Smarter Video?

smartTVWill the rise of Smart TV Change Where Marketers Place their Ad Dollars?

Recently, the perfect storm of the oncoming football season and a broken TV sent me to Best Buy for a flat screen upgrade. I came home with a Vizio 60-inch “Smart TV.” I was pleasantly surprised by the great audio quality, high-definition picture, and the price (cheap, at $900). However, what really shocked me was its installed “app store.”

As a deeply committed believer in on-demand video, I immediately started enjoying my Amazon Instant Video and Netflix subscriptions—now accessed on a huge, 60-inch HD screen. YouTube videos now were available right from my remote control—as was Pandora, and other streaming music applications. All of the sudden, Verizon FIOS had a lot less to do with what I was watching in my living room.

As someone who is fairly up to date on advertising technology trends, I already realized that cable providers and broadcasters were being disintermediated by new technology—but seeing it in 60 high definition inches really convinced me that we are living in a new world, and the implications for advertisers are huge.

First of all, for those who haven’t played around with one of these new sets, let me tell you what works and doesn’t work at this early stage of the game:

What Works:

  • YouTube: It was simply amazing to watch YouTube videos on the big screen. I queued up some “Key and Peele” from Comedy Central, and some clips of comedian Louis CK and, before I knew it, an hour had gone by (a commercial-free hour, by the way). Smart TV might just take YouTube and other video-specific sites to a whole new level. Now, anyone can “broadcast themselves” right into your home.
  • Amazon Instant Video: It was great to watch all of the Prime content on my big TV, and I began immediately catching up with “Under the Dome” using Amazon’s elegantly designed UI. Amazon is one to watch in this space. They know how to do VOD.
  • Netflix: Again, video on demand was born for the Smart TV application. (I thought I might re-subscribe to binge-view House of Cards!) Watch for more streaming providers to produce more and more original content that can drive subscription sales.
  • Pandora: This one surprised me. With the right audio system, your TV may be the only thing you need to provide great sounding music with endless variety in your home.

What Doesn’t Work:

  •  Twitter: The news feed was quite limited, and at times expanding a tweet to access a link or video content did not work. Plus, do you want your individual Twitter feed broadcast to everyone in your home?
  • Facebook: Same thing as Twitter. I wonder if high-engagement applications—and specifically ones that promise an “embarrassment factor” – will succeed on the TV screen.
  • Skype: This app is convenient for users who depend on it for their primary communication, but typing on the remote (even with a full keypad) can be challenging.
  • Yahoo Fantasy Football: Great for checking stats, but hard to manage your team via the cramped interface and small remote control buttons.

I asked Tom Hespos of Underscore Marketing, who has tackled this topic before, what he thought, and he captured what I was thinking in a few sentences: “It seems pretty evident what’s going to succeed on app-enabled TV sets. Anything that’s ‘lean back’ in nature will likely do well. Things that require engagement or are subject to an embarrassment factor if projected for the whole family to see will not.”

For advertisers, Smart TV will prove challenging. Not only are subscription services like Amazon Instant Video and Netflix ad-free, but the amount of time-shifted and VOD viewing makes available eyeballs a scarce commodity. Look for CPMs for real “appointment viewing” shows such as NFL football and popular hits like Breaking Bad to rise dramatically. In my experience, I did not see any pre- or post-roll ads on YouTube, but they are coming. Recently-public companies like YuMe and Tremor are depending on an aggressive roll-out of interactive video, and their business models are 100% advertising-supported.  CPMs there will be high, considering the relatively low inventory volumes available.

So, if “lean-back” video applications make it more expensive to reach scarcer eyeballs on connected TVs, than what about the interactive social apps? Is there room for more display banner ads on Smart TV? I think the answer is probably yes—but only for so-called “native” advertising, like Twitter’s sponsored posts. Users will be more likely to “lean back” and access their social newsfeeds on connected TV, but will be less likely to post new content from their remote control. That means the tablet will still be in hand during viewing times. It’s early days, but look for more apps that exploit the trend in “double vision” viewing (as reported by Nielsen):

88 percent of tablet owners and 86 percent of smartphone owners said they used their device while watching TV at least once during a 30-day period. For 45 percent of tablet-tapping Americans, using their device while watching TV was a daily event, with 26 percent noting simultaneous TV and tablet use several times a day. U.S. smartphone owners showed similar dual usage of TV with their phones, with 41 percent saying their use their phone at least once a day while tuned in.

