Channel 4 seeks to expand programmatic ad offering

Channel 4 plans to develop how it sells video-on-demand to advertisers to bring it more in line with the way they buy video ads from online ad auctions.

Channel 4 is hunting for a digital group programmatic manager who will help mastermind the pivot to automated auctions. A job post for the role on LinkedIn details how Channel 4 intends to build a new marketplace for its programmatic inventory that will let both agency trading desks and demand-side platforms buy its ads using open auction-based buying — or real-time bidding.

The broadcaster wants the digital group programmatic manager to create a sales pitch for how it should sell RTB, a move the post revealed has full approval from the board. According to the spec, the new marketplace for Channel 4’s video-on-demand impressions will be led by a team of digital specialists who will sit both outside of and within Channel 4’s existing sales team.

While the broadcaster runs its own ad exchange to manage programmatic-direct deals, it does not offer RTB in the same way Google does. Rather, agencies commit cash up front to Channel 4 and are given a certain number of impressions for a fixed CPM. This is not akin to the open-auction buying that buyers are used to when they submit bids through Google’s DSP DV360.

An overhaul of how Channel 4’s sales execs sell VOD is timely if their recent meetings with buyers are anything to go by. Up to 40% of the broadcaster’s VOD inventory is sometimes left unsold, said a head of trading at a separate agency, who was told the stat by a Channel 4 sales rep in the first few months of 2019.

This is partly because the broadcaster has per-session frequency caps, so when viewers binge on shows, they run out of ads they can be exposed to. The inability to sell all VOD impressions could also come down to a calculated gamble on Channel 4’s part, according to agency executive sources. If the broadcaster really wanted to sell remnant VOD inventory it could drop prices. Doing so, however, could cannibalize its larger linear business. Channel 4 has actively tried to protect its VOD price premiums, in the expectation that as linear audiences fall, advertisers will be forced to shift spend to VOD to deliver the same reach.

Channel 4 didn’t respond in time for this article’s publication, but we’ll update if they do.

“Channel 4 obviously has a unique proposition, offering a younger and more upmarket audience than other channels,” said Chris Gorney, client strategy director at performance agency Journey Further. “But it will need to continue to evolve its product and scale its subscriber base to continue to get the share of advertiser budgets it wants in the face of Sky and Virgin’s [addressable TV] partnership in particular.”

Some advertisers have started to figure out how to buy large volumes of video ads online without defaulting to YouTube. At the Digiday Brand Summit Europe in Ireland in May, one advertiser revealed on condition of anonymity that it stopped buying on YouTube after its brand got burned in the brand-safety crisis two years ago, but didn’t see any impact. “It was hard, but we found a way to buy around YouTube,” said the senior marketer. The fact more advertisers now seek online video alternatives to YouTube and Facebook is an outcome broadcasters like Channel 4 can use to their advantage.

Linear viewing continues to do the heavy lifting for Channel 4’s commercial business, but VOD is where the growth is. Yet, building a pitch to maintain that growth is hard when Google and Facebook are so well entrenched. “Channel 4 will have a tough job given how well the digital duopoly sells their product, but Channel 4 will point to their own research that shows All4 impressions are more valuable than other online video views,” said George MacKean, investment manager at independent agency The Kite Factory.

At the broadcaster’s Upfronts last week in London, the focus was on plans to grow its digital ad business — the fastest-growing part of its commercial offer after it grew 24% year over year in 2018. Buyers were told how they could match their own custom audience segments with Channel 4’s 20 million active registered viewers from the Autumn.

While not game-changing, custom audiences play to Channel 4’s advantage over rival broadcasters that can’t boast the same depth of first-party data for the 16- to 34-year-old viewers that advertisers covet.

“This has been a long time coming,” said Lawrence Dodds, communications and planning director at UM London. “Whether custom audiences take off depends on whether Channel 4 gives advertisers real flexibility with different third-party and first-party data sets, allowing them to get closer to their high-value audiences.” It also depends on whether Channel 4 can give advertisers clarity as to what happens to their first-party data once it goes into the broadcaster’s ecosystem, he added.

Like previous Channel 4 innovations, the initial pitch for custom audiences sounds impressive, but is light on detail. At last year’s Upfronts, Channel 4 told buyers they could use visual and audio recognition technology to identify linear TV moments for relevant advertisers to buy against. Since the reveal, the contextual offer is still in beta, said the senior planner, who said they haven’t been able to use it. As much as Channel 4 is seen as one of the most innovative commercial broadcasters in the U.K., its innovations around behavioral and contextual targeting haven’t transformed its VOD ad business at the rate many observers anticipated.