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UK Pay TV provider BSkyB will deploy addressable advertising for linear television next summer, starting with a large selection of its owned channels including Sky 1 HD, Sky Living HD and Sky Atlantic HD, but not covering live events, including sports, during Phase One of the roll-out. At launch over 7 million Sky homes will be enabled with the ability to combine sophisticated household profiles with real-time decisions on which home should see which advertisements and the dynamic ad insertion technology that serves pre-placed ads from the PVR hard drive into the linear advertising spots.
The Sky AdSmart technology was demonstrated in public for the first time yesterday at Future TV Advertising Forum in London. In a joint presentation with its addressable advertising technology partner NDS, the company showed how four different households could each be shown a different advertisement simultaneously even though they were watching the same national channel.
A recorded show was used to simulate the linear programme feed but the advertisements were inserted live. Four households, pre-defined as being a mid-high affluence retired couple in London, mid-affluence families with children in Birmingham and Edinburgh, and a family that does not subscribe to Sky but still gets the Sky channels via a partner distributor, were represented on different screens, each fed by its own Sky+ HD PVR. (In the real world, the non-Sky home would get the channel through someone else’s STB!)
The children’s programme ‘Sinbad’ was interrupted by what appeared to be a classic linear ad break and the first 30 second advertisement was a national ad shown to all four families. But the second advertisement was different on each screen, one showing London theme park attractions, another showing Disneyland holidays and a third showing long-haul destination holidays, all geared to be more relevant to their respective audiences. The non-Sky home received the default national advertisement. The frame-accurate insertion is completely seamless.
Sky Media, the sales arm of BSkyB and the part of the company driving the new concept, has carefully profiled the operator’s subscriber base according to multiple factors, including family type, income and geography. There are actually 90 different attributes to describe the viewing audience. The company knows which boxes each home ticks and that profile is stored in the set-top box smart card.
Different advertisements are downloaded to the PVR over-the-air, via satellite. Jamie West, Director of AdSmart & Commercial Development at Sky Media, said that at launch up to 200 different creatives could be pre-placed on the PVR at any one time. Advertisers can cherry-pick the characteristics they are looking for and combine them. The campaign management and decisioning software then determines whether we get to see the national advertisement or a more localised ad or something targeted towards us because of our other distinctive household characteristics.
By working with third-party data services like Experian, Sky Media will be able to classify us under major categories like: Life stage; Kids ages; TV region; City; Financial Outlook, Home Owner, Affluence and Mosaic lifestyle. So advertisers could use household profiling, rather than simply advertising around a certain kind of TV programme, in order to target people with ‘liberal opinions’ or a ‘suburban mindset’, and then decide which region you want and other factors like income.
“We have segmented our audience so for the first time you can select audiences based on the ages of people in the house – whether adults or children – and on region. Up to now we have not been able to offer a regional proposition but we have gone a stage further than what is possible with the ITV regions [ITV is the UK’s largest commercial broadcaster and BARB, the audience measurement system, reports on 13 large regions] and we can sell on a major conurbation.”
This more precise geographic targeting (Sky Media will offer 24 regional options in total) is significant and is one of the reasons that West believes addressable advertising can attract new money into the TV business. “This opens the opportunity for using TV in a truly regional way and makes it possible to compete with regional press and radio, so growing the TV advertising market,” he declares.
This is not just about targeting the very largest cities; Brighton (a smaller city on the South Coast) is one of the ‘conurbations’ advertisers will be able to target via Sky channels starting next summer. “Our vision of the future is to take this to the point where you have hyper-local advertising opportunities, with your local flower shop advertising to homes within five miles of their location, subject to the creative execution being good enough, of course,” West said at Future TV Advertising Forum.
He added that there are campaigns today that want to target a broad audience but actually miss certain sections of that audience, and here Sky AdSmart can help them to ‘top up’ on that segment. He believes addressable advertising is also suitable for ‘lapsed brands’: the brands who run mass advertising occasionally but cannot afford to run them all year around. Again, the opportunity is to ‘top up’ with targeted audiences.
West emphasised that the ambition is not to compete at the expense of other channel owners or broadcasters but to grow the overall market. “We do envisage a world where AdSmart is made available to our commercial partners so there is no reason why this should not be available to Channel 4 as well, for example.” Though he did not expand on that, it presumably opens the way for third-party channels to sell AdSmart capabilities to their own advertisers direct or for Sky Media to sell the addressability on their behalf, depending on commercial arrangements.
