Streaming Forum: Sky Not Taking Competition Lying Down

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Deepa Kutty, a program and portfolio manager in the Promotions & Advertising Tech section of Sky, spoke at today’s Streaming Forum in London on the impact of streaming on advertising.

"The first color television ad cost $9," said Kutty, taking the audience on a quick trip through the history of television advertising. Today, TV still provides a compelling platform for advertisers, she said, noting that the reach of an advertisement on television can be as high as 90% of a country’s citizens.

Beyond just the reach, Kutty notes that TV advertising is trusted, more than newspapers and social media. 

More than that, TV advertising provides lift to drive online behavior, with Kutty noting that Fitbit and others saw an uptick in webpage views based on airing ads on television.

With TV advertising a trusted and cost-effective approach to wide audience reach, Kutty noted that the rise of streaming offers the consumer flexibility and customized viewing, but also has the potential to fragment advertising.

Kutty says there are three models that have disrupted the market: Netflix, YouTube, and Amazon Prime Video.

Netflix has 137 million subscribers in 191 countries, versus only 7 million subscribers in the U.S. when it was a single-country service. While it currently offers subscription-only content with no advertisements, Kutty questions whether that model is sustainable, adding that the ads would have to relevant to the consumer watching a show in order for Netflix customers not to reject advertising. Kutty added that Sky is actually assessing variable ad loads, based on customer profiles, preferences, and behavior.

YouTube has 1.8 billion users and 1 billion hours of content, in 130 countries. It is fully advertising-driven.

A third model, Amazon Prime Video, has 100 million subscribers and is in 200 countries. "Amazon has made a shift into sports," said Kutty, noting that Premiere League matches will be broadcast by Amazon, replacing Sky Sports later this year.

"As the UK’s leading broadcaster, Sky is not taking this lying down," said Kutty.

In terms of streaming, Kutty notes that Sky measured 5.3 billion streams in 2018, a significant growth over the past few years. For this 2018 measurement, 71% of Sky customers either consume via a hybrid satellite-streaming or a streaming-only approach.

Sky offers targeted advertising on some of its live-linear channels as well as on-demand content. In addition, Sky is offering targeted advertising through Sky AdSmart. Some of the measurement filters include pet ownership, affluence level, number of children. These details can be filtered in the UK based on post code level.

As today’s earlier keynote from DAZN's Florian Diederichsen stated, over half of sports views are consumed on mobile smartphones or tablets, and Kutty expanded on that concept by noting that mobile advertising is the area where most advertisers are expressing strong interest. Part of the reason is that advertisers can use location-based tuning, allowing brick-and-mortar shops to draw in potential customers that are close by.

Kutty notes that advertising decisioning can be explained by segmentation (the right person), activation (the right place), and reaction (the right idea).

In regard to reaction, Kutty says the proper use of measurement and brand perception are important, as is connecting to customer journeys as they make buying decisions. Insights in to all these, according to Kutty, is the concept of "the right idea" tying together brand perception and response to call to action from the advertising.

Kutty finished up her keynote by touching briefly on 5G data delivery to mobile devices, noting that it may provide the opportunity for virtual reality to be part of upcoming campaigns.

At some point in the future, TV will have to look at skippable TV ads," said Kutty, noting this will require a workflow change but seems inevitable "because YouTube has gotten us used to skippable ads."

In addition, Kutty says purchase-aware ads should become the norm, so that consumers aren’t bombarded with ads—across multiple websites—for products they’ve already purchased.

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