Connected TV growth means a sea change for TV advertising

Michelle Clancy | 09-11-2012

The number of North American households with a smart TV will reach 87 million by 2016, according to new research from Parks Associates. That will have major ramifications on how viewers think of and interact with advertising, the firm said.

"Connected TV systems have the ability to change viewer perceptions of advertising," said Heather Way, senior research analyst, Parks Associates, who conducted the report in conjunction with TV metadata provider Rovi Corp. "These systems enable advertising to be integrated into device navigation and content search, engaging consumers at a point of high receptivity and enabling them to immerse themselves in a rich brand experience. As a result, over 50% of U.S. connected-TV households surveyed by Rovi consider these ads as content, containing useful and valuable information, and they are much more likely to remember and click on these ads."
When it comes to demographics—an advertiser's main concern—connected TV owners tend on be on the affluent side of the scale. More than half (55%) of connected-TV households earn at least $75,000 annually and own 11 Internet-enabled devices on average. Even better for interested brands and service providers, 58% of Rovi-served connected TV households indicate that advertising in the connected platform is an effective medium to communicate with viewers in the household.
"Consumers are more receptive to advertising that takes this brand-infused approach," said Jeff Siegel, senior vice president of Worldwide Advertising at Rovi. "Advertising on connected TVs that provides more immersive brand experiences has a positive impact on consumers. Over 80% of our connected-TV households state they consider these advanced campaigns to be valuable sources of brand information."
72% of those owners say the connected platform makes watching TV more convenient, and 65% said the technology makes the TV experience more enjoyable. Interestingly, 49% of connected-TV viewers depend on the platform when they are unsure what to watch—suggesting an opening for recommendation engines and social media to play a consumer engagement role.
Connected-TV households in the whitepaper are defined as households with either a smart TV or Blu-ray player connected to the Internet—concerning the latter, Parks Associates research forecasts more than 70 million Blu-ray players, the vast majority Internet-connectable, will be sold worldwide in 2016. With that kind of scale, the role of interactive advertising, new programme guides and opportunities to promote premium services such as video-on-demand.