB rather than via the Sky/Virgin set-tops, which may account for some bedroom or kitchen viewing, or they decide to stream ITV (rather than watch it via cable or satellite) on the living room connected TV.
Realistically, covering the whole UK household footprint with addressable TV on a channel like ITV requires a free-to-air solution and a solution for Pay TV homes (either deals with the Pay TV operators concerned or, as ITV originally hoped with its now defunct arrangements with Sorenson Media, a means to harness Smart TVs independently of the set-top box they are hooked to).
Major broadcasters that attract big audiences need addressability less than most. We will be reporting on the attitudes of ITV and Channel 4 to addressability separately.
Estimates for how much of all television advertising will end up being addressable vary from 20-40%, based on public utterances. If 80% of TV advertising remains mass-reach (targeting everyone rather than segmenting audiences) then a broadcaster that can maximise the value of this (maybe via audience-based buying, and innovations like AI-enabled contextual placement of ads – see here), and offer addressability across a growing online audience into more connected TV devices, and hit free-to-air homes (if they can) begins to build some leverage for future Pay TV deals.
