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Business case studies No 224 - 22.06.2018

Making addressable advertising a reality for linear TV

This week’s egtabite features an in-depth look into Smart AD, an innovative new offer developed by Belgian sales house SBS. Smart AD is the first example of addressable advertising (AA) in live TV on the European mainland and combines the power of television with the targeting possibilities of the digital age, allowing for more direct conversations with clients.

Why addressable advertising?

SBS Belgium had several reasons for its shift toward smart advertising.

Firstly, the fact that classical TV advertising is under pressure, mainly due to diminishing ad revenues from FMCG advertisers. And secondly, the necessity of diversifying the number of products and clients.

The sales house already offers a wide range of solutions such as advertising spot sales, sponsoring, product integration and online video and it recently launched what they call the “pause button-advertising” (when the viewer presses the “pause” button a banner ad appears on the screen until they press “play” again) and Smart AD, which provides one-to-one communication on a large scale.

The motivation from cable operator Telenet - part of Liberty Global and one of the shareholders of SBS - to develop new advertising models in the TV market has likewise accelerated the development of addressable advertising.

Finally, the fact that - as a small sales house - SBS needed a unique differentiating selling proposition, which the development of Smart AD, the first targeted solution in continental Europe, provided them with.

What is Smart AD and how does SBS commercialise it?

SBS embarked on the difficult journey of developing Smart AD in 2014, while the first internal technical tests and external end user testing happened throughout 2016. Smart AD launched commercially in September 2017 and is now up and running in 1.3 million households in the country.

To commercialise this new product, SBS created complex socio-demographical attributes for their clients, which go beyond targeting on basic socio-demographics, such as age or gender.

Advertisers now have two options: they can either buy on basic attributes (location, spending power, family typology) or ask for tailor-made attributes, for example by including their client list. The full campaign management (capping, planning, spread…) is done internally by the sales house and impressions (not GRPs!) are reported on a weekly basis.

SBS imposes a minimum budget for clients to get in this offer, as well as a minimum of a 3 week-campaign. The addressable inventory is sold at a price that is four times higher than linear TV inventory.

Lessons learned and next steps

After the first 10 months, SBS has observed that 50% of Smart AD advertisers are new to TV, and that 60% are new clients to the sales house. This has not only been the case in Belgium, as Sky has also reported that Adsmart - its solution for addressable TV - has brought in first time buyers into TV advertising.

Smart AD provides a lower entry threshold, making TV accessible to niche brands and location-specific advertisers. The combination of targeting client lists and specific targets, which are not available through traditional socio-demographic targeting, makes it an attractive advertising solution for clients.

With a dedicated sales team and a simple offer, the sales house runs approximately four campaigns a week but wishes to grow. It is worth noting that Peter Quaghebeur, SBS Belgium CEO, believes that addressable advertising should be available to the entire Belgian market and that it would benefit all actors.

SBS would like to further increase the penetration of AA-ready set-top boxes, ad additional channels, operators and develop into a multiplatform solution.

COMPANIES

 

RESOURCES

»SBS website - click here.
»Video presentation - click here.

 

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