3 MINUTE READ | May 28, 2015
Connected TV: The Death of Online Video or the Future of TV?
Connected TV is all the rage these days. Viewers can choose how and when they want to enjoy digital video content, making them more engaged and aware than traditional TV viewers.
As marketers and as brands, we know that Smart TVs are being embraced by a savvy and diverse group of consumers, and the usage growth makes it evident that digital advertising strategies need to evolve.
Connected TV sales are up, and more than half of internet users will have a Connected TV by next year, according to eMarketer. Consumers are using connected over-the-top devices like Amazon Fire, Roku, and AppleTV to access a world of online entertainment, and every day more apps and services are invading living rooms in the wake of these highly tech-enabled media devices.
A new survey from Leichtman Research Group has found that 56% of American homes now have at least one TV connected to the Internet, more than double the 24% level from 2010. Additionally, 29% of American homes now have TVs connected using multiple devices.
LRG also found that 29% of adults watch online video on their TVs at least weekly, almost 6 times the 5% level in 2010, underscoring how rapidly this has become a mainstream activity.
85% of Netflix subscribers said they watch the SVOD (“subscription video on demand”) service on a TV, the highest level ever. 43% of pay-TV subscribers take Netflix, vs. 50% of all non-pay-TV subscribers.
Overall, LRG found that 52% of American households have an SVOD service and 43% use it at least monthly.
So how Does the Proliferation of Connected TV Impact Digital Advertising and Linear TV?
Pressure on Quality Inventory Supply Due to Shifting Ad Dollars
We are seeing a torrid growth in requests and use of online video across the industry. As digital video spend increases, the supply of TV-quality video inventory will grow scarce, applying more pressure to find quality digital video inventory that meets the standards of TV.
Connected TV advertising will allow advertisers to build out traditional campaigns to extend their brand and employ more creative ways to make an impression on the consumer.
Since it is fairly difficult to anonymously identify a consumer across devices and inform reach/frequency models for optimization at scale, companies will need to further solve and evolve these technological challenges.
In digital, the ability to directly engage, share, and communicate with a brand or product is exceptional. Connected TV inventory is great for mimicking a linear TV experience, but once the creative is interactive and buyers expect some form of further engagement, the possibilities are endless.
However, due to the fragmentation of devices (i.e. smart TVs, game consoles, Blu-ray players and set-top boxes), advertisers must develop multiple creative formats and work with multiple vendor partners for a single connected-TV advertising campaign.
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Connected TV has a very bright future as an extension of linear TV and online video. Many of the trends we are following point to great things happening around a new model of converged TV. While connected TV is still in its infancy, it’s imperative for advertisers to consider the highly active, engaged nature of the digital consumer.
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