M&M Global spoke to Videology’s John Tigg and Jon Block about why broadcasters are reaching an ‘inflection point’ in their desire to harness ad tech.
Programmatic TV has been tipped as a key trend for international media in 2016, but tangible examples of the technology in action are few and far between.
Forecasters such as eMarketer believe programmatic TV will become an $11bn-plus business by 2019, but, privately, many in the industry complain that progress continues to be painfully slow, with broadcasters reluctant to risk compromising inventory prices.
In Europe, a notable exception to the general feet-dragging has been Sky, which has long dabbled in data-driven advertising systems. In November, Sky hired video ad platform Videology to create a programmatic system to manage its inventory, helping to optimise and prioritise client campaigns in line with audience data.
Though details of this “proof of concept project” are yet to be revealed, Videology believes the wider broadcast and telco sector is ready to adopt such services and last month created a new division – Enterprise Solutions – with Sky as its first client, alongside AT&T in the US. Further announcements are expected soon.
‘Laughed out the room’
To find out how the ad tech company envisages the future of automation in TV advertising, M&M Global spoke to Videology’s senior vice president, strategic partnerships EMEA, John Tigg and vice president of product and platform for EMEA, Jon Block.
With complex regulations surrounding TV advertising, and an entrenched trading style for the constrained levels of inventory, broadcasters have been slow to realise the potential of using data to manage client campaigns. However, this is quickly changing, argues Tigg.
“If I’d walked into a broadcaster five years ago about using data in TV they’d have laughed me out of the room”
“It is clear that, while five years ago agencies were in the position of understanding new business opportunities through leveraging data, to create addressable advertising, if I’d walked into a broadcaster five years ago about using data in TV they’d have laughed me out of the room,” he says.
“I think the difference is that now they are very much ready to do that, to collect data on their viewers and understand that data. Combined with the inventory they have, it can create a better business for TV.”
For Block, who joined Videology six months ago from UK broadcaster ITV, there is a clear opportunity to combat “wastage” in TV advertising. Over time, he believes, TV will adopt the same addressable ad tactics used by digital media players.
“When optimising, you are optimising towards a result – the opportunities and challenges of addressable advertising. The opportunities are obvious to anyone in TV advertising, and the biggest opportunity is around wastage,” says Block.
“There is less wastage in the digital world, but, in the linear world, broadcasting adverts produces a lot of wastage. With a lot of these new technologies coming in, allowing dynamic ad insertion, there is such an opportunity for us to reduce wastage there.”
However, to seize this moment, Block believes television companies must update the way they segment audiences to match the more highly-targeted approach to which advertisers have become accustomed online.
“Probably the biggest challenge of all in addressable advertising is around the complexity of audience targeting,” he says. “With advanced technologies, each person will sit in hundreds of different demographics – you might want to target based on income, browsing history, whether you are a fan of Audi or BMW, or on areas, or spending habits.
“When you’re a broadcaster and you’ve got agencies wanting to book all these different types of audience, how on earth do you forecast all those audiences and work out which ads to show to one person?”
The job of crunching the data to match advertisers’ needs, and optimising and prioritising campaigns in real time, should be done by technology, according to Tigg. And he believes this will allow broadcasters to be braver and open up a larger proportion of inventory to programmatic, rather than the fraction currently on offer.
“Lots of TV companies push 5% of inventory through SSPs and say, ‘We’re programmatic, we’re forward-thinking and innovative’. That is great, but 95% of their business is still being sold in a direct way,” says Tigg.
“What broadcasters need is a system that can bring together all those different point solutions”
“Companies like Sky, Channel 4 in the UK, and many other European broadcasters, have been collecting data on their users over the last couple of years. They know more than they have ever done before about their viewers. What they have learned – the fundamental truth of TV – is that people are watching ads not relevant to them.
“What broadcasters need is a system that can bring together all those different point solutions, including programmatic sales, and bring that into a single point of decision-making which is based on their business rules,” he adds.
Broadcasters and telcos, Block believes, have reached an “inflection point” in their desire to harness data and service advertisers with better-targeted campaigns.
Those with scale, such as Sky in Europe or Comcast in North America, will increase the proportion of inventory sold through programmatic systems. And once that reaches a certain level – somewhere between a third and half of all ad sales – they will need to adopt more sophisticated technological systems.
However, both Tigg and Block are at pains to insist that what Videology is offering with Enterprise Solutions is not “disruptive”, and instead will help existing businesses to serve more relevant advertising for TV audiences.
“Our platform is an ad ‘decisioning’ platform, so it makes decisions based on your data as a broadcaster. We don’t see this as being disruptive technology; it’s not there to replace ad servers, DMPs or SSPs. Instead it is something that sits in the middle, the brain that powers this optimisation,” says Block.
“We think that the understanding of data has created a new need. That is why we are launching this division,” adds Tigg.