The Revolution Is Television: Observations On The Emerging Connected TV Landscape

Rhys McLachlan is Head of Corporate & Business Development (UK) Videology Group/TidalTV. Here he discusses the emergence of connected TV and its likely implications for the online advertising space.

The annual nerd-fest migration to Las Vegas in early January to attend the Consumer Electronic show was dominated by the final emergence of the connected TV set as the mass consumer item of 2012.
Having bubbled under for the last few years, this was finally the year where there was a very clear and apparent collective agreement from the electronic manufacturing industry that the future of our video consumption was the screen and device that has dominated the living room for the past 50 years. But now these sets have been embellished with some real bells & whistles that make these devices consumer must-haves. The proliferation of sets, from all manufacturers, under various ‘smart/connected/net’ monikers, in every dimension, every colour scheme and every resolution, left attendees to the show with no doubt as to what will dominate the shelves of the key electronic goods vendors as we head into the key autumnal TV buying retail period.
For the UK, the penetration of these devices, currently estimated to be at around 6% of UK homes, is set to sky rocket, with conservative estimates forecasting 36% domestic primary-set penetration for 2014.
In the face of this considerable distribution lies the first challenge to those with a vested interest in the development of a healthy and commercially viable connected TV ecology, that of connectivity. Whilst for most readers of this esteemed portal it may seem neigh on heretical to purchase a connected TV and not connect it, the reality is that an aggregation of analysis into current connectivity rates nets out at 60%, meaning that 40% of sets are currently no smarter than yesteryears bog-standard HD set, further, by 2014 the rate of connectivity is forecast to grow to 80%, a significant increase, but still some way adrift of providing the market with a meaningful majority of households within which to enable connected TV commercial solutions. As such, we need to see a co-ordinated, collaborative and cohesive education programme from all the set manufacturers, a programme that preaches the consumer benefit, in control, choice, content and personalisation.
As these set manufacturers huddle together to work out how to best promote consumer enablement, the media and advertising market can avail of a number of ‘stealth’ connected TV opportunities via devices that already have significant and sizable UK household penetration. Some 75% of UK households are already connected-TV-enabled via their existing pay TV provider (Sky Anytime+, V+, BTVision) or via an IP-enabled gaming console such as Xbox 360.
These ‘through-the-middle’ or ‘over-the-top’ connected TV routes are not only already well-established in the nation’s living rooms, they offer formative commercial opportunities for advertising from well-known and trusted media partners, and as such they present a ‘Trojan horse’ route into the development and deployment of connected TV solutions that for most marketers could be considered risk-free. The only note of caution around the activation of these solutions is that they are ‘connected-TV lite’, in that data, targeting, 3rd-party accessibility, and interactivity are, at best, rudimentary and in the activation of these solutions we may find some clients underwhelmed in campaign execution and campaign results.
As the UK Market develops, and media planners and buyers increasingly consider Connected TV environments as part of the media mix, there is a further, and substantial, challenge to significant growth, and this is the metric challenge.
Connected TV is the bastard hybrid of television (the most established and rigorously measured channel in the media cannon) and digital (the most data and ROI laden media channel gifted to the marketing community). The question that we need to collectively address is one of what do we measure in this environment, and how do we measure what we need to measure.
Established TV reach and frequency metrics, as measured by BARB, would be disingenuous and fail to appreciate the complexity and richness of the connected TV world. Nor would it be appropriate to assess connected TV in the digital world of clicks and response rates. Early commercial forays into the world of connected TV may have little option but to adhere themselves to these known measurement entities. However, in doing so they may find that their ‘success’ is poorly defined and assessed and only serves to enable the procurement and media auditing community to commoditise the assessment of connected TV in the same manner in which they assess and evaluate the more established media channels.
There is no hard and fast solution, somewhere between BARB and ComScore lies a magic metric which collectively we can agree is an appropriate solution, fit for purpose for both commercial and channel requirements. Or, alternatively, there may be no consensus, that the emergence of connected TV as a robust and effective media channel is determined by individual client needs, that there is no need to seek a universal set of metrics, that this channel can be validated by the outcomes and outputs as defined on a campaign by campaign basis and in doing so we can, as an industry, finally, start to move media planning and buying beyond the analogue assessment which currently dictates what ‘good’ looks like.
Even with these notes of caution, there is an emerging set of statistics and analyses that clearly reveal a growing pattern of device sales, and subsequent consumption, of the connected TV smorgasbord by viewers in the UK. In Quarter 1 2012, Videology served out 6% UK impressions to the living-room big screen, either directly to the set via the enabled television, or via an intermediary device such a an Xbox or Roku box. For the same period 2011 the figure was zero.
Our US colleagues are engaging in a connected TV market that we believe points the way to healthy and rapid growth for the UK market. In North America, Videology served out 5X the amount of impressions to connected TV in Q1 2012 vs. the same period 2011. Furthermore, for the month of May in isolation, the number of connected TV campaigns that Videology is managing is up 15X vs. May 2011. In light of these statistics, we can, with confidence, declare that the television revolution is upon us, and that this revolution is connected.