Those are big numbers, and it’s hard to see how they will diminish, even as more options are added to television. So, the big question remains: Where should advertisers stick their ads? If you believe that consumers will continue to “lean back” and enjoy Smart TV content just as they watch TV (but with a lot less ads), then the obvious choice for aligning brands with TV content is social media on the tablet. Twitter wins big here. If you believe that networks like YuMe and Tremor can leverage Smart TVs to make access to great HD content in your living room free, then put your money down on those stocks, and hope they find the right advertising model that makes “paying for” content with ad viewing worth it.

Either way, the maturity of connected, smart, app-enabled televisions means less ad inventory for advertisers—and the need for better channels to access fewer, but more addressable, eyeballs.

[This post originally appeared in eMarketingAssociation.com on 9/11/13].

Going Native

GoingNativeTalk of ghost publishers and robot traffic has digital brand advertisers questioning some long-held beliefs. They’re wondering whether the promise of efficiency in media is outweighed by the prospect of buying ads that only machines will ever “see.”

As Mike Shields pointed out in an excellent AdWeek article the other day, brand advertisers have found themselves at the mercy of phantom publishers who live to exploit the programmatic technology systems that deliver banner ads. It’s a problem that until recently has largely been ignored, even as gullible advertisers shell out millions of dollars only to receive fake clicks and “views” in return. Writes Shields:

Increasingly, digital agencies and buy-side technology firms are seeing massive traffic and audience spikes from groups of Web publishers few people have ever heard of. These sites — billed as legitimate media properties — are built to look authentic on the surface, with generic, non-alarm sounding content. But after digging deeper, it becomes evident that very little of these sites’ audiences are real people.

Among the money-sucking ghosts that Shields names are an outfit called Precision Media, running some 25 content sites like Toothbrushing.net; Alphabird, running 80 sites; and DigiMogul, operating something called Directorslive.com that has reported a rather unlikely 326 million monthly page views. These and other such scammers, the AdWeek man reports, are less than forthcoming about their operations or owners.

All of which is driving more interest in native advertising, or what we are now calling sponsored content, or “advertorials,” as they were called once upon a time. The idea behind native advertising is a simple and well-proven one: Tailor ad messages to the format of the media. A tweet becomes an ad when it’s a “sponsored tweet” and a Facebook message can become a “sponsored post.”

Companies like BuzzFeed have worked with brands like Old Navy to populate the web with pictures of squirrels in Christmas sweaters to grab mindshare and thus bring their irreverent style to millions of consumers where they are used to consuming content.

Today’s web-based platforms are enabling marketers to be publishers, and engage with their audiences in real-time. Brands brave enough to produce content, or that have a unique point of view — take Red Bull, as an example — are finding that making investments in content and aiming marketing into other content platforms with native advertising efforts are paying dividends that go beyond traditional marketing efforts.

Suit to fit
Your company website may have a blog, but it is meant to broadcast, not listen to, consumers. Native advertising and sponsored content give consumers the ability to extend messages through social sharing, commenting, and mingling user-generated content with content that has been created by brands.

For Scott Roen, vice president of digital for American Express, whose Open Forum is the leading small business website, the idea of tailoring advertising to the format of the content is an obvious advantage. “Where can we be part of a conversation where people want us? It’s getting back to the roots… [native advertising] is not a fad.”

Is native advertising better than the banner ad? “It’s certainly better than what we had before. Anything that makes the user feel the advertising is more seamless is good,” said Mary Gail Pezzimenti, vice president of content strategy for Federated Media. “The brands that have taken the time to establish thought leadership and provide high quality content have permission to engage in those conversations.”

So, is the native advertising trend just a retread from the past, or is it a legitimate new advertising tactic, brought about by platforms such as Facebook, Twitter, Pinterest, and Tumblr? For Benjamin Palmer, CEO of the digital creative shop Barbarian Group, who works with huge global brands like GE, “Native ads will be around as long as the platforms that support it are.”

[This post originally appeared on 3/26/13 in The CMO Site]