Will local TV multiplex benefit advertisers?

Late last year Estuary TV became the first local TV service to launch on Freeview, taking its position on channel 8 in the EPG to serve TV viewers either side of the Humber Estuary in North Lincolnshire and East Yorkshire. Recently, it has been confirmed that London Live, the Capital’s Evening Standard-run representative, will receive its grand unveiling on March 31st, with further local services expected to launch throughout the year.

Deep skepticism and accusations of indulging in a ‘vanity project’ greeted then-Culture Secretary Jeremy Hunt’s decision to approve the local TV multiplex in 2011. Nevertheless, Ofcom was tasked with awarding 19 initial licenses - part-funded by a £25 million cash injection from the BBC - to applications focused on many of the UK’s major cities and regional populations. An additional 28 licenses are expected to be allocated this year, thus completing the local TV framework.

Comux, a community-driven committee, will operate the multiplex; it’s mission being to create a commercially sustainable infrastructure whereby each of local TV licensees will be given the capacity to develop their own TV advertising opportunities. The question we ask is this: What value, if any, will the local TV multiplex add to the targeted TV advertising objectives of businesses seeking to boost regional engagement?

Firstly, local TV broadcasters will be under no obligation to sell commercial airtime; how each service generates revenue is down to the service itself. License holders may instead choose to sell surplus airtime to shopping channels.

If a broadcaster does opt for TV advertising as a revenue stream, then the onus will be on them to produce quality programming that engages local communities and drives strong viewing figures. Estuary TV has already confirmed that the selling of TV airtime will form a central component of its operations, but with a small production budget, the challenge is to convince advertisers that the channel brings enough value to the marketing mix. If it succeeds, smaller, regionally focused companies may identify Estuary TV as a viable route towards target markets. Only time will tell.

London Live is different. Boosted by sizeable investment from the Evening Standard, the capacity to produce quality entertainment, news and current affairs programming – combined with its accessibility as a Freeview channel – makes TV advertising a potentially lucrative source of revenue. The channel will seek to tap into its parent company’s roster of print advertisers, with the opportunity to offer package deals likely to generate considerable interest. For businesses looking to advertise in the Capital, London Live may appeal.

However, the recent launch of Sky Adsmart looms large over the local TV multiplex. Adsmart is a revolutionary addition to the tool kits of businesses looking to launch targeted TV advertising campaigns, allowing advertisers to reach niche, highly specific audience groups with never-before-seen precision. 10.6 million homes have a Sky set-top box – almost half of the UK – with a simple upgrade able to transform each one into what is essentially an ad server; cherry-picking the TV advertisements that are relevant to the viewer’s individual interests.

Said interests are identified by the categorisation of over 90 mosaic audience profiles (such as age, occupation, postcode, income and household) generated by third party data, so hypothetically a local car dealership selling Land Rovers in Hartlepool could target families with a household income over £50,000 living within a 5-mile radius. It’s groundbreaking stuff, with over 40 brands already signed up and many TV viewers opting into the fledgling platform.

Ultimately, skepticism remains rife over the level of interest the local TV multiplex will generate. The fact is, the likes of Sky, ITV and Channel 4 – all of which offer regional TV frameworks – have the power to create more engaging content that generates national and regional interest. If the likes of Estuary TV are to succeed in delivering sufficient viewing audiences, they must get creative with what they can offer, whilst ensuring relevance to local interests. Burrow down to the bedrock of the question, and it’s all about content.