Latest trends in connected TV advertising

Internet-enabled TVs are already one of best ways to reach consumers, and new developments indicate the medium will likely provide companies with even more benefits over the coming months.

Posted on Nov 2, 2012 by YuMe

Internet-enabled television sets are already poised to become one of the most effective ways to reach consumers with internet video ads – An August YuMe study found that about 30 percent of all households with an internet connection have connected TV, and close to 90 percent of connected TV users pay attention to ads seen on the platform – and new developments indicate that the medium will likely provide companies with more benefits over the coming months.

"[C]onnected TV represents a tremendous advertising opportunity for brands looking to generate consumer awareness and meaningful interactions," Ed Haslam, YuMe's senior vice president of marketing, said in a statement.

Expected growth in over-the-top connected TV devices: A new report from Global Information predicts next generation television sets like smart TVs are set to become even more popular worldwide over the next five years. This year, services such as connected TV are expected to be worth more than $9 billion globally. By 2017, global video revenues from online television are expected to be worth more than $28.7 billion. Five years from now, it is estimated that more than 64 percent of of the 745 million fixed broadband households across the globe will watch online content, representing a massive new market for video advertisers.

Over the top (OTT) devices represent one of the biggest drivers of the expected growth in the connective television market. In particular, the November report estimated that internet video advertising would account for 51 percent of total OTT revenues by 2017.

To reach connected TV viewers, use a two-screen approach: According to a recently released report by Flurry Analytics, the key to generating greater consumer interest with connected television may be through a multi-pronged approach. Mobile device usage and ownership is up among all age ranges and both genders, indicating that this is a growing marketplace that brands cannot afford to ignore. In particular, Flurry noted that tablet usage spikes during primetime viewing hours, indicating that the devices are often used in conjunction with TV viewing.

"As we imagine a world of connected TV, tablet usage gives us the best current-day hint of that world to come," Peter Farago wrote in an October 29 blog post. He added that "this would indicate that as Apple and Google enter the living room with connected TV initiatives, game consoles made by Sony, Microsoft and Nintendo would experience the greatest competition.  The distribution of content into the living room may also significantly change for network and cable television content providers."

In the future, will all video content be streaming?: According to one industry insider, connected TV represents the new way many consumers will get video content within 10 to 15 years. Steve Shannon, Roku's general manager and senior vice president of content and services, said in a keynote address at this year's Streaming Media West conference in Los Angeles that OTT devices will lead the growth in the connected TV marketplace in part because of their cost. Currently, gaming consoles are the most popular devices for connecting a TV set to the internet, but their higher price point means that they will not be driving growth, Streamingmedia.com reported. While gaming consoles typically cost hundreds of dollars, consumers can often get OTT devices for around $50.

According to the online news source, 47 million people are expected to have watched content via OTT devices by the end of 2012, and there are approximately 325 million connection devices in the United States. Thanks to an expected yearly growth rate of 80 percent, the number of OTT devices is expected to increase to 538 million by 2016.

In part to address this expected growth, Shannon said that Roku is developing a better streaming ad model to make audience engagement easier for video advertisers.