Programmatic TV ads are coming to Sky next year

The lead image is an illustration of a robot watching TV.

Sky is getting serious about programmatic TV, with plans in the next 12 months to sell TV ads in the same automated way publishers sell online media.

“There are media plans out there with no TV on them, so there’s pressure to take some of that money back from the alternative online channels that money is going toward,” said Graeme Hutcheson, director of digital and Sky AdSmart at Sky.

Programmatic is one way. Sky will initially sell ads programmatically in its VOD before doing so for the ads in its addressable platform AdSmart and then its linear broadcasts, he said.

To own a trusted marketplace, Sky needs to attract buyers with real-time inventory, so it’s building a supply-side platform that will let Sky plug its inventory to multiple demand-side platforms at once. Video ad network Videology advised Sky prior to its bankruptcy earlier this year, and Hutcheson met with other SSP vendors during this month’s Dmexco. Like any major publisher, Sky wants to own an SSP so it can control and manage how its inventory is sold to keep its margins high.

“We’re building an SSP because we’re seeing demand from advertisers and agencies to transact in a fully automated way, which is hard to do in a highly regulated market like broadcast,” said Hutcheson. “There’s an appetite among advertisers and agencies to trade in a fully automated way and we think it’s important for a broadcaster to be able to offer that solution to the market.”

Advertisers are interested in more accurately targeted TV campaigns, but it will take time to move them toward programmatic in a channel historically used for reach.

Until then, Sky’s goal is to let advertisers reach more homes with addressable TV ads that show different creative to different people who are watching the same show via different set-top boxes. AdSmart is a step toward programmatic transactions, and the more Sky can educate the market on the benefits of personalizing ads at scale, the easier it should be in theory to pull their programmatic budgets into TV later.

Sky has already held discussions with ITV and Channel 4 to see if both commercial broadcasters can use AdSmart. Plans are also underway to see if the technology could be used in Youview set-top boxes as well as via connected TVs. Following a deal with Virgin Media last summer, the broadcaster will offer a potential addressable audience of up to 30 million people in Britain and Ireland next year.

“We’re tentatively going into programmatic because we had feedback from buyers who weren’t quite sure how they wanted to buy programmatic TV. It’s yet to be proven whether there’s a true demand for it,” said Hutcheson.

Sky believes an inflection point is coming, which is why it also owns its own data management platform. Adobe has provided the ad tech, which would allow Sky to leverage its own data to ad buyers while preventing data leakage as the broadcaster will have more control over what data is shared with advertisers. Owning the supply and analytics sides of a tech stack suggests Sky will look to control programmatic advertising costs while improving the overall return on investment for ad buyers.

“The complexities and manual nature of placing TV buys and can make decisions around effective budgeting very challenging,” said Valerie Robbe, supervisor for channel integration at media agency Barefoot Proximity. “An automated offering that promises to streamline the process of buying and optimizing TV buys via integration with existing DSPs would be of interest and may very likely appeal to brands of any size, but especially the largest corporations.”

Sky has been quietly putting all the pieces in play for a programmatic offer since AdSmart launched in 2013. Three years later, it invested $10 million on U.S.-based programmatic advertising company DataXu, and now it’s introducing Moat so that advertisers will be able to get independent verification on set-top box impressions. Despite the emergence of its ad tech stack, Sky has resisted the overtures of the big holding groups to trade programmatically — until now.

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