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Addressable TV: from Good to Greater

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By Rhys McLachlan, global head of TV strategy, Videology

Addressable TV has long been touted as the next big thing in global advertising. But much of the momentum is coming from the U.S. where the fundamentals of TV advertising are at odds with the situation here in Europe.

In the U.K., our TV landscape is a very different picture. Yes, our TV advertising industry already has access to a basic level of ‘addressability’, thanks to the range of socio-demographic data available from the audience measurement panel BARB.

But true audience addressability has not yet arrived – the level of addressability that can only be achieved by tapping set-top box and TV-subscription CRM data and appending it to third-party digital data. This additional layer is vital in equipping the industry with the insight and accuracy needed for sophisticated TV targeting at scale.

Technically it is within our capacity to combine set-top box and TV viewing data with additional digital data to create a single-view of individual viewers, but we’re not quite there yet.

For now, true addressable TV remains just out of reach in Europe for a number of reasons:

  • Lack of inventory. A lack of inventory from platform providers is one of the biggest challenges to achieving a U.S.-style solution. Cable companies in the U.S. are granted sales rights on up to two minutes per hour, per channel, which provides a test-bed for innovation – and a prime environment for the beta application of programmatic programmes. It’s a far cry from European markets where proprietary sales rights and advertising is usually the exclusive domain of the broadcasting channel.
  • Data collection. U.S. advertisers and their technology platforms can access first-party TV data, particularly when they tap into the likes of Nielsen homes. The BARB panel is suitable for broad audience targeting, but only monitors 275 of the 480 or so U.K. channels. What’s more, some 30 percent of ad spots achieve ‘zero ratings’ on BARB, so are technically unpaid.
  • Data sensitivity. Data security and the collection of first-party TV data remains a highly sensitive issue – specifically as it relates to customer charters around the use of client data. It’s not insurmountable, but it’s a huge industry challenge.
  • Regulation. Operators in the U.K. have to work within the constraints defined by Contracts Right Renewal (CRR). But addressability does not work well in a trading environment with regulations on price-setting – and it’s not compatible with the current model in which share-of-viewing is linked with advertising revenue share.
  • Measurement. The shift to addressable TV requires new forms of measurement. Advertisers work with, and reward, their agency partners using performance metrics that are aligned with current audience measurement models, raising the issue of how to audit in an addressable TV environment.  

Moving in the right direction

Despite the obstacles, change is afoot. With 1,000 campaigns launched in its first year, Sky Adsmart is playing its part in paving the way for better targeting. Beta-launched in 2013, the service provisions a form of addressable TV, segmenting and serving ads by household, rather than wholesale to everyone watching a channel.

It’s a promising start, but it won’t guarantee full addressability in the immediate future. To ensure addressability is more than a planning exercise, we need wholesale infrastructure changes to enable dynamic analysis, decisioning, allocation and copy-serving across all broadcast platforms.

One thing we’re clear about is the scope of the addressability opportunity. Our Addressable TV activity in North America is demonstrably delivering better ROI as well as a consistent view of a consumer – both on- and offline. For the broadcaster, it unlocks better yields and better inventory management, as well as a strategy for dealing with those problematic ‘zero spots’ and ‘wasted’ inventory.

For these reasons, we’ll see incremental growth this year across European markets, with the UK leading the charge, as platforms and channels recognise the value in their first-party data and the value in supplementing these data sets with digital third-party data. Furthermore, the technical barriers to deployment are diminishing as broadcast delivery systems move to hybrid linear/internet-protocol platforms.

As advertisers, broadcasters and hardware manufacturers respond to the proven, tangible benefits of addressable TV, we’ll see rapid growth across key European markets next year.

By truly digitising TV in this way, dovetailing the scope and reach of the nation’s favourite entertainment method with the power and accuracy of digital marketing, we’ll have the tools to make good services even greater.  

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