Connected TV

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Internet Connected TVs: The Next Living Room Evolution By Kathryn Meadmore A report into the connected TV challenges faced by brands

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White Paper by IAB UK

Transcript of Connected TV

Page 1: Connected TV

Internet Connected TVs: The Next Living Room Evolution

By Kathryn Meadmore

A report into the connected TV challenges faced by brands

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Copyright © Adjust Your Set 2011

Introduction to WhitepaperThis whitepaper has been produced by Adjust Your Set,

the leading multichannel video agency, and the IAB

(Internet Advertising Bureau), the trade association for

online and mobile advertising. Industry research was

conducted via an online survey of the IAB’s members.

The results from over 200 respondents are included

throughout this paper to illustrate industry reaction

to internet-connected televisions. This paper aims to

understand the issues and challenges associated with

the new platform.

About Adjust Your Set™ Adjust Your Set is the leading multichannel video agency

specialising in content across online channels, connected

TVs and social networks. Clients include Marks &

Spencer, Thomas Pink, Debenhams, BA, The Royal Opera

House and Liz Earle. Founded in 2008, Adjust Your Set

delivers an end-to-end communication service using

video as the platform to provide a constant and consistent

brand engagement.

Adjust Your Set was recently shortlisted as one of the

Media Momentum Top 50 fastest growing Digital Media

Companies in Europe and was named Best Specialist

Digital Agency at the Digi Awards 2011.

For Further information please visit: http://www.

adjustyourset.tv/about-us/

Connected TV Whitepaper

About the IABThe Internet Advertising Bureau (IAB) is the trade

association for online and mobile advertising. With

over 650 member companies, the IAB promotes

growth of these channels, develops best practice for

advertisers, agencies and publishers, and aims to

put digital high on the agenda of every marketer in

the UK.

Online is an exciting and fast-growing

medium and our job at the IAB is to work with

members to ensure marketers can identify

the best role for online and the emerging

mobile market, helping them engage their

customers and build their brands.

Through the dissemination of research

and the organisation of regular events, we aim

to put digital on the agenda of every marketer

in the UK, acting as an authoritative and

objective source for all internet advertising

issues whilst promoting industry-wide

best practice.

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Contents

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3 The internet-connected TV

4 The current state of the connected TV market

5 Why connected TVs?

6 What is a Connected TV?

8 What’s on the connected TV schedule?

9 Industry reaction to connected TVs

10 How do you find the content?

11 Revolutionising the business model: “Brands as media companies”

12 How does content retain its crown on connected TVs?

13 Could mobiles become the TV remote or our lives?

14 Filling the connected purse

15 Regulating a connected landscape

17 Social TV – ‘like’ it

18 Conclusion

Copyright © Adjust Your Set 2011

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Connected TVs have gained significant attention

over the last year, and it’s only set to continue. The BBC

launched an updated version of its iPlayer for web-

connected TVs, Sony and Opera teamed up to provide web

browsing capabilities on the platform and Audi launched

the UK’s first web-connected TV campaign to promote its

A7 Sportback range. In addition, recent research claims

internet-connected televisions are predicted to make up

90% of the TV market in the UK by 2014.1

With so much weight attached to the internet-

connected TV, everyone is asking what this will mean

for the TV advertising industry. What will the content

on connected TVs look like? Who will manage this new

connected landscape? And more importantly, how long

do brands sit back and wait until they make the leap into

connected TVs?

Also, and perhaps more importantly, will anyone

connect their TVs to the web? While the increase in sales

of internet-enabled devices is undeniable, in order for

audiences to want to plug their device in there must be a

compelling content proposition. This must not be the sole

responsibility of the broadcasters; brands too must play

their part.

The internet-connected TV

Research from several sources, including

Ericsson, clearly shows a growing uptake in

connected TV purchases around the world,

anticipating 50bn connected devices globally

by 2020.2 The tech-savvy consumer is again

leading the way and technology itself is forcing

the industry to reassess their business models

as audiences migrate away from traditional

channels. 72% of IAB and Adjust Your Set survey

respondents disagreed with the statement

“internet-connected TVs are a passing fad and

will not survive the constantly evolving digital

landscape”, but as one respondent said, “this

sector is in its infancy and needs to gain more

momentum from recommendation and information

on advantages, before consumers start to follow

the trend.”

The questions raised from the research

and discussed within this paper, highlight the

uncertainty that still remains across the industry.

As this report shows while many brands, agencies

and broadcasters agree that it’s an exciting platform

that warrants investigation, many still cite various

challenges facing them and only a small percentage

will be implementing a strategy now or in the

near-future.

?

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“The questions raised from the research and discussed within this paper, highlight the uncertainty that still remains across the industry.”

1 Source: Furturesource Consulting March 20112 Source: Ericsson March 2011

Copyright © Adjust Your Set 2011

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With the launch of YouView, a joint venture

between the BBC, ITV, C4 and others, as well as

Google TV, Apple TV, connected set-top boxes and

manufactures like Samsung and LG with Smart TVs, the

major broadcasters are already setting up to deliver a

completely new channel into the home. This will provide

significant functionality for advertisers and an entirely

new way for brands to communicate with consumers.

