Advertisers have a window of opportunity to pitch their wares to an emerging audience of connected TV viewers who are experiencing out-of-the-box video content viewing for the first time and will interact with the ads just out of curiosity.
That's one conclusion from an online survey of 736 connected TV owners and users conducted in May and June of this year as a joint project of digital brand advertising and software services provider YuMe and research-based strategic consulting firm Frank N. Magid Associates.
"The connected TV environment reminds me of the early days of online advertising. People were so curious about online advertising they were likely to notice and interact with ads just as part of their curiosity. The connected TV space is evolving in the same way. It's a space where people are OK with ads because they don't see very many of them and they interact with ads because they're curious," Travis Hockersmith, senior director of client strategy at YuMe, said during an interview with FierceIPTV.
Of course, not everyone is anxious to watch advertising on every bit of content, but the survey showed that for short-form content and TV shows, connected TV consumers "strongly prefer ad-supported content to paid, ad-free content," according to a YuMe news release.
Viewers become less willing to watch ads as the length of the video content increases, however.
"Almost 60 percent of people say they prefer to see ads versus pay a monthly subscription for short form video. By the time we got to TV-linked content, it was about 45 percent said they'd rather see ads than pay-to-play which was closer to 35 percent," he said. "By streaming movies there were slightly more consumers who would rather pay to see a movie and not see an ad."
The results could send shivers down the spines of multichannel video programming distributors (MVPDs) who have been battling a war with over-the-top (OTT) video content providers who ride on their broadband networks. Not only do they now risk losing eyeballs to OTT, they risk losing advertising dollars as well if advertisers buy into survey statistics that say "nearly 90 percent of connected TV users notice ads on the platform, particularly pre-roll; the majority of those users have interacted with ads; and nearly one-fifth of users have subsequently purchased a product as a result of an ad they've seen on a connected TV."
The survey did play a bit loose with the description of a connected TV.
"The definition of connected TV is fuzzy at best, but we look at it as anything that's bypassing that typical cable experience," Hockersmith said. "We don't necessarily look at an IP-delivered cable experience like AT&T U-verse being part of the connected TV space, but any of the devices that allow you to bypass U-verse for part of your viewing experience we consider to be part of the connected TV system."
This leaves traditional service providers fending off one more bit of competition as consumers "completely bypass the cable operator, to a certain extent," Hockersmith said.
"The cable operators are doing just fine still. We're not seeing that people who are buying these devices are doing it so they can stop paying the cable bill. They continue paying the cable bill; this extends their viewing options," he said. "They look at these devices as an extension of the channels that are available to them."
MVPDs, too, have pretty much conceded that viewers will wander off to watch video content on broadband-fueled non-MVPD platforms. They've even worked out agreements with connected TV makers.
"There's not much they can do," Hockersmith said. "If the consumer wants to buy a Samsung or LG connected TV or Roku box, Comcast or AT&T don't have much say in that."
To be fair, when it comes to watching the ads, the consumers don't have much say either. If they want to watch the content, they have to watch the pre-roll ad that's presented before the show goes on.
"It is non-skippable," Hockersmith said. "It's a forced exposure."
He believes, and the survey seems to agree, that consumers will willingly watch advertising to get "free" content.
"We found that most consumers are OK with ads. No one will say that they love ads, but most will say they're OK with ads because they understand the value exchange that's going on. They get free good content and in return they watch ads," he concluded.
For more:
- see this news release
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