The future of connected TV (and why it may just revolutionise adland)
Matthew Kershaw
16/06/2011
There is a frothy bubble of excitement growing around the future of Connected TV.
At CES back in January, it was announced that the connected TV category is forecast to ship over 123 million connected TVs a year by 2014. With overall ownership to reach 1 billion by 2015.
Just this month, Philips announced that they have 1 million active Net TV users.
And all the major players are piling in: Google are still behind Google TV, YouView are finally preparing to launch with the ultimate boss, Lord Sugar, Virgin have just launched their Tivo service, Sony made a commitment early and even Apple are still just about in the game with their AppleTV device. And then there’s Anthony Rose, the genius behind the BBC iPlayer and ex CTO of YouView, now championing two-screen interaction.
With all this hype and excitement, you’d think that us ad folk would be talking about nothing else, combining as it does ad land’s two big obsessions: the power of television and the interactivity of the internet.
So why are we holding back?
Is it just a hangover from the ‘red button’ experiment? Or perhaps, having got on board with the message that ‘TV is dying! The internet’s the future!’, combining both of them is just too big a step to get our heads around.
There is certainly a problem with the way it’s being sold to us.
Since its inception, television has had a delightfully simple and focused proposition: you turn the box on and you are pushed rich, engaging video content. If you’re bored, you can change channel and watch something else.
Recent developments like Sky+, HD, 3D and especially video-on-demand are all effectively enhancements of the same principle. TV, but better (or more convenient).
Too often though, the way Connected TV is marketed obscures and complicates all that is great about TV.
It gets in the way of the video content; displaying a bunch of stuff over the programming. Or worse, turns what should be a shared screen into a one-viewer experience.
I wonder whether people really want to get a Twitter stream cluttering up their TV screen. Or surf Facebook. Or get the weather. Particularly when there are better screens available to do it on.
But don’t get me wrong, underlying all of this there are two incredibly exciting developments in the world of TV. One is being spontaneously driven by audiences, in a completely uncontrolled way. The other, in complete reverse, is being created by The Man, the conglomerates who control television.
The first is that, without any official prompting, people are grabbing their smartphones, laptops and iPads and using them to interact with the TV to unheard of levels:
42% of American consumers surf the internet while watching the television (Deloitte)
86% of US mobile Internet users are using their mobile devices at the same time as watching TV (Yahoo!/Nielsen)
72% of under-25 mobile internet users in the UK post comments on TV shows using Twitter, and 56% do it on Facebook (Digital Clarity)
So people definitely want to interact with their TV – they just don’t necessarily want to do it through their TV.
In other words:
It’s not about people watching connected TV.
It’s about connected people watching TV.
At the same time as viewers are spontaneously socialising around TV, the powers that be are also adding some extraordinary technology, using broadcast infrastructure to do incredible things.
Broadcasters like Sky, Cablevision and DirectTV are all on the verge of being able to play out targeted advertising using demographic data they hold on their customers.
We’re talking here about proper TV ad breaks, targetted at specific households.
Taken to its extreme, in this new world, the Royal Household might think that the new face of Robinsons is Sophie Dahl while the rest of us get Stacey Solomon.
Or while we’re getting adverts for the Audi A1 (on-the-road price £13,950) the Abramovich family see adverts for the Audi R8, (on-the-road price £87,350).
Put simply, all the behaviours that currently accompany advertising on the web are going to be brought across to TV advertising:
The formats, the measurement and analysis
The real-time changing of copy and iterative approach to creative
The laser-like focus on ROI and direct response
In other words TV advertising is about to become; fully targeted, completely measurable and highly interactive.
It’s like the Brian Cox of advertising. The rock and roll of his ex-band D:Ream married to a career as a theoretical astrophysicist. And everyone loves Brian Cox, don’t they?
And that my friends is a revolution. It’s the future we’ve all been promised. The winners will be those who can change how they plan, create and produce their output to engage with consumers in this new world.
So what are the implications of this prediction for agencies?
Without getting all Harold Camping on you, here are five things I believe agencies should do to craft the advertising of the future:
1. Be action oriented not message oriented
The briefs we gave teams historically were geared around message – what did we want to say to consumers?
