Verbal sparring will soon be over as the UK’s big two pay-TV operators, BSkyB and MSO Virgin Media, finally launch targeted advertising early to mid 2012.
Sky has been talking about targeting for some time, while Virgin Media announced in November of last year that it was going to introduce it early 2012, but neither materialized. Now, both parties have put some flesh on the bones of their pre-announcements with Virgin Media announcing that it would launch a full-scale service in 2013.
The operator’s commercial director, Mark Brandon, took the stage at the recent Future TV Advertising event in London to announce that it would exploit data provided by third parties as well as its own data in launching the service at an unspecified date in 2013. According to Brandon, Virgin Media would be deploying advanced on-demand advertising services developed for its hybrid DVR developed jointly with TiVo, which has become the cornerstone of its pay TV strategy in the multiscreen era.
Not to be outdone, Sky followed up Virgin’s renewed commitment to targeted advertising at the same event by promising that it would launch its own targeting platform called AdSmart during the summer of 2013. This will reach 7 million of Sky’s 10 million customers, allowing advertisers to target on the basis of up to 90 attributes, including age, region and level of affluence. Virgin Media will be able to target all of its 3.7 million pay TV customers, although the TiVo-based extensions will only be available to those premium customers who have subscribe to that platform, currently thought to be around 1.2 million.
Sky’s AdSmart platform is based on Cisco’s NDS Dynamic advanced advertising software, which has several modules that can be deployed independently or run together in the set-top box. These modules include: audience measurement for monitoring responses to ads; interactive support that allows viewers to engage with brands beyond the ad, for example, by telescoping into longer-form videos; and the addressing itself on the basis of profiles specified as collections of attributes used to target individual households.
Virgin Media and Sky are coming at targeted advertising from slight perspectives. Virgin Media is a pure play operator that has decided not to be in the content market, while Sky also has its own programming and owns rights to both premium sports and movies. Its AdSmart will be deployed alongside its wholly-owned channels, while Virgin Media will only in some cases be selling advertising space itself, and in others will distribute the existing advertising already spliced into the content by the broadcaster. So, in principle, Virgin Media could be delivering Sky’s targeted ads.
Although slightly reticent on the ad targeting front, Virgin Media was an early mover in VOD advertising, which it launched late 2009, offering 30-second pre-roll and post-roll ads from brands such as L’Oreal, Sony, Sony Ericsson, Kellogg’s and Microsoft, using software from Sea Change International for automatic matching of programs to ad matching decisions.
Since then, subscribers have increased on-demand viewing, now estimated at over 100 million views per month. Even so, Virgin Media has admitted that it has had a challenge convincing content owners and broadcasters that VOD advertising is delivering new eyeballs and not just cannibalizing current revenue streams. This may be why it delayed introduction of targeted advertising, waiting until broadcasters and brands had fully embraced the VOD element.