Home Analysis Advertising The alternative approach to household-addressable linear TV advertising

The alternative approach to household-addressable linear TV advertising

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An illustration of what a split-screen ad looks like. The ad is delivered digitally; the programme is still from a broadcast signal

An innovative advertising campaign for Gillette in Germany looks, on the surface, like an advanced form of interactive advertising that uses HbbTV as the standards-based mechanism for serving broadband-delivered creative.  But this campaign signifies much more. It shows the power that broadcast channels have now they can use HbbTV-enabled advertising applications to understand when people are watching their programmes in real-time. And it demonstrates the potential to serve digital advertising (served OTT, over broadband into hybrid broadcast broadband set-top boxes or connected televisions) into classic broadcast linear television streams. 

Jean-Pierre Fumagalli, CEO at Smartclip, whose ad serving technology enables the German channel Sport1 to serve the Gillette ads for Procter & Gamble, thinks it is a vision of the future, where mass audience television may still be distributed over broadcast networks but the advertising is always digital, overlaid or inserted into the advertising breaks. 

Smartclip believes we will see a decade-long transition towards digital-delivered advertising that uses census-level viewing reports to know where audiences are. Classic broadcast television will exploit digital advertising complete with programmatic audience segmentation, frequency capping and, where appropriate, one-to-one targeting, with television screens bundled with other multiscreen devices within more unified advertising campaigns. 

To be clear, the Gillette advertisements are delivered over IP from a Smartclip ad server but they are shown ‘within’ a classic linear broadcast channel that is distributed over broadcast spectrum. The Gillette ads are shown to viewers when they tune into the channel. Today, this kind of advertising (and it is being implemented by more than ten channels with different advertisers in Europe, with Procter & Gamble the first to go public) is used for split-screen experiences.

The broadcast signal is ‘always-on’ and always being decoded and delivered to the television screen as long as the television or STB is tuned to that channel. The advertising streams are served intermittently and the advertising app (controlled thanks to Smartclip technology) decides when the IP advertising stream is overlaid onto the top of (or potentially in place of) the broadcast stream. 

In the Gillette campaign the HbbTV-enabled televisions are being told to temporarily shrink the picture from the broadcast feed to make room for the IP advertising, which is served alongside the linear programming. So the screen is literally split to make way for what is an interactive brand advertisement. 

But Fumagalli predicts that by the end of 2016 it will be possible to completely replace the broadcast picture temporarily, in perfect synchronization with ad breaks, so that in effect you are dynamically inserting digital advertising into broadcast linear ad spots. 

Between now and then his company has to work with broadcasters and their scheduling systems to ensure that any unscheduled changes to the timing of ad breaks, like in live events programming, can be conveyed to the ad servers quickly enough to ensure they can serve ads at precisely the right moment. 

In the meantime, the safe option is to serve the digital ads outside of ad breaks, and alongside the programming (as a temporary complement), as this does not require perfect synchronization. The only timing issues with this approach are to avoid the ad breaks, so that the IP ‘overlays’ (IP ‘alongsides’ might be a better way to explain it) do not clash with the classic broadcast ad break. (From a campaign point of view, there are probably moments in a programme when ads will be better received than others, too).

HbbTV-enabled broadcast signals carry data alongside the video and audio streams that prompt an HbbTV-enabled connected television set or set-top box to launch apps. Typically this would mean opening a broadcaster content portal to see their text services or catch-up TV content. To enable the new advertising capabilities, the app links to the Smartclip advertising backoffice, then tells the broadcaster that someone is watching their channel (in real-time). The app can then request an advertisement from the Smartclip digital ad server.

Today the digitally served ads are served to all viewers of the broadcast channel. There is no audience segmentation or targeting, despite the fact that Smartclip has made its name enabling both. With its SmartX platform (described as a programmatic multiscreen video supply side platform) the company already enables targeted ad delivery into TV inventory on television screens, but until now the programming itself (like the ads) has been served digitally, as with catch-up TV within HbbTV broadcaster portals or player services on Smart TVs. So this fits into the fully digital world, with streaming video (digital) containing digital advertising. The new approach is a hybrid of broadcast content with digital ads and that is what makes it so interesting. 

There is more to this story. It also exposes the impact that HbbTV could have on broadcasting and advertising in Europe and other markets where the HBB standard may be adopted. The applications data that an HbbTV-enabled broadcast signal carries includes URLs that the HbbTV receive device (television, set-top box) can link to. This means the devices can be linked to an advertising backend (like the one provided by Smartclip as part of a managed service to broadcasters) that tracks viewing on the device. 