Nowadays, this has evolved to discussions which treat communications as a product to be shared, remixed, commented upon. (BBH briefs ask, “Why are the target going to want to seek this idea out, spend time with it or share it?”)
But beyond this, the new landscape will require us all to think about, in a much broader sense, what action we want the viewer to take. For sure, it will be a simple, light action that they can take there and then, rather than anything complex or time-consuming. Viewers are in on-sofa lean-back mode after all.
But nevertheless, the ‘light action’ can be pretty broad:
You get the idea. Bookmarking is interesting because there is often latent interest in a product or service in an ad, but not to the degree that you want to stop watching your favourite show. The ability to ‘save it for later’ seems very appealing (this is born out by work done by Thinkbox).
‘Add to basket’ is also interesting because it has the power to disrupt the relationship between product and retailer, giving advertisers the ability to drive viewers straight from TV to supermarket.
2. Bring sales closer to advertising
Talking of actions, the most important action to most advertisers is the decision to ‘buy’.
The road to ‘t-commerce’ is littered with failures. And you can see why. Imagine inputting all this on your TV using a remote control. Nightmare.
People don’t want to be taken away from the programme to a simple voting interface, much less a complicated e-commerce journey. But luckily, in this new connected era, people on the sofa are interacting with the shared screen using their phone, tablet etc as the management tool.
Linking the incredible motivating power of TV with the ability to buy there and then could be the single biggest change in the advertising model since – well, since the introduction of TV advertising itself. The process by which a consumer becomes aware of a product through advertising, decides to purchase, goes in store to buy the product and then becomes an evangelist might have taken a number of weeks or months in the past.
Now, the whole process can theoretically be compressed into a matter of minutes.
3. Love Data
And, as that buying process compresses, so advertisers will become less interested in the fact that x million people had the ‘opportunity to view the ad’, or what a bunch of people in a focus group said sometime later about their brand.
Instead they will increasingly measure the success of their campaigns by the response they get right there and then, on the spot.
One consequence of this is that understanding and analysing consumer responses, and ever more complex results and tracking will be vital. Especially if it helps you understand better which of your creative is having the best impact. It will determine what contribution your agency is making to ‘the final click’ as opposed to all those other agencies.
If you’re not already, time to start building your data offering.
4. Prepare for a world targetted and varied
In a world where TV ads can be targetted, clients need multiple variants of the ads tailored to different audiences. Agencies need to consider multiplicity in their strategy, which has important implications for the production process. We need to do more for less. Big clients like Unilever are already starting to decouple the production side of what agencies do to get economies of scale. The pressures that all agencies are facing at the moment will only be exacerbated by this internet-ising of television.
5. Be always on
Tracking instant, real-time results inevitably means instant real-time copy changes and tweaks. For ad agencies, this requires analysts who are ready to set up and manage this information. And, as mentioned, a production process that allow for constant, on-the-spot-changes and A/B testing.
In summary
TV is changing due to increased targeting by broadcasters, and – as viewers themselves are more connected – more social activity around TV content. The impact of this is that TV advertising will to become more like advertising on the internet, more measurable and interactive.
One fear is that this will channel creativity into a singular expression, “so is advertising going to be purely about direct marketing techniques from now on?” one colleague asked me.
I hope that isn’t case.
Standing out in an ever-busier media landscape will rely more than ever on creativity. But what I also hope will happen is that as the advertising gets closer to the sale – the moment of truth – agencies will start to have a broader commercial remit. Something which can only help increase our relevance to our clients.
There is a scene at the end of Series 2 of Madmen where Don Draper fights it out with Duck over the future of Sterling Cooper. Don wins the day with his line “I don’t sell advertising, I sell products”.
Connected TV potentially offers the power to sell products to an unheard of degree.
It’s what Don would have wanted.
16 comments on “The future of connected TV (and why it may just revolutionise adland)”
Ben Kunz Said (June 17, 2011 at 4:02 pm)
I agree that TV will become more targeted, and new response mechanisms (such as concurrent tablet/phone use) could move more immediate sales. But my bet is this will remain only a fraction of all television advertising, just as DRTV is a fraction today. There are two main forces at work:
1. Consumers watch far too much TV to want to engage with most ads. In the U.S., Nielsen eye-tracking studies found the typical resident sees 5 hours and 9 minutes of TV a day. With 16-18 minutes of ads per hour, that’s 166 30-second spots each day. No one want to engage with that many marketers, so many ads will remain one-way branding with response channels elsewhere.