There are still many unknowns about this new market,

not only what the content will look like and the strategies

in place, but how brands and media owners will monetise

the new connected-landscape.

There have been various statistics recently

released citing the growing uptake of internet enabled

devices. Informa expects manufacturers such as

Samsung, LG and Sony to sell a staggering 52 million

internet-connected TVs over the course of 2011 on a

global basis and IHS iSuppli claims that from 2013

internet-enabled devices will out-sell PCs. The range of

products that are already able to connect to the internet

includes set-top boxes, connected TVs, video game

consoles, Blu-ray players and tablets. Collectively, sales

of these devices will surge from 161 million units in 2010

to 504 million units in 2013.3 By 2014, market research

and consulting firm DisplaySearch, has predicted that

123 million internet-connected TV units will be shipped

worldwide annually.

“The rapid uptake of connected TVs should warrant serious consideration from brands on the potential of the platform and future revenue streams to be generated,” said Chris

Gorell Barnes, CEO of Adjust

Your Set.

3 Source: IHS iSuppli4 Source: http://theconnectedset.tv/803/the-connected-tv-opportunity-for-

The current state of the connected TV market

Although the statistics show a growth in

consumer purchase of connected TVs, a case remains

to be proved for those within the industry who

prefer to sit back and wait for a more substantial

uptake in connected TVs until they implement a

strategy. Does more in-depth research need to be

conducted in order to provide further proof that the

newly-emerged platform has significant benefits to

convince many to commit valuable time and spend

on it? Are we facing a catch-22? Is the industry

waiting to see what content is offered first, before

investing in strategies of their own?

60% of new televisions being sold in 2012 are expected to have

Internet connectivity.

Independent research predicts YouView will have a market penetration of 3-4 million by

2014 (high case scenario 8.3million).

Virgin’s new TiVo box will be rolled out to 3.7million customers over the next few years.

TV app downloads are also accelerating: in January 2011 Samsung announced that the Samsung Apps platform, the world’s first app store specifically for TVs, had reached

2 million app downloads. Whilst it took 268 days for Samsung to shift the first million

television apps, it only took 53 days to shift the next million. In May 2011 Samsung

announced that it had surpassed 5 million downloads.

Market place 4

4 Copyright © Adjust Your Set 2011

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Online video has grown significantly over the

past few years; from home-grown videos of pet cats, to

brand-dedicated website players and channels. YouTube

was the original Grandfather of online video. Started in

2005 it enabled the first uploading and sharing of video

across the internet and became the first aggregator

of content. YouTube established a shared viewing

experience and now video has moved from bedroom

geeks to boardroom level and the power of online

video has shifted. It’s now an expectant part of the user

experience and is the fastest way to reach new audiences

across multiple screens.

For brands, online video has become an

integrated component of the marketing mix; strategies

focus on the easiest and most cost-effective route to

engage with the consumer, and in most cases this

is now video-led. To date the only disadvantage that

online video has had, is its struggle to find a consistent

5 Source: Data from Booze & Co via Gigaom.com July 2011

Why connected TVs?

audience. With so much video content now available

online, particularly via YouTube, and SEO for video

still in its infancy, video strategies have been slow

to evolve. However this is about to change. As

technology evolves, providing more devices and

multiple screens on which to show content on, more

advertising opportunities have arisen. Traditional

TV models make up the bulk of video ad spend

today, with about $160 billion spent worldwide

on broadcast advertising. But the rapid growth of

connected devices will soon add a new dimension

to what the industry has come to know as TV

advertising. Advertising for video on PCs and web

browsers, video delivered to mobile devices and

video delivered to tablets will all grow significantly

in the coming years, and it’s safe to assume that

connected TVs will benefit too. TV is the natural

home for video and thus is a natural fit for video

advertising. Traditional TV won’t lose its share of ad

spend; instead additional revenue will come from

the various new channels that ads can appear on.

In short what connected TVs offer the market

is the ability for brands to connect the massive

offline spend with the rapidly emerging online video

market. TV advertising is about to merge with the

exciting and innovative medium that is online. This

will be happening in living rooms throughout the

world in a very short space of time.

£

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“In short what connected TVs offer the market is the ability for brands to connect the massive offline spend with the rapidly emerging online video market.”

Copyright © Adjust Your Set 2011

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“The fact that every manufacturer works on a different platform currently makes it difficult for developers.” Anonymous

survey response

What is a Connected TV?

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As shown in the statistics earlier in this paper

there are various manufacturers and devices competing

in the connected TV market. It was one of the challenges

cited by respondents in the survey that has limited the

uptake of connected TV strategies so far.

For the sake of this paper we define a connected

TV as the integration of the internet into modern

television sets and set-top boxes, as well as the

technological convergence between TV and computers; it

also integrates the user journey across multiple channels

of content.

