Connected TV: Signals to Watch for Your Enterprise

In a 1936 advertisement, RCA introduced television broadcasting to New York City, extolling the virtues of its untapped potential. Just as it was then, every new advance in how we communicate inevitably brings visions of a "technological utopia."

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TV grew faster than any technology in U.S. history, from 2% in 1947 to 95% in 1969, yet remained a one-way medium. Eventually, PCs and the Internet became the new utopian platform, supporting new methods of commerce, new sources of news, and so on. This new, two-way media would provide an interactive experience with which TV could not possibly compete and that would surely be its replacement.

But even with a slight decline due to computers, TV sales have remained strong among all generations. Nielsen's 2015 Generational Lifestyle Survey reported that television remains the top source of news for adults over age 21. The definition of "news" for a 21 year old may be a comedy program, but the preferred medium is still the big screen.

Media analyst firm eContent has reported a milestone reached in early May 2015, one that "signals a change in how consumers prefer to access their favorite content." Among Comcast customers, the number of Internet subscribers surpassed cable TV subscribers for the first time, eContent reported. "Granted, the majority of that bandwidth is not being used to post to Facebook or shop on Amazon. It's predominantly the pipeline for streaming video," the report noted. Most viewers who made this switch are not yet aware that they did not simply switch to a more convenient "on-demand" platform. They are now engaged in two-way communication with their TV programming.

The Birth of the Second Screen
IP is a two-way communication stream. At a minimum, a streaming video service knows that "someone" at IP address 56.78.89.234 requested a program, switched to a different program, and then went back to the original one for several hours. It can tell if the viewer skipped an ad after the mandatory five seconds or stayed engaged for the whole thing -- information more valuable to advertisers than forcing a 30-second ad on an uninterested viewer.

Connected TVs have changed viewing habits. In its most recent Digital Democracy Survey, Deloitte Consulting learned that 83% of viewers with a streaming subscription engaged in "binge viewing" of programming. Content producers for streaming services have responded by releasing entire seasons of programs at once, rather than week by week, but the new viewing habits they most want to leverage are not happening on the TV screen.

What content producers really need to know is what's happening on the other devices that about 60% of viewers watch simultaneously. If that device is a smartphone or tablet and a method is developed to match up the viewer of both devices, advertisers and content providers will have an unprecedented level of information about viewer preferences. Nielsen, the company that has been analyzing audience activity since 1930's radio, now reports extensively on second-screen viewing.

"The second, third and sometimes fourth screen is becoming a fundamental extension of the viewing experience," said Megan Clarken, executive vice president of Nielsen Global Watch Product Leadership, in a Nielsen Insights report. "While multiple screens give viewers more options, they also give content providers and advertisers more opportunities and ways to reach and engage with viewers. Well-designed experiences can not only make the viewing experience more enjoyable, but they maximize the time users spend interacting with brands, too."

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Roku, the most popular stand-alone streaming device on the market, includes a "channel" for watching YouTube videos. The experience is cumbersome when just using the Roku controller, but YouTube encourages a viewer to use his or her device-pairing option to connect a smartphone, tablet, or PC. With a paired device, the viewer has more control, including the ability to "cast" a video playlist to the TV. Once paired, YouTube can identify the second screen in use at the same time as the TV -- and the content provider no longer needs to wait for one out of many viewers to post a comment to a fan site to measure the level of engagement. If the device is personal, the content provider knows exactly who is watching the TV.

Matching users to their content is an important industry goal, as we'll see during CES, which is opening today in Las Vegas. CES will once again feature the C Space Storytellers conference track, dedicated not to hardware and gadgets, but exclusively to digital content. CES's Chief Digital Officer Global Forum, or CDX, focuses on how digital platforms and technologies are transforming consumer engagement, marketing communications, and the enterprise. The list of participants, which includes representatives from a mix of major consumer brands, content providers and marketers, makes it clear that this is far from a niche topic.

Click to the next page and read about customized advertising, TV commerce, and next steps for the enterprise

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Customizing Advertising
Sponsors do not want to waste money on ads that don't interest you. Goodbye to employment attorney ads on daytime TV (unless you really are sitting at home, injured and contemplating a lawsuit). Farewell to job training ads that assume since you are watching "that program" you'd benefit from additional education. TV finally knows who you are, that you still have a job, and that you'd rather see ads about an appliance sale two miles from your house.

The current results of these efforts are far from this ideal, and leave good reasons to stay a little skeptical. Most enterprises today do not do a very good job of managing data. Advertisers have used online advertising to a single screen (home PCs) for two decades, casting the widest net with spam ads of home loans and herbal supplements. We now see less spam, due more to restrictions by recipients than refinements by senders. Targeted advertising still has a long journey before it reaches a point where it is usually relevant.