2. Untargeted waste is good for channel intermediaries. What I mean here is cable channels and networks have a big disincentive for hypertargeting — that would remove the current bloat of unviewed ads, which drive millions in revenue. The higher, say, CPM of an ad that reaches just the right viewer will never outweigh the lower CPMs of all the current advertising wasted on the wrong audiences (despite the best media planning, wink). We’ve seen such pushback before, when the radio PPM meters rolled out and Arbitron actually ran a campaign in U.S. media pubs stating that “70 GRPs is the new 100″ — that is, people listened to less radio commercials than previously thought, because the new measurement found they rapidly turn the dial, and the very industry monitoring service that found this out had to recast the bad news as “less is more.” Advertising waste drives margin, and those that deliver that waste may want to continue it.
It is very exciting to have hyper-targeting, one-to-one personalization, and new response mechanisms. Many advertisers will benefit. I just don’t see the incumbent industry rushing to get to such efficiency soon, because it means kissing inefficient profits good-bye.
Nice post, Mel.
Mel Exon Said (June 17, 2011 at 4:49 pm)
Thanks Ben – have to start by saying the post is by Matthew Kershaw, Content Director at BBH here in London – but we appreciate your kind words and great comment.
Your point about the commercial motivation to change (or not) is well made. I suspect it puts a ‘break’ on the pace of change, but doesn’t stop it in its tracks. Going to be interesting to see this play out of the next few years.
simon andrews Said (June 17, 2011 at 5:12 pm)
Very interesting couple of posts – we see the connected tv as part of the same ecology as mobile devices used to enhance TV.
But the economics of hyper targetted TV are very compelling for all in the value chain.
Imagine you’re Pampers – you spend £10m knowing 90% is wasted. If you could eliminate that 90% wastage and save £1m you’d be very happy – even though your cpt has gone through the roof you’ve saved a million quid.
And the broadcaster now has 90% of the inventory to sell – so the chances are he can make more money.Matthew Kershaw Said (June 20, 2011 at 8:45 am)
Hi Ben,
Both are good points.
You’re right that most consumers aren’t going to interact with most adverts most of the time, but that doesn’t mean that when they do it won’t be significant enough to make a difference. Not many people interact with online banners either, but it doesn’t stop it being a healthy business.
And to be honest, I think it’s way too early to know how much consumers would ‘interact’ in this new model because we’ve simply never made it easy enough for them. It’s wrong to look at old TV interaction models like calling a 1-800 number or going to a web site as a guide – the barriers are just too high. But if it’s just a simple button push, I think there will be take up. Light actions are what will drive it.
On your second point, about media inefficiency being more profitable, it’s like the story from Googled (http://is.gd/qVKOsj) in which the Viacom head of ad sales accuses Google’s Sergey and Larry of ‘f****ing with the magic’ by making the efficiency of the media transparent.
I honestly don’t know if there are big parts of the the old-school TV industry that will resist increasing targetting. But, of one thing I am sure, Rupert Murdoch would not be entering the space – both with Sky in the UK and DirecTV in the US – if he wasn’t pretty sure he could increase revenue and/or margins. It must have some commercial merit.
Can’t wait to find out what actually happens when they do f*** with the magic.
James Cioban Said (June 17, 2011 at 6:16 pm)
I believe that mixing the messages of targeted and connectedness is confusing the conversation. Opening the doors to connectedness need not be costly or intrusive. If they are either, that becomes a barrier to adoption. (Think how we tune out banners, and overlay Ben’s comments on economics.) But opening connectedness does remap the landscape. What we want as consumers is to be able to capture-and-store our ‘likes’ for convenient retrieval, or buy spur-of-the-moment if something spectacular catches our eye. What we don’t want is infomercials pounding our eyeballs ever 8 minutes.