What is Google TV? Google TV is a search-based software platform that

combines TV content with internet functionality. Just

as Google’s mobile operating system Android can

be built into multiple handsets, Google TV can run

on multiple connected TV devices including set-top

boxes, satellite boxes and digital televisions. As 75%

of respondents in the IAB and Adjust Your Set survey

believe that content on connected TVs will be found

via search functions, it makes Google’s proposition

seem a likely lead competitor in the UK market. It is

due to launch in the UK and Europe in early 2012.

What is Apple TV?Apple TV is a digital media receiver, or small set-

top box, that allows consumers to use an HDTV set

to view photos, play music and watch video content

that originates from internet services or local

networks. Apple TV now allows content to be bought

from iTunes, Flickr, Mobileme, YouTube and Netflix,

in the US only. Apple has a number of partnerships

with movie studios and television networks, giving

it an impressive content library. Rumours started

circulating in August 2011 that the company will

launch a digital television in 2012.

So who are the main competitors?

Copyright © Adjust Your Set 2011

“There are various manufacturers and devices competing in the connected TV market. It was one of the challenges cited by respondents in the survey that has limited the uptake of connected TV strategies so far.”

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What is YouView? YouView, formerly known as Project Canvas, is a

proposed open, internet-connected television platform

for the UK market. The venture is a partnership between

four broadcasters (BBC, Channel 4, Channel 5 and ITV)

and three communication companies (Arqiva, BT and

TalkTalk). The platform, which is planning a full launch

in early 2012, will allow consumers access to a range of

third-party services (television channels, radio stations,

on-demand services and internet content) using a

compliant device (such as a set-top box) built

to a common standard and through a broadband

internet connection.

What is a games console?Various games consoles also allow interaction and

integration with online TV. Until now many online video

services were launched primarily with the game console

in mind to meet the demand from users for interactive

video and game play. PlayStation 3 (PS3) for example,

allows catch up TV services and select channels

accessible under a separate TV channel. It also allows

integration with social networking allowing users to

watch and discuss films with other uses, as well as

access to Netflix in the US to stream content. Microsoft’s

Xbox console and subsequent launch of Xbox Kinect

shows a new level of interaction with your TV, even down

to how you purchase products. A recent prototype shown

in partnership with MasterCard allows you to wave your

hands at an icon and select purchases, all from the

comfort of your sofa.

What is a Connected TV?

What is a Smart TV?There are various manufacturers competing in the

‘Smart TV’ market including Samsung, LG and Sony.

Each has the basic functionality of connecting to

the internet, while pushing their own unique user

experience. For example, Sony’s Qriocity Video on

Demand service allows viewers to rent classic films

or enjoy the latest Hollywood blockbusters which

are immediately streamed to the device, whereas

Samsung has launched the Samsung Smart TV from

which consumers can download apps as well as

view content.

What is Boxee?Boxee is a cross-platform freeware Home Theatre

PC, essentially a software application with a user

interface and social networking features designed

for the TV. Marketed as the first ever “social media

centre”, Boxee enables its users to view, rate and

recommend content to their friends through many

social network services and interactive media.

However you cannot currently watch and record live

TV via over-the-air TV, cable or satellite signals.

Copyright © Adjust Your Set 2011

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When the IAB and Adjust Your Set asked industry

members what kind of content they believe consumers

will engage with, 80% said they feel that entertaining

short-form content will be the most prevalent. This is

followed by interactive content (71%) where consumers

can change the outcome of the video and app inspired

games (61%). YouTube has been an influential force for

online advertising since its launch and with the rise of

streamed video content on internet enabled devices; its

influence is still noticeable. 69% of respondents either

agree or strongly agree that “snackable” branded content

will become more widespread.

Interestingly when asked to rate on a scale

of 1-5 how frequently they thought people will use

their internet-connected TVs for particular activities,

‘watch catch-up TV’ came out as the most frequent and

‘purchase from a retail brand’ least.

“Until now branded content has been produced at the optimum engagement time for consumers, about 2-3 minutes long. However, on connected TVs brands need to up their game, focusing less on video length and more on creating high-quality content to suit the platform that’s both bold and engaging.” Chris Gorell

Barnes, CEO of Adjust Your Set.

Entertainment Interactive Games

80% 71% 61%

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In order to provide the type of engaging

content audiences will want to watch and interact

with, a clearly defined strategy must be employed

by each party involved in the connected TV market. While broadcasters and production companies

already employ a 360 degree commissioning

approach that allows audiences to engage in

programming content across a range of other

devices and platforms, brands too must develop a

connected strategy. For too long, brands have got by

using different, loosely combined creative concepts

across digital and traditional channels. They will not

be able to use this same strategy on connected TVs;

everything will appear together and unless there

is a completely ‘glued up’ relationship between all

parties involved on the platform, the result will be a

poor customer experience.

For brands, the connected TV should allow

a rejuvenation of the traditional ad break. It will

While purchasing from a retailer appears low, as more connected TV services become available it’s sensible to expect this activity to increase among consumers. Video commerce platforms by Marks & Spencer and ASOS prove consumers enjoy them and this behaviour will no doubt translate to connected TVs.” Jack Wallington, Head of Industry Programmes, IAB.

What's on the connected TV schedule?

