In an effort to retain advertisers and slow the advance of Google and Facebook, European broadcasters are setting aside traditional rivalries to forge alliances that offer wider reach for ads and internet-style data about audiences.
Germany’s ProSiebenSat.1 Media SE has joined forces to sell digital-video ads with Television Francaise 1 SA and Italy’s Mediaset SpA. In France, SFR Group SA and Metropole Television SA’s M6 have teamed up with publishers and ecommerce sites. And in Britain, rival pay-TV operators Sky Plc and Virgin Media are combining information on customers to offer advertisers more insight into viewers and give them better-targeted ads.
The tie-ups come as digital rivals are on track to attract more ad spending globally than traditional TV for the first time this year, according to ad agency Zenith. WPP Plc, the world’s largest advertising company, says Google has become the top forum for its clients’ ads, and Facebook Inc. could soon be No. 2.
“The stakes are so high that they need this to work,” said David Elms, a partner at consultants KPMG LLP in London. “They need to aggregate their data to provide the rich insights that are increasingly demanded by advertisers.”
While European television networks haven’t been hit as hard as their U.S. counterparts by cable-TV cord-cutting, internet-based competitors are catching up. YouTube and Netflix Inc., which entered the U.K. in 2012, still rank behind streaming services from the BBC and ITV in adult viewing, according to communications regulator Ofcom. And Sky remains the market leader in the top five European markets, with about 21.5 million subscribers, followed by Netflix with 10.8 million, while Amazon is in fifth, according to Enders Analysis estimates.
As streaming companies go after video subscribers, Facebook and Google’s YouTube are encroaching on TV advertising as well as viewing time. The pay-TV companies argue that their audiences are focused and attentive, amid skepticism in the advertising industry about how many digital ads actually reach consumers. They say they can protect advertisers from distasteful content such as extremist videos that have popped up on YouTube.
“This is not a three-second thumb swipe,” said Jamie West, group director of advanced advertising at Sky Media. “We’re saying to agencies and clients, ‘You can trust us. We only charge you if your ad is seen. And, by the way, it’s really brand safe.”’
Mark Evans, marketing director of British insurer Direct Line Insurance Group, says traditional TV is healthy and remains the focus of his media plan. But he says it’s smart for companies like Sky and ITV to cooperate to minimize the gains being made by Google and Facebook.
Sky and Virgin say that with web-linked set-top boxes and smart TVs in most British homes, their deal will let them offer advertisers better data on a targeted audience of more than 30 million people in the U.K. and Ireland. The effort builds on Sky’s existing AdSmart technology, which allows advertisers to aim their marketing at refined audience groups using thousands of combinations of age, location and lifestyle.
In France, the SFR-led team of almost 100 media brands, called Gravity, promises to allow advertisers to push digital campaigns onto a variety of formats and devices to reach 44 percent of the country’s daily internet users.
The alliance cutting across Germany, France and Italy, dubbed the European Broadcaster Exchange by its backers, aims to sell advertisers pan-European digital-video campaigns to a market of more than 250 million viewers, with an automated trading platform based in London.
Google and Facebook say there’s room for everyone as ad spending continues to grow. “Competition is good,” said Caroline Atkinson, Google’s head of global policy. Patrick Harris, a vice president at Facebook, said there are reasons for brands to spend both online and on traditional television, though he insists that Facebook has “more granularity when it comes to being able to target and pinpoint and find the right consumers.”
If a similar effort by British newspapers is any guide, the partnerships may not pay off as much as the broadcasters expect. At least four leading U.K. news publishers last year began talks on a potential alliance known then as Project Juno to pool ad sales. But since January, major outlets such as the Daily Mail and the Telegraph have abandoned the idea, leaving its future in doubt.
Even if broadcasters can work together, changing consumer behavior is against them. The TV audience is moving online, and simply offering a better way for advertisers to measure viewership will do little to slow that shift, according to a July report by JPMorgan Chase & Co. Online, which accounts for almost 60 percent of U.K. ad budgets, continues to take more share across Europe, and suggestions that advertisers would boycott Facebook and YouTube over concerns such as robot-generated traffic “appear to be more noise than action,” the report says.
Brands will put their money wherever consumers are — the specifics of the platform are secondary, said Keith Weed, marketing chief of Unilever, the British-Dutch consumer giant behind Dove soap and Hellmann’s mayonnaise. While he notes that TV can still bring in mass audiences with live events such as the Super Bowl or the World Cup, he says broadcasters should also work to improve the quality of their premium programming.
“People are willing to spend time in front of television if the content is good enough,” Weed said. “Cream rises to the top.”