It is the job of advertisers and distribution networks (aka Comcast, etc.) to make the experience available without being obtrusive. In the end, survival vs. alternate channels (think…watching TV on my iPad), demands creating equally flexible experiences on the larger screen. No one said there will be “no” brand advertising, just that good advertising may open the door to greater immediacy of response…and that is good for all involved.
Nick Jones Said (June 20, 2011 at 12:58 am)
Great post. Highlights great reasons why dynamic/targeted video is about to dominate the digital media landscape the way dynamic/targeted banners and web content have until now. The software to create dynamic video on a large scale is only now being conceived. It’ll be fun to see what creative agencies do with their new toy when they can tailor video to the viewer on the fly based on preferences.
Sam Said (June 20, 2011 at 11:29 pm)
Interesting post. Once a tool like Apple TV stores all your purchasing data, credit card # and shipping address, it’s not much of a stretch to watch Mad Men, think “Damn, Don looks good in that jacket,” click on it, and find it shipped to you in just your size. Of course people in the industry have been saying this for 15 years now. My question, Matthew is: Which agencies will produce this work? Do you know of any “proof of concepts” or skunk works projects out there? IS BBH up to something? If so I want to write about it for Communication Arts, where I am their Technology Resources Editor. Thanks for following up directly!
Tess Alps Said (June 21, 2011 at 2:53 pm)
Hi Matthew,
Tess from Thinkbox here. Our love for BBH knows no bounds – for so many reasons. Here we have a post about connected TV that is not hysterical and can see the many positives along with a few queries. Thanks for mentioning our research. We agree that easy interaction will increase (‘light action’ is so much better a phrase than our ‘task-unintrusive’) and TV as the point of sale medium and t-commerce will grow.
In fact, I agree with almost everything you’ve said apart from the topic of wastage. It’s not a phrase I am even prepared to recognise when it comes to linear TV in the UK for many reasons.
First, the cost of any supposed inefficiency is borne almost entirely by the broadcaster because TV here trades on the audience you want to reach (rather than a fixed price per slot). Pampers pays to reach HW with kids; anyone not in that audience is given away free to P&G. That’s why the moves towards addressability have come mainly from broadcasters on the grounds that if you don’t want to reach these people that’s fine; we don’t charge you for them so maybe some other advertiser will give us some money for them.
Secondly, every serious analysis of marketing effectiveness (such as the IPA’s Marketing in the Era of Accountability) supports broad targeting, precisely because it generates fame and WOM which will eventually influence the final purchaser. The future WOM includes ‘likes’ and shared links and you acknowledge the value of those elsewhere so why wouldn’t you want as many of those as possible? When it comes to ROI rather than CPM, high penetration, mass reach etc prove that they deliver more, and more efficiently. With TV offering direct purchasing we see the prospect of adding a transactional sales model alongside the existing exposure metric, and even the squeezing of the search stage. Don’t think Google need to get too worried yet though!
I think we need to look at addressability (I hate the targeted word in this context)in much more creative ways than just segmentation. Creative customisation, narrative and frequency management seem to be at least as important as excluding non-core users.
Finally, we need to accept that TV is mostly a shared medium so addressability will only ever be delivered at the household level, beyond what we can already do by choosing the right programmes in the first place.
Matthew Kershaw Said (June 21, 2011 at 3:59 pm)
Hi Tess,
Thanks for commenting.
Maybe ‘wastage’ is slightly too strong a word for it, but the fact remains that if an advertiser wants to specify an audience in almost anyway beyond All Adults, they will pay a premium for it, specifically to compensate the broadcaster who could have got more money from another advertiser who wanted to reach a broader audience.
But you’re right that being able to ‘address’ more discretely in future should be an advantage to both advertisers and broadcasters.
One thing it might also do is bring in minority, niche advertisers by lowering the cost of entry. As someone with a love of Spanish food, I can’t wait to see those adverts for Padrón peppers (http://is.gd/PYeBup), a product notably missing from our screens to date.
As to your point about the ‘overheard’ (is that better than ‘wasted’?) audience being helpful to generate brand fame and influence, that’s true… up to a point. I could as easily paint a picture of a break that starts with a Pampers ad, at which point the all-male, under 25 audience all mentally turn off for the whole break. It’s all about relevance, I would say which is quite hard to guarantee.