To Watch Catch Up Tv

As Entertainment Platform

Participating Via Mobile Phones

Participating With Social Networks

Playing Interactive Games

Surfing The Web

Purchasing From Retail Brands

allow consumers to pause live TV while ordering a

takeaway or a new outfit via their TV or one day even

test drive a new car from the comfort of the sofa via

a remote control and connected TV.

Frequency Of Activities On Connected TVs

Copyright © Adjust Your Set 2011

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While this paper has outlined the various

connected devices currently available on the market, or

due to launch, and the growth in sales of such devices,

the research carried out by the IAB and Adjust Your Set

found that just 12% of industry respondents currently

have an internet-connected TV strategy in place. The

majority of respondents (85%) are interested in the

advertising opportunities afforded by internet-connected

TVs, but there was still 10% who are not sure when they

will implement a strategy and 22% who say they have

no plans to implement one at all. In addition over a third

of respondents feel that only a budget of up to £50,000

should be allocated to connected TVs; will this be enough

to create the compelling content proposition needed to

persuade the consumer to plug in?

Many in the industry believe the internet-

connected TV trend needs to take off further to warrant

a strategy and challenges facing the industry include

cost, fragmentation of the manufacturing industry and

that there are still other channels, including mobile,

to explore.

“It’s clear the industry considers the platform an incredibly significant leap for online advertising, but it’s also become apparent that like so many other technological developments we’re waiting for the consumer to leap first.” Jack Wallington, Head of Industry Programmes, IAB.

“This sector is in its infancy and needs to gain more momentum from recommendation and information on advantages before consumers start to follow the trend,” Anonymous

survey response

6 Source: http://www.marketingmagazine.co.uk/sectors/features/article/1083901/brands-really-need-media-agencies/

Once internet-connected TVs do take off, survey

respondents feel that the strategy will be in

the hands of the media company (31%). It’s an

interesting development when agencies are

increasingly adapting across the paid, earned and

owned media spectrum. Agencies have always

defined themselves with terms like “traditional”

or “digital”, but with internet-connected TVs the

relationship between agency, brand and broadcaster

will change. We will likely see a more fully

integrated strategy developing within agencies and

even brands themselves acting like agencies to deal

directly with the broadcaster.

Technology has always played a significant

role in the media and marketing industry and 90% of

respondents in the IAB and Adjust Your Set survey

either agree or strongly agree that new technology

is forcing media agencies to reassess their

business models as audiences migrate away from

traditional channels. This again raises the question

from an organisational perspective and the old

relationships of buying and selling. Media agencies

are increasingly being bypassed by ad agencies and

even brands themselves to book ad slots. During

2010’s X Factor the successful Yeo Valley ad was

created and booked by BBH and Yeo Valley with

Fremantle Media and ITV directly. Will brands be

circumnavigating the media industry in favor of

becoming a media company in their own right? But

as Richard Morris, the deputy managing director for

Carat recently said within a feature for Marketing

Magazine about the ‘endangered media agency’;

“now more than ever, brands are going to need help

managing the complexity inherent in media.”6

Industry reaction to connected TVs

60% have had

discussions

85% interested in ad

opportunities

12% currently have

a strategy

9 Copyright © Adjust Your Set 2011

“We will likely see a more fully integrated strategy developing within agencies.”

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Persuading a consumer to plug in and utilise

content on their connected TV is no easy task.

Consumers are faced with multiple channels and an

array of content at their fingertips. So how does the

industry persuade the consumer, and more importantly,

how will consumers find the content they want?

Industry analysis has shown that consumers are

already purchasing internet-connected TVs and this is

only set to continue. So while brands and broadcasters

develop their content propositions, consumers will likely

continue to view linear TV and likely access additional

information and content via a service similar to the red

button. As the IAB and Adjust Your Set research shows,

consumers will also continue to consume catch-up

content on internet-connected TVs (this was listed as the

most frequent activity by respondents when asked to rate

how consumers will use internet-connected TVs). As the

content propositions develop so too will the ways

consumers access content. They may initially visit

the related app for additional information regarding

traditional TV ads, but eventually a seamless

transition to click-through from ad to branded

content app will develop.

Earlier in the year Audi launched pre-roll

ads for the A7 Sportback, which directed audiences

to the Audi.tv channel via internet-enabled TVs

where they could watch further content. Brands

such as Debenhams already offer video from its

online TV channel on a mobile app. It’s a potentially

small leap from here to an app on connected TVs.

In addition, users will be able to find content via

search functionality on connected TVs, which 75%

of the IAB and Adjust Your Set survey respondents

agreed would be a key method of discoverability.

Following search, 63% of respondents said content

would be found via recommendation, potentially

from social media. Following search functions, 63%

of respondents said content would be found via

recommendation, potentially from social media.

Search Functions Recommendation

75% 63%

How do you find the content?

