http://www.ibcce.org/page.cfm/action=library/libID=14/libEntryID=411/listID=2
Programmatic, data-driven advertising dominates digital media and it is taking over TV. The glue is big data about audiences used to deliver more effective, more targeted and relevant advertising.
“The TV ad sales business is largely unchanged for decades,” said Robert Ambrose, Strategy and Business Development Director at licensing and rights specialist FADEL at the IBC2015 Conference. “Orders still get faxed from time to time. It's a slow process made over long lunches. Now we're starting to see huge transformation.”
In contrast to TV ad sales which typically attempts to reach a broad demographic and socio-economic group, programmatic allows advertisers to be far more targeted.
“Ideally in programmatic you don't worry about demographics at all because you can target ads at specific individuals who actually want to buy a certain product,” explained Ambrose.
Total programmatic ad sales in the top five European markets accounted for $3.7 billion in 2015 or 36% of the current digital display business, growing to 47% or $6.5 billion in 2017.
However, Europe lags behind the U.S. where programmatic ad sales are valued at $15 billion today rising to $27.5 billion in 2017.
“This tells us that there's a huge opportunity in the European market to grow the business significantly - if we get this right,” said Ambrose.
One reason for the disparity is that in the U.S., data from set top boxes (STBs) and households have been aggregated and sold as a commodity by companies like Rentrak making addressable advertising products relatively easy to launch. In the UK and France, the market is divided among four or five STB providers but (with the exception of pay provider Sky AdSmart) these providers are not yet in a position to make data available. In Germany and the Netherlands the lack of installed STBs makes the market difficult to get off the ground.
“Everybody is trying to think about how to make data a commodity,” says Sherlock.
The amount of programmatic ad sales for TV in Europe is too small to measure but in the U.S the figure is predicted (by Strategy Analytics) to be around 5% or $5 billion of all TV spend in two years time.
“From the rate of growth in the broader digital space and the pace of change in the U.S. It's clear that programmatic is becoming important to the TV industry as well,” said Ambrose.
Channel 4 has been at the cutting edge of the transformation, building first party data about 12 million viewers and using that to deliver a better experience for audiences (such as personalised recommendations) and smarter commercial products. Earlier this year it launched Europe's first programmatic buying option, for digital platforms serviced by All 4.
“We live stream all our channels on PC, mobile and tablet and over the last six months we enabled insertion of individually targeted advertising into these live streams - therefore directly replacing the linear feed through IP delivered content,” explained Jonathan Lewis, Channel 4's Head of Digital and Partnership Innovation.
“We also allowed anonymised access to the Channel 4 database to brands like Burberry and Coke enabling them to deliver individually personalised video ad campaigns,” added Lewis, noting that both efforts were rewarded by an uplift in sales and in Coke's case, a Cannes Lion 2015.
This September, Channel 4 became the first European broadcaster to offer programmatic buying in live digital ad breaks. This is acting as a test ground for future linear programmatic trading.
“Buying broadcaster VOD inventory requires a real mind shift for clients and agencies compared to the way video has been bought programmatically in the past,” said Lewis. “Channel 4's private marketplace is moving programmatic buying from the small screen to the big screen and delivering multiple ads into ad breaks in an automated and data driven way. We are not funnelling and filtering inventory nor passing back unwanted impressions. That's the old way. We're now entering into a premium programming content world and the game has to evolve.”
Channel 4 doesn't yet enable realtime bidding but this is being looked at. The next step is to learn how data, connectivity and automation can play a part in dynamic ad insertion and programmatic trading to TV.
“There are two ways this may be enabled: either at the point of ad delivery or ad insertion,” explains Lewis
Sky's AdSm.art in the UK does this at the point of ad delivery via storage of assets on the STBs of its 10 million households. While Freeview and other UK TV platforms are keen to develop addressable data opportunities the development costs are high. That's why free to air broadcaster Channel 4 has taken a different approach.
“We believe in enabling dynamic ad insertion at the point of ad insertion,” said Lewis. “Our focus is to invest in a solution that delivers ad break scheduling and ad decisioning, potentially in realtime, and potentially using BARB and Channel 4 first party data. We believe this has greater value long term since it is less reliant on third party technology.”
He adds, “We are deliberately not referring to this as programmatic – but as automated ad allocation. It will be probably by ready by the end of 2016.”
Australian commercial broadcaster MCN (a joint venture between Foxtel and Fox Sports) has gone straight for the jugular, working with AOL to devise a means of selling and inserting dynamic ads for 85 linear TV channels combining STB and household level data with OzTam (similar to Nielsen) overnights and consumer purchase data.
According to Lewis Sherlock, Commercial Director, EMEA, AOL Platforms, “MCN is able to move beyond the traditional TV metric of age and gender and target ads into different day parts and shows.”
MCN charges a 20% premium for the audience data it generates and advertisers by all accounts feel comfortable with that. Having launched in April, this data targeted approach accounts for 5% of MCN ad sales revenue this year, predicted to top 15% in 2016.
TF1 is undertaking a year of R&D with Orange to track the viewing of ads on TF1 channels with physical purchases of product. It is doing so using connected objects such as the smartphone. The idea is to test and refine the efficiency of digital and TV advertising.
Declared Fabrice Mollier Deputy General Manager, Marketing Strategy & Innovation TF1 Publicité; “Data is the real revolution for advertising.”
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