But overall, point taken – and I like your distinction between ‘targeted’ and ‘addressed’. I’ll be using that in future!
M
Tess Alps Said (June 21, 2011 at 10:53 pm)
Anything that gets Padron peppers – which I also love – on TV has to be a good thing.
The reason that it costs more to reach a 1000 young men (or any sub-group) via mass media is because there are fewer of them; nothing to do with what broadcasters choose to charge. But more selective approaches, be it DM, events etc will cost just as much if not more.
And I could get all feminist about why 25 year old men ought to see nappy ads, but the truth is that they are going to see them anyway ‘cos they live with the 25 year old mums and watch TV with them most of the time. We don’t need addressability to put nappy ads where men are less likely to see them you know. It’s called daytime TV – or America’s next Top Model!
Matthew Kershaw Said (June 22, 2011 at 8:20 am)
Tess, my fear in your rigorous defence of TV is that it doesn’t leave much room for improvement. I agree that TV is great for consumers and a great medium for advertisers, probably the greatest yet, but even in this all this greatness, there is inefficiency.
I think you put your finger on it when you used the phrase ‘mass media’. I guess what I’m ultimately saying in the piece is that TV will start to act a bit less like a mass medium and a bit more like a direct one.
(And in defence of my 25-year-old brethren, is anyone, of either gender, interested in nappies before the bombshell of children hits them? A straw pole in this office suggests not, but perhaps we could find out for sure by using the Thinkbox FMRI scanner http://www.thinkbox.tv/server/show/nav.1367 I know a couple of people I’d like to stick in there…)
murat Said (June 22, 2011 at 12:43 am)
Yes! Love this post.
In the past I’ve seen experiments which swap of mobile TV adverts and replace them with targeted ads on-the-fly. I honestly think this is where Google TV will be one day.
Why waste advertisers money when you’ve got the exact same targetting capabilities as you do online?
What the implications of this are for the TV industry I don’t know but it’s exciting stuff.
Also i think in the future people will be able to buy products that they see on their TV just by swiping their NFC enabled phone on the remote/TV, making purchases there and then (or getting content). Check out this concept I did
http://www.mobileinc.co.uk/2009/09/concepting-nfc-enabled-tv-radio-for-mobile-advertising/
Matthew Kershaw Said (June 22, 2011 at 7:45 am)
Hi Murat,
Undoubtedly anything we can do to make it easier for consumers to interact, the more they will do so. And waving my phone in the general direction of the screen seems pretty effortless.
The only problem with NFC is that the whole ecology has to be built before it’s useful. TV/radio manufacturers will have to put NFC emitters in their products, broadcasters will have to change their systems to interface with the TVs to issue the vouchers at the right moment, consumers have to have the right phones to receive them, and then advertisers have to have the kit in-store to be able to fulfil the voucher.
I think we’re a long way off that all coming together, but you never know…
M
Murat Said (June 22, 2011 at 10:32 am)
http://wirelesswatch.jp/2009/03/04/sony-bravia-tv-adds-felica-nfc-function/
Not as far as you think
Remember the broadcaster doesn’t have to do anything, Google serves the ads dynamically using Google TV (for example)
But TVs that are Google Wallet enabled are something I think we’ll see in 12 months. Of course it’ll take time tho, I reckon 2/3 years
Tess Alps Said (June 22, 2011 at 10:58 am)
Oh dear. I really didn’t mean to be defensive. I am as excited as anyone about how TV is developing. But I think there are aspects of today’s TV that we currently take for granted; maybe we’ll appreciate them more when you can see and choose the alternative.
There’s no reason why nappy ads shouldn’t be engaging to everyone; car insurance and organic yoghurt managed it. I am struck by how your award-winning Yeo Valley campaign seemed to revel in the massive ‘wastage’ of the X-Factor.
Whatever technology comes along, we need to bear in mind that most TV will be linear, live and shared and that makes it a different prospect from most other online activity.And I promise this is my last – hopefully undefensive – comment.
Matthew Kershaw Said (June 22, 2011 at 11:28 am)
Fear not. No offence taken, in fact I think we are mostly in danger of violently agreeing with each other!
Debate is always good, and hearing your point of view has certainly strengthened my thinking on the topic. Hope mine has done the same.