A TV that knows who you are

Advertisements for the local curry house, common in UK cinemas throughout the 1970s, are making a comeback. Only this time they will appear on television sets.

Within months UK satellite broadcaster BSkyB will start TV's fightback against the internet with its own "tailored" advertising service. For the first time this will enable TV ads in the UK to be targeted at specific homes based on viewing tastes, household make-up or even postcode.

Commercials for people carriers could be shown only to households with children, and ads for top-of-the-range washing powders just to higher-income homes.

The move will also allow advertisers to cherry-pick specific geographical areas right down to individual houses on particular streets. Media buyers say this will open up the world of TV advertising to new companies. Think of local takeaway restaurants, for whom TV advertising would have been too expensive, they say. Or even ultra high-end brands, such as Porsche, which have always shunned TV simply because it is too mass-market.

"It is [Sky's] answer to the digital conundrum," says Anthony Ireson, UK marketing director at Ford. With traditional, "linear" broadcast advertising, "half your marketing is wasted", he says. "It's your chance to get rid of [the waste] so you only talk to the people you need to."

Such targeted advertising has been discussed in the TV world for years as the industry has sought to bring the personalisation of the internet to the TV set. In 2008 several US cable networks, including Comcast and Time Warner Cable, set up Project Canoe, a jointly owned company that would sell customised TV ads.

That service is now focused on "time-shifted" video-on-demand rather than live TV broadcasts. But within a few months, Sky's AdSmart will launch with live TV backed by between 30 and 50 different brands, the company says.

"We will offer multiple executions to make brands more effective," says Andrew Griffith, Sky's chief financial officer. "So the last five seconds of a car ad could go to their local dealer or there could be different executions for the same slot."

AdSmart will work on Sky's high-definition set-top boxes in the UK, which number 7.3m. Viewers who have not opted out of the service will have ads downloaded via satellite and stored on their boxes. These ads are then - seamlessly to the viewer - overlaid on linear broadcast adverts in line with the brands' chosen targeting metrics.

In addition to its own data on households and detailed information on their viewing patterns, Sky works with companies such as Experian, the credit checking agency, which helps it segment customers by lifestyle and affluence.


The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

> In the future it may even seek to tap into viewers' online behaviour, ac­cording to Sky insiders. So a household's web searches for mortgages could result in mortgage ads being streamed to the TV set. But such a move would probably raise sensitive privacy issues and Sky says it has no current plans for such a service.

What the satellite broadcaster does promise is a big range of targeting op­tions, based on household information, that offer different attractions for various advertisers. "The thing that will be most applied is the lifestyle element - say, targeting people who have just moved into a new home," says Marc Mendoza, chief executive of media buying agency MPG. "We might want to target them with an EDF Energy commercial".

Paul Rowlinson, head of exchange at media buyer Mindshare, says the ability for TV advertisers to go hyper- local chimes with changes taking place in local communities. "There is a more general consumer trend towards local," he says, "with markets springing up on the high street and moves towards a more local economy. So anything that allows you to be more direct in targeting this local audience has to be attractive."

For Ford, some of the most valuable opportunities lie in tailoring advertising messages to potential customers through deeper knowledge of the people it is targeting, says Mr Ireson.

"When we launch a car we have too many messages," he says. "For some people it's about economy, for some it's about insurance ratings, for some it's about the technology in the engine. But there's no point targeting older women about insurance groups."

Further, where homes have web- connected TVs, targeted ads will eventually be able to be interactive, like ads on the web. So, by pressing a button, for example, viewers could request a test drive on the car just advertised.

In future, Sky is also looking to tailor ads based on users' viewing behaviour. So, in addition to targeting ads based on household information, it will look at what they have been watching.

Christophe Cauvy, European head of digital at advertising agency JWT, says Sky may have been inspired by Apple, which analyses individuals' iTunes song choices to come up with different profiles for advertisers. The cultural preferences of viewers - whether they watch French art-house films or popular soaps - will prove highly valuable to many advertisers.

"If you are selling salt or a mortgage you may not be interested in what music they are listening to or what they are watching," he says. "But if you are selling a pair of jeans, a watch or a car, this is going to be very important."

The next debate for advertisers, however, is cost. While some are attracted by the prospects of greater targeting, and therefore less waste, the price has to be right. These sensitive discussions are taking place now.

For Sky the hope is that greater targeting will increase advertisers' return on investment and translate into higher overall revenues. With better targeting, advertisers will pay less overall than for a conventional, untargeted ad break. But they will pay more on a cost per thousand basis.

The satellite broadcaster is also hoping to wholesale its service to channels such as ITV and Channel 4 so that Sky homes watching these channels could also receive targeted ads. In return it would want a share of their ad revenues.

But rivals have their own plans for launching targeted advertising. Backers of the YouView web-connected TV service, which include the BBC, ITV and Channel 4 in the UK, are looking at introducing software that will enable targeted advertising on the TV set through these boxes, including on live broadcasts.

In the meantime, they are focusing on their video-on-demand streaming services as such time-shifted viewing continues to grow.

One of the leaders online is 4OD, Channel 4's video-on-demand service, which has almost 7m registered users in the UK. The channel is now in discussions with ad agencies about a series of ad trials based on more detailed demographic data.

About 5 per cent of Channel 4's ad revenues are already believed to come through its online channel, with these revenues growing at about 30 per cent a year.

But live television still dominates. According to Ofcom, the UK media regulator, live broadcasts account for 85 per cent of all viewing. It is easy to see how maximising ad revenues from live TV, rather than time-shifted viewing, could have the most significant impact for broadcasters.

Copyright The Financial Times Limited 2017. All rights reserved.


blog comments powered by Disqus