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special report the connected world supplement

offers a toehold to a variety of players, including broadcasters, over-the-top video providers, and pay-TV providers." Such findings have huge implications given that it is likely over half of the HDTV sets shipped in 2012 will be Internet-connectable, part of a trend that has seen the number of Internet- connectable TVs shipped jump from less than 1% in 2008 to over 45% in 2012. Yet, just like ‘interesting times’, the

statement ‘a toehold to a variety of players’ is a rather interesting turn of phrase. These days it means the Netflix as much as the BBC; LOVEFiLM as much as the ITV Player; Hulu as much as 4oD. And it will almost certainly mean Sky’s NOW TV which will be available first on YouView boxes and almost certainly on connected TVs. "Smart TVs have the potential to be

both a threat and an opportunity for pay-TV providers," said Brett Sappington, director, research, at Parks Associates. "Smart TVs provide consumers with another way to access over-the-top services like Netflix on the TV, providing a new distribution channel that all players can leverage to deliver content to consumers. However, by integrating the smart TV into their distribution model, pay-TV providers can leverage their strengths in content costs, customer relationships, bundling, and other areas to play a more substantial role in OTT. In addition, pay-TV providers can potentially use smart TVs to lower subscriber CPE costs, an important consideration in a highly competitive market." Sappington’s comments are very

interesting: they imply that there is a business to be had already. Other research bodies argue that such conclusions are a little premature. Leading US marketing research

organisation eMarketer would go as far as to assert that there is a danger that today’s connected TV industry is not taking advantage of the demand for connected TV. In essence, eMarketer predicts a bright future for connected TV - it quotes research calculating that 24 million North American households currently own a connected TV and that this number will nearly quadruple in the next four years, rising to 81 million households by 2016. Yet in a July 2012 industry research note it warns that firms need to ‘open their eyes to consumer behaviour when it comes to connected TV advertisements’ rather than ‘watching the steep incline in

connected TV adoption’, with viewers having ‘already displayed promising behaviours when it comes to engaging with video ads on their connected TVs’. Yet the analyst notes that as consumers catch on to connected TV, advertisers seem unsure what steps to take in response. It says that interest in connected TV ads by brand advertisers and agencies has grown only slowly since 2010 and that in 2011 only 8% of advertisers used connected TV. By 2012, nearly a third of brand advertisers supported the channel. But such misgivings have not

deterred LG which has just signed up multiscreen and brand advertising platform provider smartclip to monetise all ad inventory on its Smart TV platform across Europe, Russia and Australia. Advertisers, and both companies allude that they are in conversations with global brands, will have access to connected TV apps and also to the entire ad inventory on the Smart TV platform, currently available via all smart TVs, smart 3D Blu-ray players and the Smart TV Upgrader. Options will range from pre-roll and banner ads to what LG calls ‘unique’ and interactive ad formats, with the result of enhancing the viewer’s experience as well as offering refined targeting opportunities via ad-serving technologies. LG stresses that connected TV represents ‘a whole new arena of lucrative business

By integrating the smart TV into their distribution model, pay-TV providers can leverage their strengths in content costs, customer relationships, bundling, and other areas to play a more substantial role in OTT. Brett Sappington,

director, research, at Parks Associates.

opportunities’ for advertisers and brand marketers and believes that the controlled environment of its Smart TV Ad platform offers a ‘completely brand safe experience with efficiency and accuracy’. For her company’s part, smartclip’s vice president of connected TV, Shirlene Chandrapal, added: "Connected TV is beginning to really take off and LG Smart TV is the perfect way to reach consumers on all levels of engagement. This is the first time advertisers can close the missing gap throughout the whole consumer journey on Smart TV.” German fashion company New Yorker will be the first advertiser to run a campaign across the LG platform and, explained Silvia Lange, head of marketing at New Yorker: “LG Smart TV Ad platform offers a direct connection between two of our target groups’ most relevant media channels - TV and online. The combination of this new advertising environment with its highly visible display formats, backed up by well- established targeting models, make it a very interesting branding opportunity.” So from good intentions, bouquets

and pessimistic forecasts to global consumer electronics brands discussing which territories they will exploit with what apps and with what forms of advertising, connected TV has certainly come on over the last six months. Who knows what’s going to be the result of the next half year? l the connected world supplement september/october 2012 l ibe l S19

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