Connected TV advertising poised for big growth
Michelle Clancy
| 19 May 2014
When it comes to a thirst for buying connected TV advertising, including on programming streamed through over-the-top (OTT) set-top boxes, gaming consoles and the like, media buyers and planners are showing significant interest.

New research from Mixpo has revealed that 75% of them believe that connected TV deserves consideration in media plans either right now or within the next 12 months.

In fact, 97% of respondents believe that they should be considering connected TV buys in the near future, and more than 51% said they should do so within the next year.

About one-fifth (18%) of the respondents said that they actually purchase connected TV inventory today, a relatively high number given the emergent state of the connected TV ad ecosystem. And those who do purchase inventory generally acquire it from networks like Yume and TubeMogul, or directly from content providers, especially Hulu.

However, obstacles remain. The survey respondents who don't currently buy connected TV inventory, 65% said they "weren't sure how to go about purchasing," indicating that the education gap is actually bigger than the inventory gap.

"While market growth seems virtually assured, there are several hurdles that the industry needs to get over before video advertising on connected TV can hit scale," said Walter Harp, vice president of product marketing at Mixpo.

The adoption of connected TV devices is growing: according to recent research by The Diffusion Group, the number of broadband households with at least one connected OTT device in the home reached 63% as of January 2014, up 19% from January of 2013 when there was 53% penetration. Those homes with connected devices own 1.6 of them on average. And according to NPD, "over 200 million connected TVs and attached content devices are expected in US homes by 2015."

However, fragmentation is the main issue. Connected TV ecosystems donąt have strong standards like online video, and existing IAB standards for online video do not perform as-is for the connected TV ecosystem. Connected TV devices have diverse technical capabilities which make it harder to compare campaign performance across all devices. Thus in most cases then, opportunities to buy and run creative on the available inventory are highly fragmented.

Another issue is limited analytics. Connected TV falls somewhere between online video and linear TV, which makes it hard to get consistent data on performance across the ecosystem of platforms.

Even so, "we believe video advertising on connected TV will happen, the channel will evolve — quickly — and the sale and purchase of connected TV inventory will fully blossom," said Harp. "All that remains is for the industry and the infrastructure to catch up to the market opportunity, and all evidence suggests that will start to happen sooner than later