Arrowing in on audiences

Broadcast

Advertising is becoming more data-driven and targeted as broadcasters continue to branch out into OTT in a bid to combat the decline in ad revenues.
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The shift to addressable or targeted advertising is considered vital to ensure that broadcasters are able to compete effectively with internet-based platforms that are increasing ad revenue at their expense.
The 8% fall in advertising in the first six months of the year at ITV bears out advertising giant GroupM’s lower-than-expected growth prospects for the UK ad market.
The WPP-owned agency attributes a slump in TV investment to a 3% drop in overall ad spend in 2017 and also predicts a 10% drop year-on-year in commercial TV impressions among 16-24 yearolds – the lowest volume since the arrival of Sky Digital in 1998.
Both ITV and GroupM blame the economic and political uncertainty surrounding Brexit and the June general election, but there are more profound structural forces at play.
From the ‘one-to-many’ approach of traditional broadcast, brands and advertisers are itching to move to one-to- one conversations with defined audiences, from which the direct impact of engagement can be measured. The technique is thought to command higher unit prices (between 200% and 300%), enable better monetisation of inventories and boost viewer satisfaction by serving them more relevant ads.
Solutions that span delivery across Freeview and live streaming are being considered.
“The challenge will be combining a granular targeting model with a broader targeting model and avoiding wasted advertising space,” says James Grant, director, partner management at ad management software vendor Freewheel.
“Flagging a new car to the Jones family in Northampton is excellent targeting, but what does the rest of the country see in that particular ad slot? If the industry can align and build a scalable targeting model then there is a significant opportunity.”
Sky has built the poster child of addressable advertising with its AdSmart ad delivery technology that spans set-top boxes (STBs), OTT and multiscreen.
Of the 1,100 advertisers attracted since 2013, 73% are either new to Sky or new to TV. AdSmart delivers a 75% return rate, and channel-switching during a targeted advert reportedly reduces by 48%.
Ads are shown when the target audience is watching (whatever and whenever) and isn’t dependent on a programme or a pre-defined schedule.
Graeme Hutcheson, director of digital and Sky AdSmart, says the opportunity is “massive” for both “the hundreds and thousands of SMEs across the country that are yet to tap into the effectiveness of TV”, and major brands who can use their customer data and creativity to better engage key audience groups.
“OTT has the potential to expand the pool of targetable homes beyond Sky households to younger audiences who use streaming services or non-subscription TV offerings,” explains Hutcheson.
Viewer access
The recent deal between Sky and Virgin Media to integrate AdSmart into Virgin STBs gives the two companies access to 30 million viewers in the UK and Ireland and sufficient combined scale to compete with social media networks. Facebook has around 35 million UK users.
Far from throwing the baby out with the bathwater, however, broadcasters and advertisers continue to believe in TV’s brand-building power. They argue that if, for example, Mercedes launches a range of cars, the initial goal is mainly to convey an image and raise awareness for which TV’s mass reach is unsurpassed.
“Combining the virtues of broadcast and OTT to deliver a hybrid solution geared for personalised advertising is considered the ultimate goal,” suggests Kai-Christian Borchers, managing director at multiscreen software provider 3 Screen Solutions.
“If a service provider could deliver ads via OTT and weave these into the broadcast stream, the result would be a powerful personalised advertising capability. Advertisers would command higher fees because they would have a far greater understanding of the actual reach of the message.”
Another key benefit for advertisers is that linear addressable campaigns do not have to be planned, executed and reported in isolation.
According to Hutcheson, a combined digital and broadcast approach means advertisers “will be able to use TV to serve a different part of their marketing task, from increasing frequency to hard-to-reach audiences, to targeting ads at homes using first or third-party data that was historically reserved for digital, and bringing even more accountability to a trusted and familiar environment.” That’s a dig at platforms like Google and Facebook, which have had their fingers burnt by automatic placement of adverts alongside inappropriate content.
GroupM downgraded its expectations for digital ad spend in the UK this year from 15% to 11% after seeing some large advertisers pause investment.
“A big focus for advertisers is being in a trusted environment,” confirms Jakob Nielsen, GroupM’s addressable TV lead. “There’s a backlash against unmoderated UGC sites by clients whose ads were served in un-brand safe environments. It’s not easy to solve, given the way they’ve built their businesses, but it’s very important for them to figure it out.”
According to Adam Smith, GroupM’s futures director, the ‘costper- view’ culture engendered by digital video, “which prizes price above safety and quality, has fortunately not yet knocked off TV’s crown as the medium with the best-value cost per impression.”
Measurement is by some way the biggest stumbling block to a unified ad trading environment, with advertisers reluctant to invest wholeheartedly in targeted advertising without a metric that accurately compares across platforms.
Although, as Kate Bulkley pointed out in Broadcast, audience measurements used by the TV and digital communities are becoming “less distinct” – particularly with the launch of super-aggregator apps like Amazon Channels, which includes ITV Hub and Discovery channels like Eurosport – Barb’s integration of multi-screen views is not moving quickly enough for some.
“We ideally need Barb to move a lot quicker on Project Dovetail,” urges Nielsen. “Measuring OTT and linear is a massive issue.”
For commercial broadcasters, the need to address targeted ads is more pressing than for pay-TV operators, where subscriptions comprise the bulk of revenue.
ITV is reportedly set to introduce it within the year but Channel 4 and STV are driving this charge. Both oblige viewers to register to see premium and on-demand content they would not otherwise have access to.
That’s important since broadcasters, including ITV, will need to meet strict privacy issues ahead of next year’s pan-European data privacy reforms as ads would be targeted using a person’s IP address, post code or other deterministic data.
The Scottish commercial broadcaster was the first in the UK to use digital ad insertion across live simulcast programmes and it recently went a stage further by offering to trade the same inventory programmatically (automatically).
For targeted advertising to gain true scale, though, a unified measurement may not be enough. The haphazard introduction of the technique has led to the deployment of different proprietary technologies. The DVB, champion of Europe’s free-to-air broadcasters, believes it has a solution. It is attempting to harmonise addressable technologies by building on interactive TV software HbbTV 2.0.
“We need some kind of standard where there are multiple proprietary solutions,” says Thierry Fautier, who co-chairs the DVB’s Targeted Advertising Study Mission Group.
“If I am an advertiser or a campaign manager and I want to place ads across all the different platforms, it is going to be a nightmare. Advertisers want a seamless integration across all the screens and, more importantly, across all the delivery networks.”
Industry standard
As well as benefiting free-to-air broadcasters, the DVB argues that standardisation would make it easier for pay-TV operators to deploy targeted advertising. Fautier points to the advantages of streamlining back-office requirements across OTT, broadcast and service provider platforms.
“We think technology vendors will also be able to scale more easily with a standard,” he says.
The current HbbTV specification, on which Freeview Play is based, can support insertion of advertising over IP into broadcast streams, but doing so accurately is a key technical challenge.
Nonetheless, the DVB believes a standard can be delivered by early 2019 and could even go global.
Regardless, Nielsen predicts that up to half of all ads will be addressable by 2022. “The next five years will see more changes from a TV ad planning perspective than we’ve seen in the past 50,” he says.