“As the content propositions develop so too will the ways consumers access content”

10 Copyright © Adjust Your Set 2011

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As with most industries, as it is in everyday life,

imitation is the sincerest form of flattery. So much so

that brands are re-defining their business models and

taking inspiration from the media industry, in particular

the ways they produce and distribute content. Brands

have had to re-address how they engage across an

increasingly complex media landscape. When the

broadcast industry introduced 360 degree commissioning

and launched Facebook pages, Twitter character profiles

and online competitions alongside programmes such

as Skins, The X Factor and Hollyoaks, it re-defined its

own business model. Now brands need to move

from linear advertising to a multichannel approach.

Where broadcasters have led and won audiences, so

must brands follow with a supporting strategy and

assets to engage consumers.

However, while respondents agree (54%)

with the statement that brands will become media

companies in order to navigate the internet-

connected TV landscape, half (50%) followed this by

saying that both business models will still exist. 22%

disagreed entirely and feel that brands will never be

able to fully produce and manage the same quality

of content as media companies.

In navigating the connected TV landscape,

brands must create their own voice and lead

conversations, not aggregate other people’s

views. They should listen, respond and respect the

customer, and in this regard create innovative and

unique content that suits the consumer’s needs.

No longer will there be just a push message during

the TV ad breaks to buy a product; consumers

are seeking the information they require and the

message has become one of pull as well. The really

smart brand will create a world that will capture the

imagination of consumers, for example Compare the

Meerkat, Tony Tiger, the Nescafe couple and more

recently BT’s Adam and Jane.

By listening to what the customers want

and need, the content can also become more

personalised. 88% of respondents in the survey

either agree or strongly agree that brands need

to create a more personalised experience in

order to meet the growing demand of audiences.

Household demographics are varied but brands

and agencies have long used customer data

gathered via loyalty cards, online subscriptions

and tracking click-throughs to personalise and

connect with their customers. Connected devices

should be no different and we could one day view

bespoke and personalised content in our homes;

for example a young couple with no children could

enjoy the latest travel ad, while the family next

door could view child-care related ads, even if they

are both watching the same programme. Survey

respondents agree with this view with 89% either

agreeing or strongly agreeing that in the future

internet-connected TVs will personalise ads for

different household demographics even if that

household is enjoying the same programme as

others in the area.

Revolutionising the business model: "Brands as media companies"

“With a range of connected TVs coming to market with different platforms, it’s important that media companies and brands work together to standardise and therefore simplify marketing offerings across all of them, which is where the IAB Video Council could help.” Jack Wallington, Head of Industry Programmes, IAB.

“Where broadcasters have led and won audiences, so must brands follow with a supporting strategy and assets to engage consumers.”

11 Copyright © Adjust Your Set 2011

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While the IAB and Adjust Your Set research

reveals that the industry thinks the content on

internet-connected TVs will be video-led (51% feel that

over 60% of the content will be video led) and that 77%

believe that consumers will want to interact with TV

content, the content proposition ultimately lies in what

the audience wants.

Research released earlier this year by market

researcher Knowledge Networks found that although two

out of five households have a connected TV in their living

room, very few consumers are making the most of its

features. 47% prefer to watch a programme on its regular

TV time slot and 62% “are not connected or not capable”

and “most plan to stay that way.”

While 91% of the industry questioned by the IAB

and Adjust Your Set agree that consumers will plug

in their internet-connected TV, they’re relying on the

consumers themselves to want to find relevant and

engaging content, rather than develop strategies to

persuade them (only 12% currently have a strategy in

place). Events such as the Olympic Games next year

could provide an ideal opportunity to develop the type of

content that will persuade the consumer to plug in. The

Olympic Games could be what the Queen’s Coronation

“It is clear that the real goal for both brands and broadcasters is finding a way to persuade the viewer to ‘turn on’ the installed but inactive device. This should be the key growth area for the next 6 to 12 months.” Chris Gorell

Barnes, CEO of Adjust Your Set

7 Source: Knowledge Networks

was for colour TV. Consumer research does show a

positive reaction to internet-connected TVs with two-

thirds believing the quality of connected TVs is about

the same, or better, than their regular TV reception

and one quarter of those cite watching TV shows

through connected devices as their number one

platform choice.7 So why, if the audience wants to

engage with the content on connected TVs, does the

industry not seem prepared for this phenomenon?

If the industry is to take small baby steps

across the connected TV landscape, then gaming

could be the first of these. Connected TVs could

see the “gamification” of advertising. TVs in the

home don’t just support television content; they

also support the hugely successful gaming industry.

Gaming consoles are one such device to connect

to the internet and game-shows are one of the

most popular programme formats. Could bringing

together gaming and TV be a major aspect of the

new digital landscape? 61% of survey respondents

think that app inspired games, similar to those

available on a smartphone, will be relevant

to consumers and therefore could encourage

engagement on connected TVs. Some of the most

successful red button applications were around

sporting programmes and interactive voting on

reality shows. It follows that we are on far more than

just the cusp of gamification of the TV ad.

How does content retain its crown on connected TVs?

“Internet-connected TVs will change consumers’ viewing habits for good.” Anonymous survey response

“The Olympic Games could be what the Queen’s Coronation was for colour TV.”

