Rupert Murdoch's Sky TV and Richard Branson's Virgin Media are setting aside their long-standing rivalry to join together and offer more powerful targeting to U.K. TV advertisers.
With 30 million viewers between them, the pay TV partners are claiming that the alliance puts them on a par with Google and Facebook in terms of U.K. reach – but in a safer brand environment.
Jakob Nielsen, addressable TV lead at GroupM, said, "It's great to see competition starting to play together. Collaboration is a new trend that comes out of necessity, because the competition from non-broadcasters is very fierce."
Sky and Virgin's competition is no longer just from rival TV stations, but from social media and companies such as Amazon, which is spending $4 billion on original content this year.
Nielsen thinks that the deal will also help Sky and Virgin compete with the big social networks. "This puts them in a good position compared to Facebook and Google, who also have a lot of data and reach, but don't always have good content. And these days you can't argue with a brand-safe environment."
Virgin will join Sky's AdSmart platform, which allows tight household targeting, and can access data on things like insurance renewal dates, the age of a viewer's car, and even which direction a garden faces, when appealing to audiences.
Jamie West, Sky's group director of advanced advertising, said that AdSmart has a minimum segment size of 5,000 households, and frequency capping, so people don't feel like ads are chasing them around their TV screens. Ad breaks that include targeted ads showed one-third fewer viewers stopped watching, while individual targeted ads lost 50% fewer viewers, according to West.
West said, "It's about protecting and growing our market. We will be able to deliver a common trading mechanism for a large part of the U.K., which will make it easier for advertisers and for agencies. With Virgin we have common goals and shared opportunities."
Addressable TV is less than four years old in the U.K. It opens up national TV to new advertisers who want to run local campaigns, but is also used by financial services, wireless companies, and automakers. Audi, for example, can work with targeting to advertise seven or eight models where they used to advertise just three or four, he said.
Nielsen added, "Addressable TV is still a small percent of the total but it will increase in the next two or three years. I'm not sure people really understand how much the TV landscape is going to change. We'll see more change in the next three or four years than we did in the last 20."