Every Pay TV operator, even smaller ones, should be able to deploy addressable TV advertising and cover the bulk of their household footprint, given the extent to which deployment costs have fallen. That is the view of John Tigg, VP and Managing Director for EMEA at Cadent, who estimates that the widespread use of standards by his own company, including VAST and SCTE, has helped reduce the cost of deployment by a factor of ten in recent years.
Cadent is an ad-tech leader whose wide portfolio includes the ad decisioning and routing, ad serving and campaign management that can go towards an operator addressable TV deployment. Tigg says: “We have worked very hard to develop a standards-based system and in doing so, we believe we have a technology that can be deployed by almost any operator in any market.
“There is a misperception that it is massively complex and expensive to deploy addressable technology. It is not.”
Addressable TV advertising is an important new revenue opportunity for the Pay TV market, but when it comes to targeted advertising, advertisers wants scale, so the more Pay TV providers in a market have the technology, the better it is. Whether operators work alone or combine their footprint with that of other operators to create a shared inventory pool, they still need to ready their own infrastructure and STBs for the necessary ad decisioning and ad insertion.
So even if a smaller Pay TV provider, say with 500,000 subscriber homes, wanted to deploy addressable TV alone, is that viable? “Yes,” says Tigg, re-emphasising the need for tech providers like Cadent to drive cost and complexity out of the system. “Deployment does not have to be onerous.”
Cadent’s addressable TV tech solution is used by Virgin Media in the UK as part of the operator’s deal with Sky to integrate its household footprint into the Sky AdSmart programme. Cadent has a deal with Liberty Global (owner of Virgin Media) that means its technology is now being deployed with Virgin Media Ireland ahead of other European markets starting in 2021.
Speaking about the addressable market in general, Tigg notes that each territory has its own dynamics, so any tech platform must have a common core and avoid too much customisation, but be flexible enough to adapt. One of the key challenges is catering for every type of set-top box, whether one-way or two-way, next-generation or ageing legacy devices, with different software stacks.
“You may not have to support every box on the network – sometimes there is a device type that is being ‘sunsetted’ and will be replaced in a couple of years, but sometimes the pace of change is slower than you think so you end up with a large swathe of older STBs and you have to support them in a cost-effective manner,” Tigg explains.
Tigg reckons one of the strengths at Cadent is its experience working with diverse STB populations. “We like to think that during years of doing this, we have built up a level of knowledge about how to perform these integrations.”
STB support is one important factor in the quest for scale – we want as few gaps on a network as possible. Scale is important, of course, because the whole point of targeting is to immediately start removing sections of the audience, and the more granular the targeting becomes, the smaller the proportion of a population that will receive the ads. To make that final pool a meaningful number for advertisers, you have to start with a large household base.
“The more devices you can enable, within a unified system that delivers and reports on addressable advertising in a consistent manner, the better. That means you can run larger campaigns,” Tigg explains.
Cadent has a long history in advanced TV advertising that is not limited to addressable TV and also includes buy-side solutions like its television DSP (demand-side platform), cross-platform campaign management solution, and tools for optimised, data-driven buying against standard linear schedules. The acquisition of 4INFO in January 2020 provides an identity solution that accurately maps device usage back to households.
In the addressable TV market, Cadent’s key value-add is device decisioning and ad routing (routing an ad from a Cadent or third-party campaign system to the right people at the right time). The company also provides ad insertion but will work with third-party ad insertion systems, including those built by an operator inhouse. All of this works across QAM, IP or hybrid TV architectures. The company also provides solutions for data sharing and the protection of privacy, which includes the use of third-party data safe havens.
Confident that Pay TV providers of all sizes can afford to deploy addressable TV advertising, and that the vast majority of their homes can be enabled cost-effectively whatever mix of STBs they have, Tigg highlights what is now the biggest challenge to scale: inventory. In particular, he is thinking of the need to get broadcasters onboard so their inventory is available for targeting.
As he points out: “Some platform operators start in addressable TV advertising with VOD because to some extent it is less complex to deploy and they might have their own content and VOD library. They do not need permission from anyone else for an addressable TV project, so that is often a starting point.”
To enable addressability on broadcaster content, however, commercial deals are needed and according to Tigg, this is now the single biggest hurdle to wider deployment of addressable TV advertising in Europe.
“The technology exists today. We can deploy on an operator footprint and it is relatively simple. We can enable any kind of set-top box or any environment for addressable TV. It is all there [on the technology front]. There is more demand for addressable inventory than supply, and regulatory barriers are also falling – as in France [where the regulation permitting targeting to a living room television was removed last year].
“What stops people deploying now is the commercial agreements with broadcasters. Time and time again, we see this as the big hurdle. They need to work out commercial agreements that make sense for both of them; how to share revenue.
“Getting those commercial agreements is crucial because they give platform operators a more concrete revenue model. Once they know what kind of money can be made, they can justify the cost of deploying the technologies.”
The number of addressable-enablement deals between Pay TV operators and channel owners that they do not own is still tiny, despite recent progress, so we are in the very early stages of operator/channel collaboration – and that is if we assume that the current deals are a precedent rather than an exception (Videonet believes they are a precedent). Progress in operator-operator deals is better when you consider the instances of collaboration as a proportion of operators offering addressable TV advertising, and Tigg thinks we will see more deals like the one between Sky and Liberty Global.
We do need some urgency in the drive for scale, Tigg believes. “We need scale to sell targeted audiences to advertisers, and potentially we need market-wide uptake so television can compete with digital platforms that are taking [advertising] money outside of the TV ecosystem,” he warns.