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HbbTV is Almost Ready to Move Beyond the L-Frame

Tim Cross  19 November, 2020

One of the major promises of the hybrid broadcast broadband television (HbbTV) specification has been its ability to deliver addressable advertising on linear TV. But so far, addressable ads delivered through HbbTV have mostly been L-shaped templates which sit on top of the regular linear feed, rather than true spot replacement.

But those working with HbbTV who VAN spoke with said that broadcasters and advertisers across Europe are poised ready to enable spot replacement once the final technical hurdles are overcome. And with the targeted advertising specification HbbTV-TA now in the hands of TV set manufacturers, these final hurdles might soon be cleared.

Germany setting the blueprint for Europe

Even without the ability to run true spot replacement, the HbbTV spec has been picked up by broadcasters across Europe, but deployment has varied significantly by market.

Vincent Grivet, chair of the HbbTV Association, says Germany and the UK are the two strongest markets.

“In the UK Freeview Play, which is built on HbbTV, has reported it’s deployed on around nine million devices. And I’ve seen a lot of TV manufacturers making big efforts to reach compliance with the HbbTV specification, and that’s partly driven by the strength of Freeview Play,” said Grivet.

“And then in Germany, broadcasters are very active in supporting the HbbTV specification,” he said. “There have been reports recently that HbbTV is the number one smart TV platform in the country with about 50 percent market share. That would mean it’s deployed on around 70 million devices.”

Sebastian Busse, director of addressable TV international at smartclip, says in his view Germany is HbbTV’s strongest market, setting the blueprint for its deployment elsewhere in Europe.

“Germany has really made HbbTV a serious and established product, which wasn’t really the case even two years ago,” said Busse. “But now when you speak to the broadcasters, they say it’s a very serious business for them.”

Busse believes Italy, France and Spain are all about one year behind Germany, in terms of deployment. And each market has seen significant developments in the last few years. In Spain for example RTVE, Atresmedia and Mediaset España have launched an HbbTV-based catch-up service called LOVEStv. And in France, Salto, the new joint OTT service launched by TF1, M6 and France Télévisions, has said that HbbTV is central to its plans.

Recent regulatory changes in France, which allow broadcasters to run targeted ads on their linear channels, has also renewed interest in HbbTV and its uses for addressable advertising. For example Julien Boyreau, director of ad tech at TF1 Group, said TF1 has renewed its HbbTV efforts in the last 18 months, partly in anticipation of this regulatory change.

Moving beyond the L-frame

When it comes to targeted advertising, HbbTV is still strongly associated with L-frame ads, which sit on top of the linear feed.

True spot replacement, where ads during a commercial break can be swapped out based on household targeting criteria, remains the ultimate goal. But those VAN spoke with said that L-frame ads have been popular with the buy-side nonetheless.

“The big advantage of those new formats, apart from the extra revenues, is that broadcasters can do stuff without interfering with existing business arrangements,” said smartclip’s Busse. “There aren’t problems where you’re, for example, replacing a Pepsi ad with a Coca-Cola ad”.

One senior executive from a German broadcaster [who wished to speak anonymously] told VAN that demand for L-frame ads often exceeds supply at the moment (partly due to supply constraints, as adding further L-frame ads would compromise the user experience). And revenues have been growing quickly, at a rate of around fifty percent growth per year.

In most markets, broadcasters aren’t yet running true spot replacement.

This isn’t because it’s not technically feasible. “From our side, as a tech vendor, we are ready to go,” said Smartclip’s Busse. And the German broadcaster VAN spoke with said his company is already running spot replacement addressable ads.

But there are still issues to be worked out before it really takes off. Firstly spot replacement is harder to implement than L-frame ads because, as Busse suggested, they can interfere with existing commercial deals. And revenues tend to be hampered by the fact that addressable ads are often confined to only a small proportion of households.

The German broadcaster executive laid out the issue. “A lot of the time, advertisers are geo-targeting,” they said. “But when that happens often the puzzle pieces don’t all fit together. For example, you might have one advertiser that wants to run a targeted ad in three out of 16 states. But then you don’t necessarily have other advertisers who want to fill the spots in those other 13 states – you get overlap in areas brands want to target, or gaps which aren’t filled.”

And spot replacement still doesn’t run as smoothly as broadcasters would like. Spot replacement can still result in awkward pauses and black screens while targeted ads load.

TF1’s Boyreau said his company has trialled ad replacement on linear, but these issues are preventing a full rollout.

The HbbTV-TA (targeted advertising) specification, released earlier this year, is designed to help solve this problem. Boyreau said TF1 expects the HbbTV-TA specification, once it’s deployed on smart TVs, will allow higher quality spot replacement.

Now that the specification has been released, it will take time for it to filter through and be used within new smart TVs. The HbbTV Association’s Grivet said that the COVID-19 pandemic will likely have slowed this down, but he expects we’ll see HbbTV-TA compliant come to market in 2022.

Cutting out the middle men?

One of the things that is making HbbTV attractive to broadcasters is that it disintermediates the CTV platforms. Broadcaster relationships with the platforms has become increasingly fractious as platforms frequently ask for a slice of ad inventory or ad revenues in return for carrying an app.

We have also seen this play out in the US, where major broadcaster streaming services like NBCUniversal’s Peacock and WarnerMedia’s HBO Max have had high profile carriage disputes with the likes of Roku and Amazon Fire TV.

HbbTV is seen by some European broadcasters as a way to cut out these middlemen, allowing them more control and independence over their advanced TV services and addressable ads.

“That’s probably the most important reason for broadcasters to deploy HbbTV services,” said smartclip’s Busse. “Their main business model is in traditional TV, and the logical next step is to insert technology which they control.”

But Vincent Grivet said that HbbTV doesn’t cut out middle men completely. “Of course, broadcasters would like to avoid targeted TV advertising becoming as intensely intermediated as web, mobile and digital advertising,” he said. “It would be great if it remained a direct one-to-one relationship between the broadcaster’s sales house and the advertiser or agency”.

Grivet said that HbbTV will help avoid unnecessary complexity, but it’s unlikely we’ll see that one-to-one relationship maintained.

“It’s public information that TV manufacturers who are implementing HbbTV standards have an expectation that they will have commercial agreements when it comes to targeted advertising,” he said. “So I wouldn’t promise to our stakeholders that HbbTV will be free, and that we won’t see TV manufacturers taking their cut in exchange for implementing the HbbTV-TA specification.”

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