There has been a lot of interest by advertisers and advertising networks in using the online video capabilities of the Internet-connected television as an advertising medium. "By Christmas morning, just about half of American households will have at least one Internet TV” said Richard Doherty, research director at Envisioneering, a market research and technical assessment company, And now advertisers think they have the solution…
The PC is becoming increasingly less important as a way to access the Internet. One only has to look at projections that show that other web-connected devices will outsell PCs in the near future. Each of these Internet-enabled consumer devices is competing to become the center of the digital living room. The trend is for one device that will serve up movies, television programs, music, video, social media, etc. In the relatively near future, consumers will be more likely to access the Internet through their televisions than via their PCs.
Television manufacturers have introduced “smart” televisions that go beyond simply being web-connected. These smart televisions advertise a whole new way to experience entertainment. They offer gaming, streaming movies and television shows, browsing the Internet, chatting with friends, updating social media and using a variety of different Apps optimized for the big screen.
A First for the Advertising Industry: At least one smart television set manufacturer, LG Electronics, has partnered with YuMe, a video advertising technology company, to provide a different way to advertise through their web-enabled TV sets. This partnership will result in the first ever ad platform to be embedded in TVs.
The Embedded SDK allows manufacturers to insert software code into their firmware that will support video advertising out of the box. The embedded technology and associated services will seamlessly connect advertisers, app developers, content distributors, consumer electronics manufacturers, and publishers. For the first time, TV manufacturers can also participate in the revenue stream generated by advertising while offering an integrated, interactive-advertising experience for consumers.
Such a partnership will allow businesses the ability to advertise as TV users do such things as navigate, load apps, browse the set’s app store, search, upload content to social media sites, etc.
For example, if a video ad is to play before an app from the TV set’s app store loads, it would run in place of an hourglass icon or ticker — and only until the app was ready to open. The developer of the app would have to agree to the ad’s appearance.
Those seconds while apps load are now a new opportunity for marketers to deliver advertising to owners of these LG TVs. Toyota USA has signed on to be the first advertiser. Expect owners of LG’s new smart TVs to see ads for the 2012 Camry when browsing their new TV set’s app store or using the search screen.
The question is how consumers, manufacturers, app developers, etc. will respond to this new capability.
- Will consumers get annoyed?
- Will manufacturer’s and app developers have incentives to make certain functions a little slower to give more time for advertising?
- Will such advertising become part of paid content, e.g., while Netflix loads as well?
- Will other television set manufacturers adopt this or similar technology?
The last question is the most easily answered. One of the investors in this new venture is Samsung Venture. Samsung Venture is the venture capital unit of the Samsung Group, the No. 1 maker of TV sets. Enough said. Consumers can’t circumvent this advertising approach by using connected Blu-ray players instead. This same advertising platform is being embedded in them as well as other kinds of “connected” devices.
The other questions posed are more difficult to answer at this stage. How will consumers react to advertising where there had been none before is a good question. Will they be open to it or bothered by it? “It is a challenge,” acknowledged John Lisko, executive communications director at the account’s creative agency, which is the Torrance office of Saatchi & Saatchi. “We’re learning that the more relevant the messaging is for the experience, the better the connection will be with the consumer,” Mr. Lisko said.
The joint venture’s intent is “to target ads so they’re more relevant” to viewers and the medium, using the experience YuMe has accumulated in operating “an ad platform that serves 1.5 billion video ads a month for online and mobile.”
My guess is that consumers will tolerate the advertising provided that they get free content that they like as part of the experience and that the advertising is interesting and relevant. After all, consumers have adapted to sitting through advertising to watch online videos.
Whether viewers will be as tolerant for ads displayed while paid content, such as Netflix, is being loaded is a relevant question for the future. While at this point the joint venture will target “free” content, look for advertising to carefully move to paid content as well.
Smart TV set owners could soon see the Netflix ticker and “just a moment” screens be replaced with targeted advertising to specific Netflix subscribers' personas.
An interesting question in my mind is whether or not this kind of alliance between manufacturers, app developers, content publishers and advertising networks could incentivize them to make more time for such advertising by slowing some processes associated with smart TVs. If a process, such as an app loading could be slowed down without being noticed by the consumers, say another 2 or 3 seconds, that amounts to an enormous amount of “impression” time and associated revenue to advertisers and their new partners.
Frank Barbieri, senior vice president for emerging platforms at YuMe calls this “… one of the biggest technological evolutions for television advertising since there was television advertising,”
That may be a stretch, but get used to the notion that advertising is coming to your web-enabled TVs in a way you didn't anticipate when you bought it.
