Connected TV Will Take Over the Living Room in 2013

Smartclip CEO Jean-Pierre FumagalliIn the first instalment of VAN’s 2013 prediction series, Jean-Pierre Fumagalli, CEO of Smartclip, Europe’s largest multichannel video ad network, sets out what he thinks will happen in connected TV advertising in the coming year. Over the remaining weeks of the 2012, VAN will be publishing predictions from leading industry thinkers on a variety of themes.

In the last few years, we have seen the emergence and growth of the connected TV market, and with research and consulting firms predicting a possible 1.6 billion devices in use by 2014, the future for connected TV looks very bright heading into 2013. The increased consumer engagement and targeting capabilities this channel offers to advertisers means it’s important they are ready to take full advantage of the upcoming opportunities. So as the connected world moves moves even further into the living room, here are some predictions on what we at Smartclip think will happen in 2013:

1. Fragmentation will get worse, not better

We can expect to see more fragmentation in 2013. But fragmentation won’t only take place across the various content offerings, but we’ll also see more fragmentation caused by shifts in consumer behaviour. Today, the consumer accesses media and content in a highly personalised way, that often makes use of all devices and all channels. We are living in a multi-device world.

We will be see some welcome progress in some areas, particularly in terms of hardware, in which we’ll see better platform architecture, less complexity around input devices, additional interactivity and improved computing power. But at the same time, we’ll also see CE-manufacturers trying to maintain their profit margins through advertising and many new players entering the market, all of which will contribute towards fragmenting the market even further over the next year.

Initiatives such as the Smart TV Alliance still need to find ways to make it easier for content producers to build for multiple devices cost efficiently.  This also extends to ad serving solutions, which are becoming less standardised, meaning that content producers will often have to implement three or four different ad-serving solutions if they intend to build for multiple platforms. If device manufacturers are serious about making money, payment solutions and advertising needs to be more standardised. They can differentiate on the user experience, search, recommendation, and other areas, but they need to make it much easier to build opportunities for all platforms to drive revenue through transaction and/or advertising.

2. The growth of social TV

Simultaneous use of the Internet and TV is becoming the norm. In fact, recent consumer research carried out at Smartclip showed that nearly two-thirds of people use the internet frequently while watching TV. Most of this usage is social TV or email currently.  Social reinforces appointment-based viewing and presents a compelling use case for broadcasters and content producers of traditional TV.  We will see more and more synchronised apps from content producers to counteract multi-tasking ,on-demand viewing and which will support direct social interactions.

Today, the use of devices is very individual and not limited to the content we are consuming. As everyone watches more on the go, we stop thinking of first and second screens – we are simply using the most convenient device at the moment. The idea of second screen is dated, we should start thinking in terms of screen journey: depending on the situation, where we are and what we are doing, any screen could be the 1st screen. The user now is in full control what her or she wants to see.

3. Data and targeting

With multiple devices working off the same network and interacting with each other, device manufacturers and content owners can analyse behaviours and gather data that will improve the consumer’s experience.  This data can also be extended to the advertising experience.  Data is commonplace in the internet world and has improved targeting and relevancy for many years.  Today, many Connected TV platforms have limitations in their ability to gather or leverage data, but other devices in the house can be used to determine what people are doing on their TVs.  Device manufacturers are waking up to the importance of data and looking at how they can capture information that can help their content partners, their advertisers and themselves in building better platforms for the future.

4. More advertisers will embrace CTV

In 2012 we saw significant growth in CTV traffic across our content partners, as well as strong interest from advertisers.  In some markets, agencies are already appointing dedicated specialists for Connected TV.  The global TV advertising industry is worth $188.5 billion in 2012 and when a user is on a Connected TV they are not watching linear TV.  It is, however, the same device in the same household and for the first time television offers real interactivity.

Advertisers can build TV optimised microsites with the same analytics they have on the web and can drive users to these sites from their ad campaigns across Connected TV. Our research study found that people are using the multitudes of devices available to them. We are seeing that the usage gets much more intertwined: surfing the web, video on demand, gaming, music, news, information services, and social are not any more limited to a certain device – we can do everything everywhere. Advertisers are beginning to realise the opportunity this presents, to meet their consumers in this multi-device and multi-channel world, meaning wherever they are accessing whatever kind of content. Advertisers should not care about the kind of screen, but focus more on how to reach their target group.

5. The is where the really fun stuff starts to begin

2013 will see more innovation around 3D, augmented reality, voice, gesture, and kinetics in general.  This is still early and has a strong novelty factor associated to it, but we are beginning to see the window to the future of a truly advanced TV experience.  Content producers and advertisers are already exploring options to take advantage of these technologies.  At Smartclip, advertisers want to know how they can build an experience that will allow consumers to truly engage and interact with their brand in a way that goes beyond standard interactivity, such as click through.  They want the future now.

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