The Future of TV Advertising Global (the new name for the London edition of Future TV Advertising Forum, held earlier this month) is one of the best places to feel the pulse of the global TV advertising industry. It gives you a sense of the challenges ahead and the solutions available. Here are our key takeaways from the 2019 event.
Takeaway No.3: Addressable TV is coming fast, as a complement and not a replacement to ‘national’ ads
Nobody at The Future of TV Advertising Global disagreed with the assertion that we are preparing for an addressable TV ‘stampede’ as more platform owners and broadcasters adopt the technology, and addressable household reach is expanded.
The benefits to advertisers (spontaneous brand awareness up 4% and spontaneous ad recall up 10% vs linear TV) and platform operators (new-to-TV money including from SMEs, repeat customers, major profit growth on advanced TV, of which addressable is a key part), and even the benefits to viewers (48% less channel switching when addressable ads are in the first three positions of a break, vs standard linear ads) have all been proven by Sky UK, courtesy of its five year and 130 campaign study, which was referenced at this event.
More operators and broadcasters are adding to the evidence that addressable works, and works well. Jeroen Coeymans, Director of Business Intelligence at the Belgian broadcaster SBS Belgium, stated, “Advanced TV advertising will bring in incremental revenue. Half our campaigns were with new-to-television advertisers and the other half are shifting money back from digital to television.”
Christian Godske, Head of Commercial Product Development at Danish broadcaster TV2, revealed the results of a study with Business Science (GroupM’s consultancy agency) showing that the ROI on its addressable TV is 4.4 Krone for every 1 Krone spent. This compares to 3.0 and 1.9 for YouTube and Facebook respectively (according to TV2’s figures). He said the key metric driving ROI is viewability – with TV2’s digital addressable product delivering 99% completion rates.
Despite the growing interest in addressable, nobody says anymore that it will replace mass-market advertising (as some commentators used to). Addressable is viewed as a complement to ‘national’ (i.e. reaches all) advertising and there are good reasons why. Sky already showed in its recent five-year study that linear with addressable is a more powerful weapon than addressable alone.
[Sky’s 130 campaign study showed that addressable advertising increases spontaneous ad recall by 10% compared to linear TV advertising, but ad recall is boosted by an astonishing 49% if addressable ads make up at least half of the ads shown to someone, with the rest being classic linear TV ads. The study also shows that campaigns including AdSmart alongside linear spot activity are 14% more likely to be discussed with friends and peers by the viewers exposed to them.]
At Future TV Advertising Forum Global, Nicolle Pangis, CEO at Ampersand, the multi-Pay TV operator sales and technology company enabling data-driven advanced TV advertising across the U.S., provided some compelling figures to support this. She declared: “Addressable should only ever be a component [of a campaign]. You need to fill the funnel. It is a piece of the puzzle.”
For her, it is the combination of addressable and national linear TV that delivers the magic. Ampersand worked on a campaign with an automotive client that first used national (reach everyone) buys and exhibited a growth reach curve like most such campaigns- strong but then topping out, leading to diminishing returns on every dollar spent. From the baseline audience achieved using this ‘national’ campaign, the company then A/B tested two budget additions: more money into national versus more money into addressable, where addressable used a custom segment based on viewers who were under-exposed to the national campaign. An extra million dollars on national spend delivered 2.3% incremental reach points, while the addressable strategy delivered 6.4% incremental reach.
A pattern is emerging for how addressable is being used and the most important use-case is to deliver cost-effective incremental reach, including into light television viewers, once the cost of acquisition for every new and unique consumer has become prohibitive using ‘national’ (reach everyone) television.
Dan Ackerman, Chief Revenue Officer at Samba TV (which provides viewing and audience segmentation insights and targeting) said the original intention for addressable TV was that it should enable micro-targeting but this has now been overtaken by the need to fill gaps where heavy streaming viewers have become light television viewers.
The main obstacles preventing an addressable TV stampede were identified as: Cost (it is still viewed as expensive, despite all the caveats about the need to focus on effective CPM rather than CPM); Complexity (simplifying access to addressable inventory was raised as a major obstacle several years ago, and is not entirely solved); Inertia (one of the biggest challenges now is to convince broadcasters that they should open up their inventory for addressable advertising, in partnership with Pay TV operators who have the technology).
On the question of cost, Sam Taylor, Head of Group Commercial Marketing at Direct Line Group, said of addressable TV: “My challenge is that the data used is not as good as it could be, and scale is not as big as it could be, so you are paying a premium to target an audience versus the benefit of waste in linear TV, which is still cheaper than other media. We will see a flip to more addressable when linear gets more expensive and addressable comes down in price.”
Pat Kiely, Managing Director at Virgin Media Television (formerly called TV3, and the largest commercial broadcaster in Ireland), reckons you need all the major platform operators to cooperate to instigate the addressable ‘stampede’. He has his wish in Ireland, thanks to the Sky and Virgin Media AdSmart deal.