This means that a broadcaster with HbbTV signals can monitor the viewing of its channels in real-time, knowing who is watching and for how long (currently at an aggregated level using the Smartclip solution – viewers are not being personally identified) and therefore gather census-level data that can then be shown to advertisers. Fumagalli at Smartclip is excited by what this could mean for smaller channels especially, as they can start to prove they have audiences even if they are under-reported by panel measurements. This gives broadcasters a powerful tool that they often lack, and which is usually the preserve of Pay TV operators with return path data (RPD) capabilities on their STBs.

The use of set-top box data to achieve census-level viewing measurement is becoming more important. We have reported previously how Cablevision, the New York based cable operator, is using this to reveal the otherwise hidden audiences on a long-tail of smaller channels where viewing is not showing up on panels (See stories here and here). The Pay TV operator is then helping advertisers to buy these audiences and segments of them. Broadcasters may be able to work with Pay TV platforms to get his kind of insight, and they can gather viewing data on their digital outlets (like their online player services, which are entirely digital) but this capability in HbbTV devices gives them a direct route to STB return path data for classic broadcast television, as well.

Jean-Pierre Fumagalli sees this as one of the potential market disruptions that could stem from the HbbTV capabilities. He reckons the major broadcasters are wary of how census-level reporting could impact their businesses, as it could lead to budget moving towards smaller channels once they can prove their audiences. 

As he noted separately, in a press release about the new technology: “This technical set-up permits mid-sized and smaller broadcasters – which have been under-represented in current standard TV panel measurements and thus lacked market visibility to advertisers – to fully exploit their advertising potential and benefit from new customers and revenue streams.” 

The disruptive potential of HbbTV enabled return path data will be determined by the market penetration for the standard. Fumagalli estimates that a quarter of TV households in Europe have the HbbTV technology needed to enable broadcasters to exploit these new hybrid reporting and ad serving capabilities. “That is a huge number for advertisers, especially if you get the major broadcasters onboard,” he claims. You can track viewing in 100% of the households that do have the right technology. Across Europe, HbbTV penetration is increasing fast, anyway, and more people are connecting television devices to the Internet.

Broadcasters can work with Smartclip ‘just’ to measure their viewership, without using the ad serving technologies. Fumagalli believes the next step after serving digital ads into non-targeted linear audiences is to introduce household-level addressable advertising. This requires that someone starts to understand the kind of people we are, in each household. The fact that every HbbTV-enabled device has its own unique identity is the foundation for this, although currently this ID is not connected to any IP or physical address. Smartclip expects that eventually advertisers will be able to apply their own data to the audiences that are being identified and so determine the best target audiences for each product or service.

If there are no insurmountable challenges to this enterprise, it makes this hybrid ‘broadcast programmes with digital ads’ approach to ad serving a competitive concept to the linear addressable TV advertising that Pay TV operators are starting to deploy (for classic television). Earlier this year we spoke to a broadcaster in Canada who was dubious whether the required effort to enable addressable TV and dynamic advertising insertion for broadcast linear (using current approaches to DAI) would have a return on investment. Their attitude was that they would rather wait until “everything goes digital”. This is, perhaps, the alternative model. 

But one clear advantage the Pay TV operators have today is that if their customers are opted in they have physical addresses and other valuable customer account information that can be linked to a set-top box. If we accept that HbbTV can be used as the basis for linear broadcast DAI and targeting then any ‘competitive’ debate would have to consider the relative quality of the data sets coming out of Pay TV operators or a more horizontal and retail-driven free-to-air marketplace (although this HbbTV mechanism could also be used by Pay TV operators, like cable operators, if they have HbbTV-enabled set-tops). You could also argue about who has the scale that advertisers will be looking for. 

Fumagalli says that with HbbTV and Smartclip, a broadcast linear ad break could be treated the same way you treat a streamed video (OTT) linear ad break, which means there is no technical limit to how many times you split the audience and how many people you serve one-to-one (as you are in a unicast environment). Regional targeting will be possible. Frequency capping will be another tool to attract advertisers to the hybrid ‘linear programme with digital ads’ model.

As he said when announcing the new ad serving technology, “This enables market players to approach TV advertising from a completely new angle with standardized digital delivery and true ad-server integration with the linear TV stream. For us it will be a golden age of TV and video advertising, when digital truly merges with the TV screen. It will bring the best of both worlds together: mass reach with digital controlled delivery and measurement.”

So the current Gillette campaign is just a taster of what is to come, Fumagalli believes. There may not be enough broadband Internet capacity to cope with mass audiences watching live television as streaming video, but broadband networks may be able to serve digital ads into the advertising breaks, he suggests. And not all linear television is live sport, of course.

This leads us towards true advertising convergence around digital. “The capability to programmatically consume linear TV advertising in real-time [note – the campaigns today are not programmatic] is the same way you would consume all other digital advertising. It is the basis for true multiscreen delivery and optimization, Fumagalli declares.

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