Sky’s investment in addressable TV advertising appears to be paying off, as ad sales through its AdSmart product grew 17 percent in the UK according to the company’s latest financial results. Strong ad income in adverse conditions helped fuel total like-for-like revenue growth of five percent for the second half of 2017 compared to the previous year, which the company also attributed to it’s growing customer base and investment in original content.
The results show that AdSmart’s strong performance helped drive five percent overall growth in Sky’s UK advertising revenue. Sky estimates this as a 700 basis point outperformance compared to the wider TV ad market.
The company has been growing the AdSmart product, saying that addressable advertising is bringing in strong ad revenue despite adverse conditions for the wider TV advertising market. Sky claims the product has been successful in encouraging advertisers who’ve previously reduced their TV budgets to reinvest, and has brought first time buyers into TV advertising.
The product saw its reach expand in the UK as Virgin Media’s parent company Liberty Global signed up to AdSmart last year, and its reach is set to expand further as Sky rolls out the service across its wider European footprint.
Across the business as a whole, Sky posted positive results, with like-for-like revenue for the latter half of 2017 growing by five percent to £6.7 billion and ten percent growth in EBITDA to £1.1 billion.
Sky added 365,000 new customers in the last six months and sold two million new products in the same time (though there was no mention of how many subscribers were lost in this period). These customers are increasingly watching Sky’s channels through over-the top (OTT) devices, rather than Sky’s own set top boxes, but it says this is helping push up viewing figures across its channels, which grew six percent across all markets.
Sky will hope it can boost set top box sales as it launches Sky Q over IP, meaning customers will no longer have to install a satellite dish, but is also planning to invest more in content to capitalise on the shift to OTT. The company says it will be spending less on second tier sports, niche films and linear only channels, and will invest more in producing its own original content.
“In content, our focus on high quality, differentiated local programming to complement what we acquire through our partners is working well, said Sky’s group chief executive Jamie Darroch. “Viewing to Sky channels increased by 6% and, following both critical success and record audiences for Sky Original productions, we will be increasing our investment in original content each and every year.”