Market Insight

Sky adds mobile to its advertising portfolio

November 14, 2008

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Leading UK pay TV operator BSkyB has signed a deal with local mobile operators Vodafone and T-Mobile in order to manage and sell display advertising inventory for its syndicated 'on-portal' sites.

Sky is using technology partner Ad Infuse for ad insertion and targeting across the multiple mobile content sites the pay TV operator uses to promote its sports and news content. Fiat and Adidas are known to be the first brands to be interested in the new advertising platform. Mobile operators are contributing to the ad-platform by providing contextual information, such as geographical data and browsing behaviour, to aid targeting.

Sky plans to extend the deal in order to include a mobile TV and video ad inventory, thereby maximising its cross-platform inventory (i.e. TV, online and mobile) making it particularly appealing to advertisers. Sky is the leading provider of audiovisual mobile content in the UK and its content is accessible through all the major mobile networks.

This deal is the first step for mobile operators towards releasing some of the mobile advertising business into the hands of content providers. Whether other UK mobile operators will follow suit remains to be seen. Several mobile operators and handset manufacturers are betting on mobile advertising to offset future revenue decline in their respective core businesses. In light of the current economical context, it is important that everything is done to quickly kick-start the mobile internet phenomenon. A deal such as this one will certainly raise the interest of advertisers and bring a much needed alternative revenue stream to Sky and the mobile operators involved. Screen Digest doubts that the inclusion of advertising will result in a change in Sky's mobile content pricing (currently £5 per month).

Although internet 'display' formats and search advertising represents the bulk of the mobile advertising market (excluding messaging), Screen Digest forecasts that advertising from mobile audiovisual content such as mobile TV, mobile video and mobile games will generate £12m by 2012. After mobile operators take their share, Sky's mobile TV and mobile video advertising revenues will contribute to 1 to 3 per cent of its total advertising revenues (currently approx. £300m per year). Nevertheless, mobile TV and mobile video adoption rates are set to grow further after 2012 and the corresponding advertising revenues could well double or even triple between 2012 and 2015.

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