At launch the first ad in a break will always be within the main ‘national’ feed but later Sky Media would be happy to make every advertisement in a break an addressable ad. West does not think there will be enough demand for that to happen, however, noting that for many advertisers this addressability is simply not needed. The targeting is available as another route to market for those that do want it.
West said Sky Media will provide complete transparency by signalling every AdSmart activity to the BARB people meter. “If 2% of our whole audience were ‘AdSmarted’ and receive a different ad to the original advertisement then the [original] advertiser is only charged for the 98% [i.e. the audience they do reach] and that will be measured by the people meter so there is no double counting. You pay for what you receive.”
In addition, Sky Media has its own measurement panel based on the 30 million viewing events it records using set-top box data from 500,000 homes. This panel data will also be available for advertisers, audited by a third party.
Sky Media has been testing this technology and the trial will be extended to Sky employee homes in due course to provide what West calls an end-to-end customer test that includes all the reporting that the advertising industry needs. At its ‘upfronts’ [when channels present their new programmes to the advertising industry] Sky Media will be inviting brands and agencies to take part in this test phase. It is looking for a cross-section of campaign types including brand-heavy, response driven and regionally focused.
The plan is for Phase One of Sky AdSmart to run for a year and it sounds like the company will be conservative about how it uses the system during what will be a bedding-in period. West said that when Phase Two kicks off in summer 2014 “that is when we will see the true flexibility in terms of targeting.” This is the point when a prestige car maker will be able to target the top 5% of homes in terms of disposable income, for example.
Sky Media’s West believes addressable advertising will enhance the TV experience for the viewer, pointing to research in the US showing that addressable advertising reduces tune-away from channels by 32%. “If you are a family with children aged 5-7 and you are watching TV together on Sunday night, then an advertisement for nappies will not be relevant to you,” he points out.
A Sky Media promotional film, played to the London audience, said: “This turns television viewing into a whole new ball game. Advertisers can get a specific audience through a mass medium, giving greater control over who sees which commercials and in which location and how often they see it. Once you have agreed the campaign terms, AdSmart does the rest and with our advanced data it is easy to track the campaign performance and report in detail. You select the exact buying audiences you need.”
According to the Sky promo film, this is “The power of TV – enhanced”. And in response to a question West emphasised: “In the early phases we will have existing advertisers spending more , maybe by promoting more different brands, but our ambition over time is to attract new television advertising.”
Addressing a senior audience from advertisers, agencies, channel owners, broadcasters and platform operators, David Whittaker, Director of Business Development & Advertising Technologies at NDS (now part of Cisco) explained the technology behind Sky AdSmart. He noted that the whole premise behind the original development of the ‘NDS Dynamic’ software was the desire by Pay TV operators to develop a mixed economy where they could make money from advertising on their own channels as well as from Pay TV subscriptions. “10 years of technology development has gone into this,” he said. The NDS technology is also deployed in other markets.
He explained how the PVR is made aware of what advertising spot is coming next, and how the device is informed whether it must stay with the main channel feed or switch to play an alternative ad spot from the PVR’s disk. The addressable advertising spot has to fit within the existing time slots of an advertising break but that does not limit you to 30 seconds; it could be a 60 second addressable ad that replaces two consecutive 30 second national ads, for example.
Whittaker reiterated that this is about more than delivering different copy to different homes. It is essential that these actions are then reported to BARB so this approach ties in with the established reporting and trading systems. “We know exactly which box shows which ad when viewers move away from the main broadcast and into AdSmart,” he pointed out.
Responding to audience questions, Jamie West revealed that if an advertiser does not want addressable ads to replace their original ad in the main channel feed, that is a trading question (meaning it is negotiable, presumably!) Otherwise the Sky Media terms of business do allow the company to sell addressable ads that might take parts of the audience, where the inventory is capable of being ‘AdSmarted’. As noted earlier, advertisers will only pay for the audience they do reach.
Sky AdSmart is designed to work with linear TV, VOD and catch-up through the set-top box and West said the vision is to extend targeting functionality to all of these types of delivery.