What impact will Sky AdSmart have on advertising?

Following a successful testing phase, Sky AdSmart will soon roll out to market. Here, the7stars’ Gary Caranay looks at the impact – both good and bad – it will have on television advertising.

The much anticipated Sky AdSmart technology will finally take significant strides this year after what has seemed like an age of research, testing and launch partner trials.

Sky is set to roll out the platform with more attributes for campaign customisation and across more channels, including its premium live sport offering. Heralded as the next step in optimising linear TV campaigns, two major benefits for marketers come shining through: relevancy and reporting.

Sky AdSmart claims to use a household panel of 500,000 users, a figure almost 100 times the size of the current BARB panel, on which all UK TV data is founded, to target audiences based on regional and lifestyle attributes, household composition and socio-demographics.

The efficiency here is that if a brand has a very clear and defined audience, it can minimise wastage by only targeting relevant households, or at least get closer to them than it could with the broader trade audiences of traditional TV.

A potential downside to AdSmart is that, in taking a targeted approach to TV advertising, it may undermine the value of traditional TV in generating fame and awareness, especially for brands looking to become famous or whose audience isn’t particularly well defined.

Where AdSmart comes into its own is in optimising campaigns that feature multiple ad executions because its level of targeting makes it possible to take different executions and serve the most relevant ad in the most appropriate slot.

Another benefit of the AdSmart platform lies in campaign evaluation. The platform allows the use of self-serve reporting portals to gain insight into the definition of audience segments. The dashboard technology gives clear visibility of campaigns through this portal and Sky even offers support to help measure the impact on sales, considered the Holy Grail by many advertisers.

To this end, Sky IQ allows datasets from both the advertiser and Sky to be combined in order to look at the return on investment of the Sky AdSmart campaign.

Despite being able to report on all of the traditional TV deliverables, Sky has veered away from traditional cost modelling with AdSmart. With the audience attribution we have come to expect from digital and new technologies, Sky is selling the AdSmart platform on a cost per impression model, with an impression being a household that has seen at least 75% of the prescribed advert.

However, similarly to TV, as the audience becomes more niche and more attributes are layered into the targeting, the cost per impression naturally increases.

This development coincides with another long-standing project in the form of BARB carrying out its own tests on measuring web TV viewing. Since the inception of video-on-demand (VOD), agencies have sold in this newer, on-demand video media to traditional TV advertisers on the basis that it is complimentary to linear TV, with UK media agencies’ familiarity with the term “incremental coverage” helping to facilitate the move.

The uptake of non-linear viewing suggests this type of measurement will be increasingly important as it establishes itself as a standalone medium. Dubbed “Project Dovetail“, BARB has predicted that 2014 will be an important year and published reports on the latest progress are expected this summer, thereby bridging the gap between VOD and linear TV reporting.

With the wide positive reception of AdSmart, it is no surprise to see there have already been over 100 advertisers, both old and new to Sky, willing to test the capabilities of the platform. According to the latest numbers released by Sky, this equates to over 165 million Sky AdSmart adverts and 700 campaigns.

Although it has been a long time coming, Sky AdSmart is very much a potential game changer. Pricing still has to be finalised and the pool of channels needs to be widened to see if the platform can be replicated across the wider market. Even at this stage, Sky has already started winning awards for AdSmart, which leads to the questions: why hasn’t it been done sooner, and why have none of the other sales houses challenged Sky?

For such an established industry, it is very easy for the big sales houses and platforms to ignore the need for development in the areas of targeting and measurement. ITV had an incredibly successful year in 2013 but that came on the back of programming successes and traditional sponsorship campaigns – areas ITV is likely to focus on again this year especially with the launch of two new channels, one of which – ITV Encore – will be released as a close partnership with Sky.

With Channel 4 and Channel 5 also refraining from making any public announcements in developing their TV measurement offerings, and Virgin as the other big pay-TV platform withdrawing its support from their similar programme, Sky’s AdSmart technology showcases an aggressive stance in growing market share.

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