How connected TV will transform advertising

TV advertising commands the majority of ad spend, yet it faces increasing competition from highly targeted and interactive ads on the Internet and mobiles.

But as connected TV takes off (shipments are expected to exceed 138 million by 2015), TV advertising could be transformed. 

So far, connected TV has failed to attract significant advertising revenue, in part due to the fact that reach is low, and  because it is currently difficult to measure content consumption. But with BARB’s announcement that they are going to start measuring TV viewing on the web, tablets, and laptops, this is a problem that will probably be solved this year. As a result, connected TV advertising could take off this year.

However, connected TVs have a lot more power than the standard TV set; don’t expect advertising to look the same as the traditional 30 second spot.

What will connected TV advertising look like?

1.       Online Video

Connected TV places the world of online video on the TV screen.

Online video offers a new platform for a new form of advertising. In May 2011, Hulu's OTT service generated the highest number of video ad impressions, 1.3 billion, out of the total of 4.6 billion video ads viewed by Americans. Additionally, online video viewers actually have a much better recall of advertising; 53% of consumers find online video ads less annoying than during live TV – indicating real potential for growth.

2.       Second screen

70% of tablet owners and 68% of smartphone owners use their devices while watching television. But the tablet isn’t a threat to TV – instead it offers a new channel for targeted, personalised advertising.

According to recent research by Yahoo!, two in five consumers say they are interested in content relevant to the commercials they see. Since many connected TV’s are being built with the ability to interface with the second screen, advertisers will have the ability to easily know what is playing on the TV, and offer related content.

3.       Interactivity

Connected TV brings this interactive advertising much closer to reality, with TV apps, and the ability to add services like Fling to the hardware. Yahoo! is pioneering broadcast interactivity on their connected TV sets that automatically detects what a viewer is watching, enabling publishers and advertisers to deliver content and commercials tailored to that viewer’s interests.

With broadcast interactivity, TV programmers can engage and retain viewers in a whole new way. They will be able to create TV apps that let viewers vote for a reality TV participant, get more information about characters, play related games and videos, or make e-commerce purchases while watching a show. 

With $6.50 of every $10 of advertising budgets spent on television, it's clear that TV remains the most important and cost-effective advertising channel for companies looking to reach massive audiences. But as connected TV reaches the mainstream, expect to see TV advertising transformed.

The real power of connected TV lies in its ability to fit into the transmedia ecosystem, allowing TV advertising to evolve along with the fast-paced world of technology. 

Emma blogs for TV Genius over at the TV Trends Blog. TV Genius is a software company that has specialised in TV content discovery, recommendations, search, and interactive TV guides since 2005.

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