The United States remains the most significant advertising market, with around half of all of the world’s advertising traded in a single country. Inevitably this means that it attracts more disruptive start-ups looking to get a share of the ecosystem, and many of the models that have launched in the US are now coming to Europe.
Although Sky’s AdSmart has done well in bringing smaller advertisers onto TV, it hasn’t reached the heights we’ve seen stateside. Addressable advertising is already a billion dollar in the US. Advertisers – from pet food to TV networks – are buying against highly-targeted groups as part of a standard advertising campaign.
The barriers to this in Europe are driven both by the platforms and by the regulatory environment, but neither of these is insurmountable, and we can expect to see progress on both fronts over the next 12 months.
On the platform side, the issues are mostly a matter of scale and business goals. Sky has made a conscious decision not to offer addressable advertising to its mainstream TV buyers and is focussing on bringing new advertisers to their platform. In the US, all cable operators have a significant amount of inventory that they are allocated to sell, and the driver for addressable is much higher. As brands and networks learn the benefits of addressable in the US, it is likely that demand will drive take-up amongst European operators, and perhaps even subsidise the roll-out of market level addressable platforms.
On the regulatory side, data protection legislation in Europe makes it much harder for TV providers to match their datasets with third-party segments. In the United States you can quickly run a match against name and address to get a full breakdown of demographics, but within Europe, this level of information is less readily available.
However, there are alternative ways to match datasets directly and the case of Smart TV data – which is now just starting in Europe – provides a useful reference point for this. Smart TV manufacturers use automatic content recognition (ACR) technology embedded in the device to recognize any content that hits the screen. This data has been available in the US market for several years. Unlike cable provider data, it does not have name and address information associated with it, and people have developed other ways to match it to online datasets.
Like most devices, Smart TVs can carry cookies that make the most straightforward match fabric; and IP address can also work where the user has given sufficient permissions. With the forthcoming General Data Protection Regulation legislation, it’s highly likely that IP matching will not be possible within the European Union, but cookie matching is enough to take online segments and match them against individual TVs.
Once we have online segments matched against TVs, we can then start to sell these audiences on TV against addressable campaigns. Pet food brands can target their addressable campaigns only to pet owners. TV networks can target their tune-in campaigns only to viewers who are likely to watch their new shows.
Consumers get bothered less by irrelevant advertising and TV spend stops leaking to digital.
That’s the theory. In the US at least, it seems to be working.