12 Copyright © Adjust Your Set 2011

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Try asking your friends or work colleagues how

many of them use their mobile phone as soon as they

wake up in the morning? It’s often the first thing they do before they even turn on the light. An August 2011

“Communications Market Report” from Ofcom shows

that 60% of teens and 37% of adults in the UK are “highly

addicted” to their smartphone device, with a staggering

81% leaving their handsets turned on all the time.

It’s little wonder then that the mobile device

will play a significant role with the internet-connected

TV. Earlier in the year marketing agency Digital Clarity

found that 80% of under-25s use a second screen to

communicate with friends while watching TV and 72%

used Twitter, Facebook or a mobile app to comment

on shows.

For connected TVs it’s likely the mobile device

will merge with the traditional TV remote. Owners of a

“Mobile will dominate the interaction between consumer and TV (TV will dominate the viewing, mobile the conversation).” Anonymous

survey response

Samsung Smart TV can already use their iPhone,

iPad or Android handset to control their TV, using

a downloadable app or the touch remote that

comes with most of its high-range sets. Other TV

manufacturers, like Mitsubishi and Samsung, are

working on smartphone remotes and phone apps

as part of both Apple and Google’s TV offering

and LG offers a remote control that works more

like a computer mouse. Over 30% of respondents

from the IAB and Adjust Your Set survey feel that

consumers will access internet-connected TVs via

the TV remote into an app store controlled by the TV

manufacturers. There are still issues to work out of

course; if your phone goes into sleep mode, or you

receive a call during a TV programme, you’ll need to

switch between applications. And if only one phone

controls the TV, if you’re not in the house, how will

the other household members change

the channel!

And it’s not just mobile apps and devices

that will allow greater interaction with connected

TVs. Broadcasters will likely develop companion

apps for their channels and programmes that will

aggregate all the information for the consumer.

The recent launch of Zeebox by Anthony Rose and

Ernesto Schmitt reflects just this. The free zeebox

app automatically syncs an iPad, phone or computer

with a TV, shares the viewing and shows the

audience what their friends are watching in

real-time.

Could mobiles become the TV remote of our lives?

13

“For connected TVs it’s likely the mobile device will merge with the traditional TV remote.”

Copyright © Adjust Your Set 2011

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Accessing content on the range of competitive

devices and platforms currently available raises

the inevitable question of monetisation and revenue

streams. Each piece of the connected puzzle, from the

TV manufacturer to the broadcaster, media company

and brand, will each be looking at the ROI of providing

content and technology for the connected TV. While the

manufacturers can clearly see sales rising, Samsung

sold two million Smart TVs in just 90 days with Europe

and North America accounting for more than 700,000

units, brands and broadcasters will need to measure the

effectiveness of their connected TV strategy.

There are a number of ways to create revenue,

depending on what sector the brand operates in;

automotive, retail or FMCG for example. Retailers

will want to develop an e-commerce strategy for their

connected TV proposition, FMCG to push vouchers

and automotive to book test drives. While the IAB and

Adjust Your Set research revealed that respondents felt

‘purchase from a retailer’ was the least likely activity for

customers on connected TVs, the platform is not solely to

encourage shopping, there are a number of possibilities

for brands. Even for retailers there is strong reason to

believe customers will purchase via the platform. At

MIPCOM 2011 Google TVs Director of Content Donagh

O’Malley said that once connected TVs achieve mass

adoption, they should allow consumers the ability to

purchase any item of their choosing at the click of the

button.8 Ultimately it’s about conversion.

In May of 2011 the UK Online Measurement

Company (UKOM) and Nielson unveiled the first industry-

backed online video metric. The news meant brands and

broadcasters could directly compare web viewing with

TV for the first time. Another measurement body,

the Broadband Measurement Working Group made

up of a range of broadcasters, has not yet launched

its standard metric for video on demand across

web-connected devices. As the industry continues

to launch content across mobile, connected TVs and

other platforms, these forms of measurement will

have to keep pace. Throughout 2011 Brightcove, the

video content platform, has been releasing tools

and support resources to help organisations take

advantage of LG’s Smart TV. The platform provides

media companies and brands with control over user

experiences, programming and business operations,

such as advertising and analytics. Brightcove said

earlier in the year that distributing content onto

the connected TV market requires a focus on how

content can be measured and therefore monetised.

The tools are currently only available for one

connected device – the LG Smart TV, with potentially

more to follow. Alternatively another video platform

Ooyala has launched ‘Ooyala Everywhere’, a

video solution aimed at providing large content

distributors a framework to develop online video

experiences with more flexibility around how the

video is consumed. However, until one definitive

guide is launched, there is no way to successfully

measure the effectiveness and thus revenue of

all content on connected TVs. Will the value chain

end up so large that no ads get served at all? Or

will only the biggest advertisers be able to afford

it? We could inevitably end up limiting consumer

choice on connected TVs if a new buying, selling and

measuring model is not found.

Another piece to this puzzle is the

standardisation of ad formats on connected TVs.