For example, Amazon is a leader in using data analytics, but despite knowing my purchase history, it still sends me ads for items I do not want. These include items that I have already purchased from Amazon; these are not items like a shave cream or pair of socks that someone might reasonably buy again but rather include probable one-time purchases such as watches and DVD box sets. Even to a known customer with a single device, big data leaders such as Google, Amazon, and others are still trying to get it right. So we have to ask, will complicating this problem by analyzing multiple devices create more accuracy, or less?

TV Commerce
Skepticism aside, content providers and advertisers are motivated to make it work. "Media executives allege that as fragmentation of audiences exacerbates competition for advertising investment, content providers face growing pressure to prove conversion of viewers to customers rather than to show mere ratings. Advertisers want more than the opportunity to reach consumers; they want the tools to close transactions," wrote Lee McGuigan, a doctoral student at the Annenberg School for Communication in a case study for the Television and New Media Journal.

TV commerce, or t-commerce, is a term denoting interactive TV marketing and shopping applications that let viewers click to buy -- even the clothes worn by their favorite TV characters -- via their remote controllers. McGuigan predicts that t-commerce will be "the most invasive iteration of television's marketing capabilities."

In one sense, click to buy already exists on streaming TV, with viewers directly adding movies and subscriptions to their accounts with the remote control. American Express, for example, offers a lifestyle channel with the goal of influencing viewers to become card members. In a Bank Innovation article, American Express stated that viewers are 50% more likely to take an "Amex action," meaning that they will choose to engage with the brand as a result of watching the channel.

Beyond that, most attempts to extend commerce over streaming devices have produced mediocre experiences. Producers of "MoveTube" bill this real-estate channel as "the world's only interactive property search channel built exclusively for televisions." MoveTube allows you to click to locate a realtor, but the viewing experience is less interactive than browsing real estate listings on a tablet or PC. Just like the new TV device in the appliance store window, beyond novelty MoveTube offers nothing compelling to retain the viewer's interest.

As tempting as it may be to write off the impact of streaming TV as a sales/customer service channel, consider a similar pattern in the history of the Web. For consumers, the Web began as a platform for viewing content. Security limitations inhibited two-way purchases. With 1995 came Amazon and eBay as well as HTTP Secure, or HTTPS, making e-commerce more secure and into a thriving market outlet by the end of the decade.

Online customer care had a rocky start around 1998, with early fumbles leaving the same negative perspective as bad phone menus did in the early 1990s. Still, online customer care found its way, making the Web a viable channel for both sales and support.

Connected TV does not have the same technology barriers as the Web did. The primary barrier to connected TV as a sales/support channel is social acceptance, which will change. Most viewers have little concern making TV-enabled purchases from pre-established accounts. Even in one-way media, product placement has always had a significant impact on sales.

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After the 2004 movie Sideways, California's Santa Ynez Valley saw a boost in tourism and The Hitching Post," a restaurant that appeared in the movie, still markets to fans 10 years later after business increased by 30%. In the early days of Sarah Palin's 2008 vice-presidential nomination, optometrists saw a surge in orders for the type of Kazuo Kawasaki frames she wore. What better way to optimize fleeting opportunities such as these than an immediate purchase option?

Two-way customer support is already possible. Most likely, it will start with support for the application itself, then after a level of social acceptance, will find its way into unrelated products. Two-way customer support interaction is already making its way to smart devices. As an example, look at HealthTap, where users can ask questions of or video chat with doctors for $99 per month. Connected TV technology is ready, with built-in voice command, camera, and gesture options.

Next Steps for the Enterprise
A large percentage of contact centers are still adapting to established multi-channel customer sales and support. They probably face no need for immediate reactions to this potential new sales/service channel. Data analytics are still immature. Companies with big-data initiatives may hire data scientists and consultants to help manage the information, but as with all IT, the further an expert is from the line of business, the harder it is for that expert to leverage his or her expertise for business success.

Even with early insights from companies such as Nielsen, advertisers still pivot toward traditional channels, rather than interactive ads on connected TV. We will likely see a few more years of clumsy launches, occasional success stories, and growing social acceptance before connected TV is a viable channel. If your enterprise wants to be on the edge instead of waiting, look for trends specific to your industry that might trigger social acceptance of a connected TV application. Then look for unique opportunities to provide services that differentiate your brand or sales opportunities that exploit the immediacy of connected TV.