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Connected TV: The challenges and opportunities for marketers

“The Situation is so much cooler now that he’s off drugs and lasagna is his vice instead” is an actual thing that I said out loud last week. We all have our guilty pleasures and yes, Jersey Shore is one of mine. MTV recently rebooted the show after six years, during which the proliferation of connected TV changed the television landscape dramatically. Back in 2009, I watched the original series on MTV; the new episodes, on the network’s Roku app. I don’t even know which night of the week they originally air.

I’m not alone. eMarketer estimates that about 182 million Americans watch connected TV, a term that encompasses smart TVs, over-the-top (OTT) devices like Roku and Amazon Fire TV, subscription services like Hulu, and even gaming consoles. And yet, according to a survey of ANA marketers, only 15% have connected TV in their media plan.

“It’s easy to say, ‘You should be on connected TV,’ but that’s such a broad term,” says Will Felcon, Head of Product & Technology at OTT advertising company Premion. “There’s a lot of confusion in this industry and the fragmentation isn’t helping the lack of understanding.”

Fragmentation: A challenge and opportunity in connected TV

Let’s use Jersey Shore: Family Vacation to illustrate the fragmentation. You can watch the show on MTV and its various apps. Episodes are also available on Amazon Prime Video, Google Play, YouTube, iTunes and Vudu. That totals 14 different channels, discounting pirated content.

Tim Sims, Senior Vice President of Inventory Partnerships at The Trade Desk, points out that the fragmentation is both a challenge and an opportunity. While people are watching content from every which way, that also gives marketers a chance to capitalize on one of connected TV’s main advantages: more sophisticated targeting capabilities.

“For the history of TV buying, we’ve been mostly stuck in a world where the transactional currency is age and gender,” says Sims. “One of the big potential tipping points is, you take all the amazing things you can do in digital, like audience targeting, and apply them to TV, which was impossible before.”

Compared with linear TV, connected TV also lends itself to more sophisticated frequency capping and relevant retargeting. Data providers also enable more effective reporting and measuring, telling advertisers where and how many times, and on which devices, an ad was viewed.

An omnichannel look at TV

There’s a parallel between connected TV and ecommerce: perpetually on the rise and particularly popular with younger consumers. Roku’s ad revenue is projected to hit $293 million this year, making the company second only to Hulu in OTT ad sales. According to Nielsen figures, Roku ads have 10.2% greater incremental reach over linear TV among 18- to 34-year-olds.

However, much like in-store shopping, linear still dominates. Traditional TV ad spend may be down year-over-year, but eMarketer still projects it to reach nearly $70 billion in 2018.

“The number of cord cutters continues to grow, but there’s a larger group of people who have linear TV and Amazon Fire or Roku or a smart TV with Hulu and all these apps preloaded,” says Sims. “That’s quite a substantial middle of the curve. We’re still in the early days for what the opportunity is, which is exciting.”

Looking forward

Connected TV is the fastest-growing video segment. And just as marketers are buying more ads there, they’re getting savvier about it.

Casual IQ: Connected TV survey

In July, programmatic solutions provider Career IQ surveyed 100 digital advertising decision-makers at enterprise brands about connected TV. While only 7% of respondents are in the optimization phase, 56% are actively testing. Additionally, the Media Rating Council recently updated the IAB Digital Video Ad Impression Measurement Guidelines to include the medium.

It couldn’t come at a better time. AT&T and Disney both plan to launch OTT services next year. Felcon sees huge potential for Disney+—content on which will include the Star Wars franchise and the entire Marvel universe—in particular.

“Netflix is there, but it’s not ad-supported,” he says. “Disney will be the first behemoth channel network company to push exclusive programming to OTT on an ad-supported basis, and I believe that’s going to be a game-changer.”

The post Connected TV: The challenges and opportunities for marketers appeared first on ClickZ.

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