Programmatic TV advertising isn’t new, but it’s young. While the popularity of traditional, ratings-based TV ad-buying certainly isn’t waning, advertisers are realising the benefit of instantly matching ads to their desired audience. 

Last month, British telecom group Sky made a step further into programmatic technology with a £7 million investment into DataXu, a US company which provides data and analytics for programmatic technology.

PerformanceIN caught up with Sky Media’s deputy MD, Jamie West, to find out more about programmatic’s divert from online, what this investment means and the challenges Sky has faced so far as one of the UK’s pioneers in programmatic TV. 

Sky Media just invested $10 million into DataXu’s programmatic capabilities, but this isn’t your first foray into the format, having partnered with Videology last year. What’s the medium term goal?

Jamie West: We will be working closely with DataXu to extend the reach of our new product, Sky AdVance. DataXu will be our demand-side platform (DSP) which enables us to go beyond Sky’s operating platform. Ultimately, combining Sky’s knowledge, experience and innovation in advertising with DataXu’s programmatic marketing expertise will provide exciting opportunities for our advertising partners. 

We believe our partnership with Videology answers a different business challenge. It will enable us to manage our video inventory in compliance with the regulations, and in turn let us trade programmatically whilst protecting our first-party data. As a result, we will be developing a programmatic, cross-screen video advertising solution for our advertising customers. 

Could you give us an example of how the whole process would work, i.e. from gathering the data of the viewer to selling a TV spot programmatically? 

JW: This is a fair question but a difficult one to answer well in words alone! It is a surprisingly long and complicated process behind the scenes. However, in short Sky has data at scale with our viewing panel of three million homes, which when combined with digital data such as device ID, cookies and IP addresses means that we have the ability to understand customer journeys across multiple platforms. And just as importantly, we can then deliver ads sequentially across those platforms.

Sky seems to be leading the charge into programmatic TV at the moment. Do you see this setting a precedent among competitors in 2016, or is it still early days? 

JW: We do seem to be leading the charge, we are setting precedents, but it is very early days! Sky’s strategy is to build technologies which enable advertisers to integrate with Sky in whichever way they see fit. From our perspective we see many existing advertisers wanting to trade with us in the future in the exact way they do today, so we’ll maintain their ability to buy broad audiences on linear TV. At the other end of the scale we have advertisers who want to use Sky AdSmart and Sky AdVance for precision targeting, using customer segments. Of course, there are hundreds of advertisers seeking to operate somewhere between these two extremes.

Automation and targeting innovation in general are opening up so many opportunities in television, and we’re very excited about that. However, the ad tech counts for nothing if the AV content isn’t there, or isn’t being watched. Sky is in the unique position of investing more than any competitor in content and ad tech, with the benefit of a large distribution platform and data analytics capability to base it all upon. Our new partnerships and investments in ad tech are building upon our existing competencies.

Could programmatic become a replacement for traditional methods, or it best served as a way of supplementing it, and maximising the use of existing inventory? 

JW: In line with our strategy as I’ve described it, we believe that some advertisers will want to trade with us in the future in the same way they do today. We therefore need to maintain and enhance linear TV’s unmatched capabilities as a mass-market medium. However we are serving an expanding body of disparate advertisers, and no two have the same requirements. We listen to what our clients want and build our capabilities accordingly. 

As with almost all new technologies, there is a far greater likelihood of programmatic expanding the range of available options rather than simply replacing all existing methods.

Have any concerns been raised by broadcasters over the implementation of this kind of ad buying, such as commoditisation, regulation, or the unpredictable nature of ad spots? 

JW: It is perfectly proper to consider the ramifications of new ad tech and raise concerns where they exist, but to my knowledge there are no fundamental concerns in anyone’s minds. We don’t introduce any new innovation without very thorough processes which are designed to identify and avoid problems at an early stage. Adhering to regulations and protecting our data are built-in requirements.

Programmatic ad serving is the exact opposite of commoditisation: it exists to make the most of tiny differences in targeting, so I’d say it de-commoditises targeting. The greater efficiency of programmatic is to the benefit of all involved – including consumers, who will see more relevant ads and maybe even benefit from lower ad costs built into the prices of products and services.

What other issues or challenges have you faced so far? 

JW: Adding complexity into targeting and buying models will always make it more challenging for agencies and advertisers alike. It is therefore our role to make it as easy as possible for them to come on board and join our platform.  It is not always easy to make it easy, but we already have a growing range of case studies showcasing best-in-class examples, how-to guides, and learning resources which will help us collaborate to the best effect on our journey. 

Magna Global predicts that programmatic TV will draw $10 billion in global spend by 2019. Do you think we’re on track to see this, or is there still a long way to go in this new industry? 

JW: As a large media agency Magna Global will have good visibility and good reason to predict that figure.  I won’t join the predictions game, other than to say there is huge scope in more targeted and automated TV planning and buying in the UK and internationally. Where a product or service is driving effective advertising outcomes, marketers will prioritise their investments accordingly.