Kiely also identified price as one of the barriers, referring to how you structure deals rather than prove the value. “The buying of addressable will come through AV or television buyers and that has been one of the blocks to getting progress in this market, because of the traditional shared deal,” he observed.
Regarding the need to simplify addressable TV, there is a groundswell of opinion that we need to start standardising on audience segments (how they are defined, the way the data is handled, e.g.) across markets so that buyers everywhere know what they are getting when they buy an addressable TV audience. It was suggested that internationally standardised audience segments could become a feature for broadcaster-owned inventory (including when sold on set-top boxes).
“I am keen that AdSmart standards get adopted in the UK but more broadly across Europe because advertisers need consistency in how they trade, target and measure,” Jamie West, Deputy MD at Sky Media told the London audience separately.
Thomas Bremond, General Manager, International, at ad-tech leader FreeWheel, also emphasised the need for a consistent approach to addressable TV across Europe if the industry wants to compete more effectively with the digital giants, who can point to a single buy, and consistency across territories, as one of their key strengths. This would include a framework about how addressable is traded.
West described 2019 as a breakthrough year in terms of addressable TV scale, efficacy and commercial success. When it comes to scale, you need growth on two axes: homes covered and channels that make their inventory available.
On this last point, the addition of Channel 4 to the AdSmart portfolio (in the UK) is significant. We keep waiting for one of the major ‘terrestrial’ platform operators (like Freeview) to gather up their broadcast partners to create an addressable advertising solution, but until they do (and their challenge is complicated by the way their set-top boxes are sold via retail, and made by multiple CE manufacturers), the Pay TV providers will continue to pioneer the non-digital part of this market. Right now, it is collaboration between Pay TV operators and broadcasters that is going to deliver the true scale.
Dev Sangani, Director of Capabilities at Sky, outlined the three things he wants to happen in addressable TV in 2020: more scale, more standardisation and more simplicity. For him, standardisation relates to data sharing, the commercial agreements about how you operate, and agreement on what addressable even means.
“It has to be the same, so that when an advertiser takes it, they know what they are getting. Scale means minutes of addressable TV inventory available, not just the number of homes covered. Simplicity means bringing linear and VOD together.” He argued that addressable TV has a place “in most campaigns”, inferring that part of the job, when it comes to simplicity, is ensuring it can be easily integrated with other advertising channels.
Pangis at Ampersand also referred to the value of a ‘TV platform’ when highlighting the lack of one today. Digital makes it easy to transact lots of money on a single data set and digital companies can frequency cap, she said. Ease of use drove their growth, she argued. “We are getting there with TV, but we are still not connected enough.” Her message is that we need more than scale for addressable to fulfil its potential – it has to be seamless scale, including across screens.
Coeymans at SBS Belgium, which is owned by Pay TV operator Telenet and which reaches 2.8 million homes in northern Belgium on an addressable footprint, gave some advice to everyone trying to deploy addressable.
These are: Make it simple and easy to understand for buyers in the same way that Google and Facebook do; Try to prevent pricing from becoming an issue by using the same CPM for every target segment rather than charging more as segments get more granular; Make sure brand advertising is part of the conversation; Make as much inventory available to addressable as possible (not just unsold inventory) as this is the key to reaching light TV users; Cooperate with all parties in the ecosystem, including with telcos.
He had some other advice, too: Collaborate with the local JIC to take account of the impact on standard linear campaigns where addressable segments are being carved off; If there is any cannibalisation of your linear sales, it means something is wrong with your pricing; It won’t be easy, so don’t believe anyone who says it will.
“It [the implementation of addressable TV advertising] will be a long and bumpy road,” Coeymans warned the audience. “In the end you will succeed, and it is a great product,” he added.
Fabrice Mollier, VP Marketing, Strategy and Operations at Canal Plus Brand Solutions (sales for Canal+) said his company is aiming for a Q4, 2020 launch of addressable TV once the French regulator removes its prohibition, and his advice to that market is that all the channels in the same sales house should work together on a minimum viable addressable product that they are all happy with.
Bremond said the conversation around addressable is moving to how we make it work for agencies, including how we trade with it, and how we make it work from a financial and business perspective for all the stakeholders. This is because the technology itself is well understood now. He spoke about the need to understand the exchange of value that is required to open up inventory.
Read our full list of takeaways from The Future of TV Advertising Global 2019:
Takeaway 1: Television is back on the offensive
Takeaway 2: It’s not a question of if you follow the 60:40 rule, just how you implement it
Takeaway 3: Addressable TV is coming fast, as a complement to ‘national’ ads, not as a replacement
Takeaway 4: Unification of broadcast and digital is everything – priorities No.1 and No.2 for TV
Takeaway 5: TV is an activation medium, which makes it a uniquely full-funnel offering
Takeaway 6: The real magic is data-driven, audience-based buying
Takeaway 7: The future of agencies – yes, they do have one