This week’s news that Bouygues Telecom has struck a partnership with France Télévisions, TF1 and M6 – France’s major broadcasters – to launch addressable advertising highlights the growing importance of targeted advertising, with pay TV operators set to play a key role.
Bouygues Telecom has launched a segmented TV proposition including addressable advertising to its base of 1.5 million TV subscribers in partnership with the three broadcasters. Subscribers who have given consent to the use of their data for targeted advertising will receive personalised advertising based on where they live, their tastes in programming or areas of interest, among other criteria.
French broadcasters and service providers have been ramping up their activities in this area since the government changed regulations governing advertising to permit targeting last year.
Bouygues Telecom has already signed up Canal+ Brand Solutions as a partner, while rival service provider Orange has signed partnership agreements with France Télévisions and TF1.
Altice Media meanwhile has begun offering targeted advertising on the SFR platform for its own portfolio of channels including BFMTV, RMC Découverte and RMC Story as well as its regional channels BFM Paris, BFM Lyon, BFM Grand Lille, BFM Grand Littoral, and BFM DICI.
Interest in addressable advertising has been growing, driven by the switch of advertising spend to digital platforms, which has left broadcasters struggling, along with a concomitant increase in demand for measurability and a data-driven approach to marketing by brands.
Pay TV operators have played a major role in developing addressable advertising in the US, where service providers have an allocation of advertising inventory per hour to sell.
The situation in Europe is more fragmented, and service providers lack the history of the US cable ad business. However, a number of pay TV operators have their own media inventory to sell, and Sky has been a pioneer of segmenting its audience with the AdSmart platform, which can select ads from a library stored on the set-top in order to reach an audience whose set-tops may not be connected to the web.
As demand for targeted advertising grows, fixed-line pay TV operators and telcos are well-placed to play a role given their large bases of addressable set-top boxes in homes and ability to provide more flexible server-side ad solutions. If they can share technology between them and offer a standardised technology solution for advertisers – something emphasised by Bouygues Telecom – they will be in an ideal position to act as facilitators in partnership with broadcasters and other content providers. Interest is clearly growing, with even CEE pay TV operator Digi recently announcing an addressable ad offering, in this case on its digital platforms.
Digital TV Europe recently ran a Symposium session on addressable advertising featuring input from Portuguese pay TV operator NOS – also highly active in this area – technology enabler Velocix and our sister research organisation, Omdia.
Omdia’s Matthew Bailey, senior analyst, advertising and games, pointed out that video consumption has shifted online and traditional TV has not shown signs of growth in recent years. Consequently, total media advertising revenue is now dominated by online, which has accounted for more than half of the total since 2019, according to Omdia data.
Online video advertising accounted for 58% of the total last year and Omdia expects this proportion to grow to two thirds by 2025.
Against this background, addressable TV is becoming more important, and there is also growing demand for campaigns that transcend the boundary between traditional and digital media.
COVID-19 has meanwhile accelerated uptake of online video and especially of AVOD.
Online video ad revenue is expected to overtake TV advertising by 2024, according to Omdia, driven not only by the rise of AVOD but by social media consumption and the likes of YouTube.
Addressable advertising is key to the fightback by broadcasters and offering household level targeting via set-tops and smart TVs is central to this. TV incumbents are developing more advanced linear TV advertising with targeting to defend their patch, and household level targeting can be sold at a premium.
To make the most of the opportunity, broadcasters will need to sell, track and measure campaigns across both linear and streaming platforms, which is not straightforward. The complexity of integrating these different segments is likely to be challenging, as is accommodating growing demand for privacy and privacy-related regulation.
But as advertising becomes more data-driven, with more demand for measurability, broadcasters, in competition with ad-supported streamers and device manufacturers, are seeking to maximise their share of the pie. Telcos and pay TV operators that can deliver addressability to them stand to benefit.
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