While the measurement of online advertising is

debated by UKOM and regulation is clarified by

bodies including Ofcom, the industry needs to

address the various opportunities available to

them. From pre-rolls to branded content hubs,

the opportunities on connected TVs are greater

than what is currently available spread across a

number of devices. Currently pre-roll ads serve

the online market, while traditional advertising

still plays its role on linear TV. However, each of

these opportunities will be available to brands on

internet-connected TVs and thus a clear definition

and regulation needs to be decided in a competitive

market. In addition, how will broadcasters measure

and monetise a customer journey from a 30 second

ad to branded content. Will the broadcaster receive

a share of the profits if a consumer interacts with

branded content found via an ad? Will brands be

allowed to serve TV ads, pre-rolls and produce a

branded content app? And who will be in control of

the media buying and selling across each platform?

Filling the connected purse

£

14 8 Source: New Media Age article: http://www.nma.co.uk/news/connected-tvs-are-commerce-platforms-says-google-tvs-donagh-omalley/3030634.article

Copyright © Adjust Your Set 2011

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With any new consumer service regulation issues

always arise. For example, with online video on TV, does

that count as TV rights clearance or online? In May 2011,

Jeremy Hunt, the Secretary of State for Culture, Media

and Sport, officially began a “wide-ranging review” of

the 2003 Communications Act, the rules that govern

the regulation of broadcasting and communications

within the UK. His goals are to build a communications

framework “that will drive growth and innovation, remove

unnecessary burdens and continue to protect consumers

and the public.” It is still unclear how internet-connected

TVs will fit into Jeremy Hunt’s local TV service strategy.

Interestingly IAB industry members questioned in

the survey are like-minded, with 66% of respondents

agreeing that Ofcom will need to issue new regulations

for internet-connected TV. However, delegates who

attended the 2011 Royal Television Society Cambridge

To ensure internet-connected TVs take off and reach their full potential, the industry needs to work together as a whole. Both broadcasters and brands should agree formats and decisions together.” Chris Gorell Barnes, CEO of Adjust Your Set

Convention, voted unanimously against the need

for a new Communications Act. It’s clear there is a

disjointed opinion on this matter across the industry.

Ultimately regulating the connected TV

landscape will mean a decision over control and

ownership. The IAB and Adjust Your Set research

reveals that once connected TVs take off, survey

respondents feel that the strategy will be in the

hands of the media company (31%).

Regulating a connected landscape

“Connected TVs represent the merger of two huge advertising mediums which are regulated in different ways. Online video is still incredibly new and we’re still trying to figure out how this fits alongside broadcast from a regulatory perspective. However, advertising on connected TV, like all advertising, will be covered by the Advertising Standards Authority’s Committee of Advertising Practice who will offer guidance in due course.” Jack Wallington, Head of Industry Programmes, IAB.

15

“Ultimately regulating the connected TV landscape will mean a decision over control and ownership”

Copyright © Adjust Your Set 2011

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33

Before analysing the impact of social TV it’s worth

noting that social TV is nothing new. TV has always driven

social interaction; whether it was the ‘water cooler’

moment the next morning in the office or comments

posted on Facebook during a Saturday night programme.

Love them or hate them, we all have something to

say about content, and those who produce it. Steve

McCattery, VP of home business EMEA at Motorola

Mobility said recently in the Daily Telegraph that “social

television is essentially the act of discussing what is

being watched on the main TV using internet services.”

60% of respondents in the IAB and Adjust Your Set

survey agree, or strongly agree, that internet-connected

TVs will further encourage the use of social networking

sites. Internet connectivity fundamentally changes the

nature of television by giving viewers access to video-

on-demand, web video and new online services, such as

social networking. Social media in particular has already

shaken the world of online video with various tools now

integrating the two. Facebook video players for retailers

in particular, now allow consumers to browse product

videos while engaging with their friends.

This trend for ‘social TV’ is spurring

entertainment companies and brands to create an even

greater interaction between the two media.

Social video combines the interactive experience

into one channel. Scrolling through peer reviews

and friends’ tweets whilst still viewing video content;

changing the outcome of the film with your own ideas,

or purchasing a featured product from the video with the

click of a button. It is the ultimate fusion between content

and experience.

“At Adjust Your Set we’ve measured up to 50% higher engagement in videos recommended by peers via social media than those found via search engines.” Chris

Gorell Barnes, CEO of Adjust

Your Set

Connected TVs will further revolutionise this

trend by integrating social networks directly into the

TV platform via apps, or have browsers that bring

social media to the screen. Zeebox for example

provides an app that automatically syncs an iPad,

phone or computer with a TV, shares the viewing

experience and shows the audience what their

friends are watching in real-time.

This form of integration will allow viewers to

interact with TV shows without the second screen;

recommending shows or movies to friends and

family and posting reviews in real-time.

Ultimately social video can greatly impact

the point of sale as well. As research from

Starcom MediaVest Group claimed, it is not just

being aware of brands on social media that leads

people to continue that relationship or buy goods,

it is the level of interaction or “doing something”

Social TV - “like” it

with branded content that has bearing. Jim Kite,

strategic development director, said “the deeper

the interaction with social media, the greater the likelihood of moving the consumer from enquiry

to brand preference.” Within their research 86% of

those who watch videos in social media would then

visit the brand website. The more involvement from

consumers in content, the more likely someone is to

move down the purchase funnel.

