BSkyB to tailor adverts to users depending on postcode

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BSkyB (LSE: BSY.L - news) will soon start tailoring adverts to users depending on where they live and how wealthy they are, as it battles to drive up revenues in the increasingly competitive television market.

The satellite television giant, which is 39pc owned by Rupert Murdoch’s News Corporation, said it was investing heavily new technology to help it make more money from its 10.7m subscribers, as it delivered a 5pc uplift in half-year revenues to £3.53bn on Thursday. Pre-tax profits rose 8pc to £642m.

The new targeted adverts, which will launch in the summer, will make it possible for small businesses to buy television advertising they would previously have been unable to afford. BSkyB’s chief financial officer Andrew Griffith said the new advertising could pave the way for a fight-back by local businesses on the UK high street.

“One of the reasons the high street has become so homogenised is because of a lack of local media,” he said. “You’ve got to find the level of scale the economics work for…but could you make a standardised advert that florists across the Interflora [delivery] network could tap into, which they could insert their own details into and deliver that [tailored advertisement] on a postcode-targeted basis ?”

BSkyB, which is able to deliver the targeted adverts over the internet direct to viewers using high definition Sky boxes, said customers would be asked whether they wanted to sign up for the tailored content. As well as postodes, it will factor in viewers’ socio-economic group and the number of people in their house.

The move is one of a slew of new innovations which the UK business hopes will drive future growth in the face of mounting pressure from rivals including BT (LSE: BT-A.L - news) , which has been buying up the rights to Premier League football and other top-tier sports to help it supercharge its own television service.

Meanwhile BSkyB’s Sky Go offering, which lets users access content on their tablet devices and mobiles, has been steadily gaining traction and last week the company started charging £5 a month for a premium version of the service. Sky Go users will be able to download content as well as streaming it over the internet, so they can catch up on shows on plane journeys for example, and will be able to use the service on four devices rather than the usual two. The service has been a particular hit with sports fans, 264,000 of whom signed up to watch Arsenal play Liverpool live on Wednesday evening.

Chief executive Jeremy Darroch said the company’s sports output including its Formula 1 channel and the Ryder Cup golfing tournament had been a “standout” hit, helping to drive customer loyalty. At the same time, the satellite operator made considerable in-roads signing up television customers to its broadband and telephone services, driving the amount of money it makes from the average customer up by £24 to £568.

“In a tough economic environment, more customers are taking more products and spending more money with Sky,” said Mr Darroch.

The company has also grown its customer base with its new pay-as-you-go offer, Now TV. Half of BSkyB’s new television customers in the last three months of 2012 opted for the new service, which allows viewers to access Sky content on an ad-hoc basis, without paying for a subscription or getting a Sky box. The scheme a defensive move against Netflix (NasdaqGS: NFLX - news) , another rival which offers cut price online movie rentals raised fears among analysts that it would cannibalise BSkyB’s existing subscriber base. However, Mr Darroch said there was almost no overlap, and that Now TV customers tended to be younger people based in cities, where they rent accommodation and do not want to go to the trouble of having a satellite dish installed.

The shares rose 12½ to 822½p.