For more than a century, the humble telephone was a cool yet simple device enabling one person to communicate with another. Then something happened. The phone got smart and became an indispensable tool of modern life, serving an infinite number of purposes.
Now it’s television’s turn to get smart. By connecting to the Internet and intelligently managing multiple content sources, Smart TV is about to dramatically alter the living room experience and fundamentally change the dynamics of in-home television viewing – for both consumers and advertisers.
Connected TV platforms (including both Smart TVs and connected Blu-ray players) are having a profound impact on the way consumers perceive and interact with video content. Even more importantly, they are offering brands a better way to connect with those consumers through innovative TV ad campaign strategies.
How do I know all this? Because Rovi Corporation, in conjunction with leading market research firm Parks Associates, just released a groundbreaking new research study that delves into multiple aspects of the connected TV market.
Global Households Tune Into Smart TVs
Just how quickly are Smart TVs catching on? Parks Associates has followed the worldwide market for smart TVs for many years and tracked a dramatic increase in device adoption and usage. From 2012 to 2013, North American and Western European smart TV households will increase by 39 percent and 40 percent, respectively. Latin American smart TV households will swell by 199 percent in the same forecast period.
By this time next year, Smart TVs will have entered the mainstream. Parks Associates estimates that 38 percent of all TV households in North America will own a smart TV set by 2013. The same holds true for Western Europe, where smart TVs will be present in 32 percent of all TV homes. Asia-Pacific remains slightly behind the curve with smart TV ownership levels growing from 6 percent of all TV households in 2013 to 16 percent by 2016.
Now that connected TVs are clearly on the rise, we wanted to understand how this new platform was impacting both viewers and advertisers globally. The point of the study was not only to get a handle on the number of smart TV households across the globe, but to really dig deep into the content and ad engagement levels of viewers and to explore the role of Internet-enabled search and discovery functions in TV advertising campaigns.
The first question we really wanted answered was: who are these connected TV owners around the world and why are they so important to advertisers? Turns out, they are one of the most affluent, influential, and well-educated audience segments in the world. In other words, they are every advertiser’s dream.
In the U.S., for example, 55 percent of connected TV households earn at least $75,000 annually, and nearly 70 percent of connected TV owners have a college degree. What’s more, they love their technology. Each household owns 11 Internet-enabled devices, on average. The story is similar in the U.K., where connected TV owners are young and successful. Nearly 40 percent are upper-middle class and over 70 percent closely follow the latest developments in new technology. These consumers are seven times more likely to own a tablet than the average U.K. consumer.
A Better TV Experience
Connected TV users are also highly engaged. They watch more programming because of the convenience and flexibility enabled by connected TVs. In fact, 72 percent of connected TV owners in the U.S. said that the connected platform makes watching TV more convenient, and 65 percent said the technology makes the TV experience more enjoyable, according to the study.
What makes connected TV such a superior experience? In particular, users report that the search and discovery capabilities inherent in the connected TV platform greatly enhance their traditional TV viewing. For instance, connected TV platforms provide recommendations for the discovery of new TV shows. They also enable users to more easily search for existing shows and connect to other viewers online. Some 49 percent of connected TV viewers said they depend on the platform when they are unsure what to watch, and 43 percent use it when looking for a specific program but don’t know where to find it.
Ads Make an Impact
Connected viewers are not only more engaged with TV shows, but also with advertisements. They are exceptionally receptive to ads, according to our study. Viewers notice and remember ads shown on the connected platform, and they often perceive ad content as valuable extensions of the video-viewing experience.
In particular, these viewers report they are most receptive to advertising while searching for programs, and that interactive program guides are a great place to reach them. One of the biggest advantages of interactive program guides in general is that viewers are able to click on ads within the guide to get more information about the product, service, program, or movie being advertised.
This high level of ad receptivity presents a whole new world of opportunity to brand advertisers. The connected experience enables consumers to truly interact with brands and spend more time in immersive experiences. In the U.S., for instance, 81 percent of connected TV users notice the presence of ads and one-third of them respond to the ads. An equal number, 81 percent, consider ads to be valuable sources of brand information.
The study also found that when viewers are in search and discovery mode, the right ad delivered to the right person becomes compelling content. Fully 73 percent of connected TV households said they would click on ads if they were interested in what’s advertised. And 64 percent said they like being able to get more information and watch videos if what’s advertised is relevant to them.
The television landscape is undergoing a tectonic shift as viewers shift from traditional TVs to connected platforms. In industry parlance, connected TVs have entered prime time, while traditional TVs are stuck in reruns. Brand advertisers that proactively develop strategies leveraging the emerging connected platforms will discover immense opportunities to engage with viewers and immerse them in a one-of-a-kind brand experience.
The full white paper, entitled “Connected TV Environments: The Next Iteration of TV Advertising,” is available for download at: http://www.roviadnetwork.com/resources.html