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Does Sky’s AdSmart Mark the Dawn of Smarter TV Advertising?

Does Sky’s AdSmart Mark the Dawn of Smarter TV Advertising?

This January, BSkyB formally launched its new targeted TV advertising service, Sky AdSmart. Forty major brands backed the launch—including venerable marketers such Tesco, RBS, Audi and Polo. While greater ad relevancy is something we're growing used to as online consumers, targeted advertising for TV is a whole new ball game. Sky's move is a bid to make advertising work better on the main screen—for both viewers and advertisers alike.

How does it work? The service provides audience segmentation based on geography, third-party data and specified attributes, and operates by sending a host of ads via the Sky+ HD box, which are then selected and inserted live, based on their compatibility with a household's profile. As a result, each household will be served a different set of ads during the breaks, based on what makes sense for that household's demographics.

Effective targeted advertising on TV is something marketers have been clamouring for for years, because brands are deeply attracted to the prospect of better segmenting the vast but incredibly valuable TV audience. But, what's really interesting about the Sky AdSmart launch is what it represents for small and local businesses.

As I mentioned in an earlier post, the prohibitively high costs—coupled with a largely geographically-irrelevant audience—have closed-off national TV as a route for local businesses to effectively reach TV audiences. Through its ability to provide effective targeting to a fifth of households in the U.K., Sky is opening up TV advertising to more brands and businesses—indeed, a quarter of those that signed-up for AdSmart are either new to, or are returning to, TV advertising.

What's more, advertising with greater relevancy could also lead to better viewer retention for TV programming. In the U.S., similar targeted ad services for TV have triggered a notable drop in channel hopping. Viewers aren't switching over as soon as the ads come on, because more targeted, personalised advertising is infinitely more engaging. The result? Targeted advertising doesn't just benefit brands, it could be a blessing for broadcasters fighting the ever-present ratings war. It also paves the way for more personalised 'Me TV' programming, optimised per individual by preferences, geography and device.

The next step for advertisers is finding a way to connect our multi-screen experiences to build fully- integrated campaigns. U.K. consumers today spend more than two hours on connected devices, spending 46 percent of this time using two or more devices simultaneously. As a nation that consumes video across screens, we constantly move between devices according to what suits us at that particular time. AdSmart is just one part of the advertising puzzle. The next challenge is targeting specific users in a screen-agnostic approach that reaches an audience, regardless of how and where they're consuming content.

That said, the beta testing of AdSmart across the past six months has already shown some impressive results. The industry will now be closely watching to monitor how the full roll-out fares, and whether it has the power to shake-up TV advertising as we know it.