More than half of connected TV consumers use the apps on their set to view free, online videos and browse the web, a survey by electronics maker and video ad tech firm YuMe finds. To a lesser degree, these consumers -- half of them, to be precise -- are using their so-called smart TV apps to view paid, subscription based programming on sites like Netflix. And that is where companies like YuMe, who have been banking on the convergence of IP-delivered video to the TV, are counting on advertisers and agencies to get the message.
In the study of smart TV viewing and advertising patterns (free download on this page), Nielsen, which conducted the survey with a panel of 500 consumers in June, said that full-package ads, more than pre-rolls or banners, were most likely to register positively with viewers.
That's particularly important for companies like YuMe, which has tended to eschew the varied pricing models associated programmatic methods in favor of traditional CPM-based campaigns. YuMe's argument essentially boils down to the idea that major brand advertisers don't want a multiplicity of ad models. They want apples-to-apples comparisons across screens. The promise of smart TVs, which saw roughly 12.7 million units shipped in the first quarter of this year, according to the YuMe report, is that complete blurring of the lines between video screens.
About 70% of the survey's participants say that they "have engaged or would consider engaging" with a smart TV ad because it advertises products/brands they are interested in. The assumption, widely held is that in-banners and pre-rolls are not as compelling. In other words, while consumers generally don't have much praise for such ad formats on their PCs or portable devices, bigger is not necessarily better when they migrated to the TV screen.
The report also had some interesting things to say about the kinds of categories that are most favored for smart TV ads. Not surprisingly, entertainment, which the chief reason people watch TV in the first place, is also the number one reason that brings viewers to smart TV apps. Weather and news are the following top categories. The meaning here is clear for cable TV operators -- most of which also supply the internet connection to people's households -- smart TV is another way of viewing cable-like programming. But instead of using the DVR, consumers with smart TVs may be more inclined to rely on apps.
That's probably why the least favored smart TV viewing category is sports, which are still the one of the main reasons given for why people are unlikely to cut the cable cord. Despite all the battles between cable TV operators and networks, sports channels like ESPN remain in tightly locked agreements with MSOs. So even though ESPN has a popular app on "over-the-top" streaming systems like Apple TV, the apps are only available to subscribers.
Nevertheless, there are still a lot of areas of content for publishers and advertisers to explore via smart TVs. One of the viewing aspects that should be attractive to both buyers and sellers is the cross-channel marketing capabilities. The report notes that 47% of smart TV viewers watch programming on other devices, which compares to 28% of traditional TV viewers. Way down on the list are those who self-identify as smartphone and Sony PlayStation console users -- those consumers don't appear to leave their walled gardens, as only 10% each for each of those categories say they view content elsewhere.
In a sense, despite YuMe's aversion to programmatic buying channels, the ease of automation may actually make smart TV advertising more valuable. But given the findings, if YuMe doesn't want to provide the pipes, there are a line of both emerging and established companies -- ones like TubeMogul, Tremor, BightRoll, Videology and Adap.tv to name a few -- that are increasingly trying to figure out how to make it work.