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Last week’s CES event brought a clutch of announcements around interactive TV services — specifically around more content getting pushed to…

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Last week’s CES event brought a clutch of announcements around interactive TV services — specifically around more content getting pushed to devices. That points to growing attention to the medium: will advertising follow?

Some numbers out from eMarketer (via Memeburn) seem to imply that up to now, advertisers have not ignored connected TV. But nor has interest in it grown:

Looking just at investment in just in digital video advertising (itself only a part of overall spend in digital ads), only eight percent of advertisers said they invested in connected TV video ads in 2011. That’s a modest number, and smaller than other mediums like mobile, where respectively 42 and 41 percent of advertisers said they would spend on iPhone and iPad platforms, and 31 percent said they would invest in ads for Android devices.

Perhaps more tellingly, that eight percent was flat on the year before — that implies that interest in the medium of connected TV seems to have stalled.

Publishers, meanwhile, seem to also be trying to play catch-up in this area: in 2011, 17 percent said they supported video advertising for connected TVs, while only 11 percent supported it in 2010. According to eMarketer’s numbers that puts connected TV video ads on par with video advertising support for non-Apple (NSDQ: AAPL) tablets, but still a ways behind iPhone and iPad (both 35 percent) and Android smartphones (28 percent).

Judging by announcements last week during CES, consumer electronics companies still laying the groundwork for how advertising on connected TV platforms might work in the years ahead:

Samsung is forging its Smart TV strategy on its own, proprietary platform (complete with Kinect-like gesture recognition and lots of content options). And last week it also launched its own AdHub connected TV advertising services. Premium Interactive Advertising (PIA) is Samsung’s very first ad initiative for its Smart TV platform, and offers advertisers banner advertising on its home screen with functions like click to microsite (interactive multi pages), click to video, and click to application.

– And while Google (NSDQ: GOOG) had a mixed showing for its Google TV connected platform at CES, it continues to make headway into how it is helping more traditional broadcasters sell and manage their advertising inventory. (Their latest customer win: Cox Media.) As those broadcasters begin to consider how they offer advertising on connected TVs, I think it’s a safe bet to say that Google will step up to offer their services there, too.

Sony’s music and media technology company Gracenote, meanwhile, launched an interesting-looking new service called Entourage, which uses “audio fingerprinting technology” to listen to short clips of content via a mobile device that can trigger the service to then look up content on a smart TV, be it a film to purchase or an advertisement. Gracenote, of course, will need buy-in from smart TV players to make this into an actual service; given that Gracenote is owned by Sony (NYSE: SNE), their might be the first TVs, mobiles and other products where you will see it work first.

– Meanwhile, Sony inked another interactive TV ad deal: Yahoo’s connected TV services, which serve content related to programs and advertisements on regular TV, will now be embedded in Sony Bravia sets. Like Gracenote, it offers an audio-based trigger to deliver advertising (its technology comes from its own subsidiary, IntoNow). Yahoo (NSDQ: YHOO) says its 180-odd connected TV apps already work on connected TV services from Samsung, VIZIO, Toshiba, Haier and HiSense. Yahoo is also starting to roll out new ad units around its these: it says that Toyota is the first company to use such a service, with display ads placed into Yahoo’s Fantasy Football TV app.

– Ooyala is another online video player that is linking up with a vendor, in this case Panasonic for its Viera line of connected TVs. Advertisers and content publishers now using its platform will now also be able to publish their content on Panasonic’s TVs as they are now able to do on mobile and Internet platforms. The Country Network will be the first broadcaster to use the service to offer selections of its content on-demand and live through Panasonic’s platform.

Considering this is CES we are talking about, it’s unsurprising to have a profusion of device- and platform-led announcements, although in the bigger scheme of things broadcasters will inevitably also be playing a role.

“I think traditional broadcasters want to be seen to be involved in new media today,” says Simon Murray, an analyst with Digital TV Research in the UK. “They were slow before and now want to be involved in new technologies and providing information and serving advertisers in different ways.” But he also notes that “Broadcasters have a bit of a dilemma. Obviously they want to diversify but they don’t want to alienate existing advertisers and traditional ways of advertising because it’s still their bread and butter. Puttng too many ads on to programs outside their traditional market might upset their ad base.”

But regardless of who controls the game, perhaps the biggest issue of all is that, unlike internet or even mobile penetration, we are still a long way from critical mass in connected TV services. Figures from Strategy Analytics estimate that by the end of 2011, there were only 12 million connected TV devices distributed globally by the end of 2011. The U.S. had a penetration of only eight percent while Europe’s connected TV device penetration was seven percent.

That, too, appears to be changing, though. Digital TV Research forecasts that it will take until 2016 for there to be a global penetration of 20 percent in connected TV services — that includes not just connected sets, but also other devices such as blu-ray players; games consoles; retail set-top boxes and pay-TV set-top boxes. Highly anticipated updates from the likes of Apple and its Apple TV could also advance the market.

While today games consoles are the most common way for making a TV internet-friendly, Murray says he thinks that connected TVs will overtake games consoles by the end of this year (2012) as the main route to accessing Internet services via televisions worldwide, driven by more widely-available

“The thing about advertisers is that they want traffic. Some will experiment earlier. It might appeal to advertisers selling highly priced items such as cars, where you might want to demonstrate features of, say, a new model of the BMW, but I don’t know how much P&G or Unilever would benefit TV interactive advertising today,” Murray told paidContent. “I think it will be a fairly minor and experimental feature for at least the next five years, until the market becomes more established.”

  1. Players from every corner of tech and entertainment have been jumping on the Smart TV bandwagon – http://appcarousel.wordpress.com/2012/01/16/the-battle-for-your-living-room-apps-and-the-smart-tv/.

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  2. I am really excited about what is in the short-term for TV and social engagement. The potential seems massive but it is yet to get a whole lot of coverage. 

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  3. While slow to integrate – connected TV is going to come on strong.  This will be a tectonic change in media.  It will change everything.

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