What Next for Video Advertising as TV Overtakes the PC for Online Video?

Online Video Moves to Connected TVThe number of consumers reporting that the TV is their primary screen for viewing both paid and free online video has risen from 33 percent to 45 percent, according to research carried out by The NPD Group, a US research firm. During the same period, the number consumers who used a PC as the primary screen for viewing content from over-the-top (OTT) services such as Netflix declined from 48 percent to 31 percent.

NPD say more consumers are watching TV and movies on big screen because of the ‘rapid adoption’ of connected TV — 12 percent of the consumer TVs in the US were connected TVs, totalling more than 29 million devices. However, just 43 percent of connected TV users accessed online entertainment directly from their TVs, including online video, music, and cloud services.

“The growth in connected TVs is another sign that online video is maturing,” said Russ Crupnick, senior vice president of industry analysis for The NPD Group. “Streaming video has moved from the dorm room to the living room; and, as more households obtain and connect TVs to the Web, we predict increased trial and engagement for video distribution services.”

Finally, Online Video’s All Grown Up – Now Advertising Has to Catch Up

While most people in video advertising are clear on the fact that video is primarily a brand channel, even those chasing brand budgets occasionally use the language more commonly associated with performance advertising.

This is partly because many people working in video advertising have come from other parts of digital, particularly display, which is commonly used for both brand and performance, so the jargon and thinking tends to overlap more than it really should (not to mention that some brand advertisers have an unhealthy interest in clicks).

Then there’s also an element of ‘we can do it, so let’s talk about it’ in video advertising, so if you can demonstrate a click when TV can’t, it appears to make sense to differentiate your product by pointing out what video is capable of.

But positioning your product around short-term measurable outcomes could pose problems as video moves off the PC and onto connected TV. Things like click-through rate (CTR) and sales attribution might seem useful in a world where most video is consumed in ‘lean-forward’ PC environments, but those behaviours are less attributable and less likely to happen on a connected TV, at least if you’re looking for traffic to a site, a sale or a form filled.

While connected TV engagement rates are currently quite high when it comes to things like watching some extra content, we are in all likelihood going through a honeymoon phase when consumers are still curious about what their new TVs are capable of. With all other digital mediums, engagement rates have dropped off over time as consumers become familiar with the new environments and devices, so it seems likely connected TV will one day suffer a similar fate.

Remembering Brand Basics

However, in focusing too much on identifiable, reportable responses to advertising, the more fundamental question of  ‘Did the ad tilt the needle in the right direction for the advertiser?’ sometimes gets lost in the online metric-mist. And as a result, video’s less attributable strengths are often over-looked and under-sold. The goals of a brand campaign are usually quite simple when you boil it down to things like reach, scale, recall, equity and affinity — and TV advertising’s ability to meet these relatively straightforward brand objectives is the reason billions upon billions are pumped into TV each year.

In some respects, video needs to go back to basics. Brand advertisers understand that – assuming there’s a market for the product – the sales will follow if the brand is properly advertised. So trying to link every ad exposure to a direct engagement or a sale doesn’t do video justice and is an impossible task in any case, particularly when you consider things like cookie deletion, offline sales, the use of different devices, and the fact that an uplift in a person’s affinity with a brand may deliver not days but years down the line.

Following on from that, as online video moves onto connected TV, companies trying to ‘over-demonstrate’ engagement are going to find themselves having to start thinking a little more like the TV industry. Now is a good time for the video world to start remembering that video ads have value that goes far beyond what can be demonstrated in a spreadsheet on the day a campaign ends.

Sometimes engagement is simply watching, and then remembering, and then at some point in the future – perhaps decades after the campaign ends – buying or recommending. So anyone who is serious about truly accountable advertising will have to factor in the fact that advertising will never be fully attributable. The TV world understands this, as do brand advertisers.

Companies who push the idea that every video ad should be linked to a sale (and while there aren’t too many, I’ve seen leading luminaries from leading companies say as much) are going to struggle as video moves onto connected TV. For a start, attribution is going to be an extremely complicated affair in any case as we don’t have cookies on connected TVs just yet.

Then there’s the fact that — at least for now — very few people are going to buy anything via a connected TV, as filling out a form by using a remote control to jockey around an onscreen keyboard is the same horrible experience it was in the 1980s.

The TV is also more likely to be a shared environment, so the opportunities for engaging directly via the TV are further reduced — Dad checking out car insurance rates on the TV screen while X-Factor is about to start isn’t something that’s going to be happening too often.

There are solutions to these problems of course, many of which already exist but have yet to achieve sufficient scale for advertising. One potential solution is likely to come via the second screen, which will in all likelihood gain proper traction and scale when incorporated into tablet-based remote controls.

But if measurable engagement via the first screen is going to take off, then it will have to be easier, more intuitive and more enjoyable than it is at present. Some of the most innovative solutions in this area are springing up around Xbox’s Kinect – take Brainient’s hand gestured ads and Microsoft’s voice-activated NUads for example.

So while the shift from PC to connected TV will require a slight shift in thinking for the video advertising industry, it’s a perfectly manageable one and the next few years will be a very exciting time for the industry.

The promise of online video was always the prospect of TV budgets – and perhaps budgets from elsewhere – moving to online video, but the growth of the medium has always been limited by, amongst other things, a certain amount of screen-bias in the minds of TV buyers. But as online video moves onto TV, it suddenly finds itself in the same lean-back, brand friendly environment, with the same screen size and sound quality. The next big battle for the industry – which has already begun – will centre around gaining access to premium content.

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