How Smart TV Advertising Will Change the Way You Watch Television

Posted by | February 3, 2012

Credit: CBS Interactive

All advertisers have the TV in mind when it comes to connecting with consumers, and not just through your typical Super Bowl advertisement. Television will one day become a center for engagement and interactivity, for which we’ll have Smart TV to thank.

One of the big stories out of this year’s Consumer Electronics Show (apart from PixelOptics’ electronic focusing eyewear, emPower!) was Smart TV—a concept that’s been around since 2008, but is just starting to catch on. These TVs are Internet-connected devices that integrate social media, smart search, apps,  Internet content streams (like Netflix or Hulu+), and other content to offer a more interactive experience for users, one that will ultimately change the way people consume content like TV shows.

Large TV manufacturers are now deploying their own Smart TV platforms, and advertisers are scrambling to have their apps featured on the platforms’ coveted launch page. The industry projects millions of these TVs will be in homes by the end of the year, with sustained growth expected.

While this is an exciting space for consumers, it’s also of particular interest to Safeguard Scientifics’ partner company, MediaMath, which is paying attention to the advertising opportunities that this new technology offers.

According to Marta Martinez, Chief Marketing Officer at MediaMath, all the major advertisers are already interested in this space. Some electronics companies, like Samsung, have already jumped in. Samsung’s AdHub offers 3-D and interactive advertisements that take advantage of Smart TV’s potential.

Apart from these new ad formats, Smart TVs will help advertisers gather more information about viewers. Up until now, advertisers have gathered data from surveys and Nielsen ratings, which offer only a broad portrait of their audience—for example, the type of person most likely watching the NFL playoffs or tuning into Sunday morning news shows. With motion sensing and social interactivity, Smart TV will offer much more detailed information: how much time you spend consuming different content, your engagement level, and how you interact with the TV.

As a result, they can deliver custom ads to you based on this data. Smart TV technology is at the center of what advertising is about—a deep audience understanding that allows companies to meet consumers where they are and enhance a brand relationship. With this interactivity as the crux of the new system, the way we watch TV will fundamentally change.

Of course many of these personalization strategies have already been implemented in Internet advertising through algorithms like MediaMath’s TerminalOne™ platform. This split between the established algorithms and the potential of the new medium could lead content in one of two directions:

  1. The Internet could run cable and satellite providers out of business. We’ve already seen TV content gravitate online through sites like YouTube and Hulu. All the major networks already upload their shows to their websites. With many of the metrics already in place for online advertising, content may follow consumers, who increasingly watch content online. Products like Google TV would thrive as content is streamed straight from online content services to a TV, bypassing the traditional cable, satellite, and broadcast systems.
  2. Interactivity could save cable and satellite providers. Despite the trend toward the Internet, if Smart TVs can offer a viable, or flat-out better, alternative to the Internet through interactivity, cable and satellite companies could thrive. With smart cable boxes, manufacturers could keep more consumers in front of their TVs by offering the same level of interactivity and personalized content as the Internet.

As these two approaches push in different directions, Marta and MediaMath are keeping a close eye on them, testing each to see which consumers prefer. At this point the only question remaining is how fast these changes are coming. Based on the way consumers have become increasingly eager to adopt new technology that keeps them connected, MediaMath suspects we will know sooner than we might think.

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