Internet-connected TV is steadily becoming more popular but are consumers fully engaged? MyCustomer.com examines its emergence, consumer appetite and impact on TV advertising. 

Connected TV (CTV) is your television set connected to the internet via the TV itself, set-top box, or games console and considered to be the next media revolution on the horizon, particularly given the rumoured Apple smart TV arrival. Rather than simply flicking between the traditional channels on your linear TV, CTV integrates social media, video and gaming apps – all available at the touch of a remote. Smart TV is encouraging a much more interactive experience and one that is more representative of the always-connected, all-consuming consumer.

And, alongside smartphone proliferation, consumer appetite for CTV is growing. According to advertising specialists YuMe and Frank N. Magrid Associates, 30% of US households have TV sets that can access the internet whilst In-Stat predicted that 100m homes in North America and Western Europe will own a CTV by 2016.Video consumption is also on the increase. According to Deloitte, we’re watching more TV than ever before, with the average viewer forecasted to watch nearly a trillion ads in 2012.

But consumer take-up isn’t necessarily translating to internet-connected activities. Additional research from In-Stat earlier this year showed that only half of CTVs are actually connected to the internet. Giles Cottle from Informa agrees that although a lot of units have been sold, the number of people using their devices for anything other than TV watching is pretty small. “That’s a massive problem for advertisers because the key thing for them is mass and reach, which is why TV is still the medium it is today.”

Marketers switching off?

Surprisingly, marketers themselves have also been slow to adopt. Connected TV with its customer data, performance analysis and audience segmentation is a marketer’s dream in comparison to the black hole that is analogue TV but marketers seem to have little interest in this new advertising platform. The Internet Advertising Bureau surveyed over 200 of its members last year and found whilst the the vast majority (85%) are interested in the advertising opportunities afforded by internet-connected TVs, only 12% currently have a connected TV strategy in place.

Perhaps rather than missing a trick, marketers are taking a step back to examine whether the trend will take off, and how, before investing digital budget. Jack Wallington from the IAB said at the time of the report: “It’s clear the industry considers the platform a significant leap for online advertising, but it has also become apparent that like so many other technological developments we’re waiting for the customer to leap first.”

So when the customer does leap and fully embrace CTV, what impact will this have on advertising formats and will it radically move away from the traditional 30 second commercial as we know it? Cottle believes that whilst ads may become more targeted and fewer, no radically different ad formats will take hold with video on smart TVs.

He explains: “The ad industry itself is a fairly conservative beast and takes a lot of time to persuade a planner at a media agency to shift budget from TV which they know, although paradoxically that it's less measurable and accountable than online, that it works. It’ll take some time for those sorts of mind-sets to change in terms of CTV itself.”

Whilst YouTube may have had various kinds of interactive ad formats, this doesn’t tend to work on a big screen environment, he added.

CTV’s ability to deliver interactive social experiences or change consumer habits regarding video watching has also been brought into question recently.

Miles Lewis, VP of EU advertising for TV advertising app Shazam, recently told the Drum that using CTV to engage on social media sites is unlikely to take off. He said: “There’s a belief that it’s not about connected TV, but it’s actually about connected individuals. All the research coming out, whether it be from Thinkbox or Google saying that TV is still a family time. Why would I have my Twitter of Facebook streams on my main TV?”

And Cottle agrees, saying: “In a world where it's not going to take that long for everyone to have a smartphone and a tablet then it makes less sense to have stuff on the TV other than video.”

Advertising revolution

But Jean-Pierre Fumagalli, CEO of smartclip, believes TV is on the verge of changing completely with ad placements in linear TV being served through ad server technologies instead, allowing marketers to target audiences according to regions, gender, age and so on, rather than serving the whole country.

He says: “Right now, we're living in a completely separate world which is linear TV is what is always has been, it hasn't been affected yet, and with the smart TVs connected either to the smart TV itself or to external devices including mobile phones, we will see a complete new usage pattern and content emerging on these devices and screens.”

Figures from smartclip's study into the consumption behaviour of CTV users showed 70% of CTV owners are already using the online capabilities at least occasionally with 84% of those survyed showing an internet in non-linear viewing of series and films. 

Shirlene Chandrapal, VP of connected TV and mobile at smartclip, added: "The move towards buying an internet-capable television sets the trend towards second screen usage amongst users who are accessing the internet via smartphone, tablet, PC or notebook whilst also watching TV, competing for the attention of consumers, and drawing them away from linear TV. Once you have got to grips with the extent of the opportunity that Connected TV presents, the possibilities are endless."