Will Connected Devices Kill Broadcast TV Advertising?
By Jamie West — Ex Group Director of Advanced Advertising Sky and Deputy MD at Sky Media
I’ve been involved with TV ad sales for more than 30 years, witnessing tides of change sweep over the industry. From the limited market of terrestrial television with just four commercial channels to the multi-channel environment launched by Sky and its cable rivals from 1990 onwards. I’ve seen early connectivity experiments using the dial up modem of a set top box to the ever growing sophistication and targeting enabled by the fast, always on, return path of broadband.
These big changes have allowed TV ad sales to adapt, expand and evolve but haven’t fundamentally threatened the underlying model upon which it was based. Extra channels meant tighter targeted advertising based on audience, demographics and content type. The process of packaging content and promoting it in a seemingless endless array of thematic channels became key. As did the EPG.
The Electronic Program Guide (EPG) became — alongside marketing — the vital link between a channel, its audience and advertising revenue. Twenty years ago it was the only way to see the TV catalogue of what was on, other than surfing or manually inputting the channel number in the TV remote. Channels jockeyed for position in each genre and a black market — later legitimised — developed in trading channel numbers. Placement in the EPG listing had a tangible effect on your viewership and revenue.
Broadband, together with notable competition from subscription services independent of platforms, led to a significant shift in audience expectation, which is one of the reasons Sky launched Sky Q in 2016. The EPG became just one of a multitude of services on offer, most of which broke finally with the previously dominant linear model and surfaced entire catalogues of demand content within a bewildering array of visual interfaces.
Enter Netflix, who launched its first user interface (UI) in 2009, giving users a flat and clean way to navigate through a catalogue of content. But the UI also treated each and every title the same, initially presenting endless rows of box cover art — a format optimized for shelves not TV screens. So in 2012, designers at Netflix opted for a different approach that focused on big pictures, capable of telling the story of a title without many words.
It’s content led, binge friendly, interface quickly became the de facto standard and its major competitors are all imitators: Hulu, Disney+, Apple TV, HBO Max, Amazon Prime Video and even Sky Q.
The advent of streaming has also shifted the priorities of television, attracting those determined to get through a whole series in one sitting rather than casual viewers happy to browse through channels (and ads) until they stumble across something that piques their interest. Sky’s box set offering typifies this approach. In this new viewing environment, advertising can be seen as a real friction against the entertainment experience.
With the TV experience and expectation fundamentally shifted, we also face new problems of measurement, insight and data available. In the UK viewing has been measured by BARB, the Broadcasters’ Audience Research Board, jointly owned by the BBC, ITV, Channel 4, Channel 5, Sky and the Institute of Practitioners in Advertising. Participating viewers have a box on top of their TV sets which tracks the programmes they watch using a panel of circa 5000 households. The US has a vaguely comparable system in Nielsen.
In 2013, I helped launch Sky AdSmart, an addressable TV capability which only played your ad when a selected audience was watching — we were able to build on BARB measurement and utilise Sky’s 500,000 home viewing panel to provide even more granular detail on viewing and measurement of a campaign. Since 2013, this return path data capacity has been expanded to include additional data from in excess of 7 million households using connected STB’S and devices.
Yet the disconnect between linear and streaming audiences measurement remains. In 2019 Nielsen in the US attempted to use the viewing behaviors of its sample of US households to forecast the views of Netflix’s The Irishman during its premier week. Using their sampling of U.S. homes nationally, Nielsen released ratings of 17 million viewers. Netflix countered that this ignored mobile devices and other services and that the movie had actually been watched more 26 million times in its first week — that’s a 50% larger audience than Nielsen’s forecast. Yet Netflix is a black box without any need or desire to make its measurements open to scrutiny.
From an advertising perspective, the planning and execution of TV or Video campaigns needs to change. Commentators often assume BVOD (Broadcaster Video On Demand) or CTV (Connected Television) are a reach extension of linear TV. I disagree. Agencies should instead be planning for an audience first approach; reaching out through whichever viewing experience is most effective for the campaign objective, rather than adhering to a legacy TV trading (sales and buying) approach. To enable this to take place in a more coherent fashion, however, there needs to be a fundamental change in how we approach cross platform video measurement and video campaign execution.
Add to this the platforms desire to monetise their digital shelves with paid content placement that covers both content and Advertising and there’s new premium real estate (Above the Fold on our Connected Devices) that the industry is going to have to come to terms with. How will advertisers engage with this new content first UI to maximise visibility of their products within this limited space and how will platforms engage with Advertisers and Content Owners to ensure end users remain highly engaged. Disney, Roku and Amazon Fire are all now pushing into this space. Visibility of pricing and metrics on what ‘placements’’ — positioning on the visual grid — are worth looks increasingly to be the sweet spot we need answers to in order to take this opportunity forward and I, for one, will be interested to see how advertisers can transition their approach and skill sets to this exciting new world of TV.