As Smart TVs Reach Mainstream, Can They Finally Fix Advertising?

by Ben Plomion | Startups

It’s taken longer than some expected, but smart TVs' moment may finally be arriving.

Industry research from Parks Associates reports that 25% of American homes will have smart televisions this year. Meanwhile, smart TVs are getting better and better. Samsung’s newest model comes packed with features that would hardly have seemed possible five years ago. You can ask the TV for recommendations just by talking to it and even have it automatically record the shows it thinks you’ll like.

But if more people are now buying smart TV’s, that doesn’t necessarily mean they’re taking advantage of everything their TVs can do. Indeed, as Antone Gonsalves recently noted on Readwrite, more than 40% of US households with Internet-enabled TVs haven't connected their sets to the Internet. And even those who do hook up their smart TVs often fail to take advantage of all the social, media, and shopping features that were supposed to make smart TVs such a huge breakthrough.

For now, it seems, most people with smart TVs want them to do the same thing their dumb-TVs do: provide great video content.

Why hasn’t the smart TV caught on in the way that many predicted?  Part of the answer clearly lies in the poor user experience that made the first generation of smart TVs such a hassle to set up and use. For many, it was just  easier to access Internet content on their TVs via third-party devices, such as Apple TV, Roku, Boxee and gaming systems like the XBox 360 and PS3.

But the biggest obstacle for smart TVs, at least in their initial incaration, turned out to be “the second screen,” that tablet or phone people like to glance at while watching something on a TV screen. Simply put, there isn’t much need to have all of your social or reading apps on your TV screen when they’re easier to manipulate on the device in your hand. Service providers and TV manufacturers are starting to accept this reality, turning their focus away from the TV itself to mobile apps that can supplement your TV screen, showing what friends are watching, and providing additional info on shows.

The ad tech industry, of course, has been following the smart TV’s progress with rapt attention. And while some are still holding out hope for all the promise of a fully-interactive TV screen, there’s no reason for advertisers to be disappointed by the emergence of the second screen.

On the contrary, the new mobile apps that connect our TVs to our phones and tablets offer an intriguing opportunity for advertisers to target TV ads based on the things people do on their mobile devices. To take a simple example, someone who spends hours a day reading basketball articles on ESPN on his tablet could be targeted with sports commercials while watching TV, even if he's not watching sports at the moment. 

The larger point is that with the emergence of real-time bidding and retargeting, online advertisers have become remarkably effective at serving ads to users based on their online habits. And with a single mobile device used both for everyday life and for control of the TV, there’s no reason all this behavioral data can’t be put to work for more effective ad-targeting on TV.

For that matter, there’s no reason why streaming video services such as Hulu can't be serving better-targeted video ads right now. The benefits are clear enough. There's a ton of waste on Hulu right now (and across TV in general). And Hulu already has a  relationship with customers across multiple screens. Better yet, many of their customers are logged-in, which allows Hulu to pinpoint valuable information and serve even better ads.

Why, after all, should I continue to see up to five Geico ads for every hour I watch Hulu, especially since I'm already a Geico customer and log into Geico on my laptop and iPhone regularly? The data is sitting there and Hulu should be using it. Because no matter what screen you're looking at, the days of showing ads to the wrong people should, finally, and mercifully, be over.

Toronto, Ontario, Canada

Chango is a real-time marketing technology company with an advanced platform and full-service solutions for brands & agencies. We have a team of seasoned technology and media entrepreneurs who worked hard building technology to be able to deliver the kinds of results that we see. more

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Ben Plomion

Ben Plomion

Ben is VP of Marketing & Partnerships at Chango, where he heads up marketing and is also responsible for expanding the company’s data and media partnerships. Prior to joining Chango, Ben worked with GE Capital for four years to establish and lead the digital media practice. This led to the development of GE Capital’s digital value proposition and its execution worldwide. The new venture... more

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