Peer recommendation has also had a long-

established impact on sales and brand engagement

and companies like Amazon have had success

with recommendation in the past; “others who

have bought this book, also liked…” The power

of customer data can ensure recommendations

are made based on consumers viewing habits

and connected TVs with integrated social media

comments, could take this to the next level.

16 Copyright © Adjust Your Set 2011

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35

When the TV platform first emerged, producers

filmed radio programmes that were already being

broadcast in studios. The likes of David Attenborough

re-defined the medium by creating formats that went

further than studio programming had ever gone. Now

we’re seeing the development of social media impact

how we interact with our favourite programmes and

technology that enables us to consume on any device,

from any location. What is the defining connected TV

format? Will the interactivity and connectivity of the latest

platform take both brand and broadcaster to new levels

of production, creativity and engagement?

It was reported from the 2011 Royal Television

Society Cambridge Convention that “broadcasters are

not yet ready to embrace internet-connected television

platforms, due in part to the lack of control they would

have over the advertising appearing next to their

content.”9 What broadcasters need to understand is

that this phenomenon is happening regardless and

the IAB and Adjust Your Set research has shown that

85% of respondents are interested in the advertising

opportunities afforded by connected TVs. Advertising

models will need to be re-addressed as connected

TVs create a more personalised user experience. 75%

of respondents from the survey revealed they agree

that internet-connected TVs will change the type of

advertising used by brands. The platform will allow a

pull message, rather than push, with the type of content

“No one knows what will happen and it is very early days to guess who will win. However, it is certain that the traditional TV model will change.” Anonymous survey

response

available on it. As the world becomes better

connected across multiple devices and screens,

the industry too needs to connect its strategies and

content propositions.

The connected TV has created a new

integrated, collaborative and interactive ecosystem.

Viewers can now post a blog, order a dress, play a

game and update their Facebook status all from

their TV sets, and by pausing the TV, they can do

this without interrupting the programme. The result

is that brands will need to work harder to target

their customer and keep audiences engaged. It’s

become easier to click away from the TV ad and

we may not want to watch the same advert as our

neighbours. Viewers will also become increasingly

Conclusion

distracted from linear TV as the almost endless

array of media is offered to them on connected

TVs and recommended from friends. Video already

provides a more direct and personalised customer

relationship, particularly when integrated with

social media, but it also has numerous challenges

ahead for it.

More compelling than the content itself is

the interactive package that it can be wrapped in;

comments posted via Twitter or Facebook, peer

recommendations, requests for information and

smart-commerce – the purchase of products via

your Smart TV. Products could soon be sold via an

‘interactive purchase cycle’ that involves friends,

brands and even TV programme endorsements.

17 8 Source: http://www.marketingweek.co.uk/disciplines/digital/iptv-is-a-scary-prospect-for-old-school-broadcasters/3030204.article

Copyright © Adjust Your Set 2011

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37

“I think internet TVs are just an early step on the path to fully integrated broadcast and internet media. People will undoubtedly access personalised content on the big screen but I think the format that will take is yet to be decided and probably not even developed yet.” Anonymous survey response

For the connected TV to deliver on its promise

it needs to reach its full potential and become an

indispensible tool for the customer to access, interact

and engage with content. That content however has

to create and deepen the viewer experience and

relationship. As already mentioned in this paper, it’s clear

the industry is waiting for someone to make the first

move. Broadcasters and media owners can easily slot

into the connected schedule with programmes such as

The X Factor easily transportable to a connected device.

Broadcasters have shown the way forward by creating

the market, now it’s up to the industry as a whole to

navigate connected TVs together. Each plays a part; the

broadcasters and media owners, brands and agencies.

It could ultimately reveal a whole new digital landscape,

with new regulations and revenue opportunities for all.

For brands in particular, it’s a whole new strategy.

Most brands already have a dedicated branded video

channel but rarely direct their customers toward it from

a banner ad, TV commercial or email newsletter from

one device to another. But brands should soon realise

that in addition to serving customers an ad between

their favourite TV show, they now have the opportunity to

compete for the customer’s attention and create content

consumers want to watch. New mothers could watch

a Pampers programme on the best ways to encourage

babies to walk, BT could offer tips on the internet-

connected home, or Nike could show interviews with

their celebrity stars, while you purchase the latest

products from these retailers; the list for potential

connected TV content is endless.

Regardless of the debate surrounding

strategies and content propositions, 72% of the

survey respondents disagree that “the internet-

connected TV is a passing fad and will not survive

the constantly evolving digital landscape”. We can’t

deny that the platform is here, that customers

are purchasing connected TVs and that content is

needed to sustain them. Innovation is at the heart

of the media and marketing industry. As the latest

gadgets arrive on the market, consumers want to

digest content on them. Whether the content and

strategies will emerge to support connected TVs is

the key question.

The End

Conclusion

18 Copyright © Adjust Your Set 2011

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