The sudden collapse of cable TV consortium Canoe Ventures a few weeks ago generated a lively debate among media and advertising experts on the future of making television an interactive experience for viewers. Media economist Jack Myers called the Canoe development "a wake-up call for the industry" and "a spur for expansion and growth." I wholeheartedly agree. Based on the growth and range of ways major corporations in the U.S. used interactivity (iTV) to lift the impact of both their television and digital advertising in 2011, the future looks very bright.
Like the many other areas of our lives that it touches, the digital age has gradually reshaped viewers' relationship with their television set. The changes in audience behavior over the past 10 years have now propelled iTV advertising to become the single most explosive growth category in the television and advertising industry. In 2011, major U.S. companies continued a steady ramp up of their use of iTV ads after first picking up real steam in late 2008; and newest adopters got a taste of the tremendous impact that interactivity in television can bring to their ad campaigns.
The Proof is in the Numbers
Most significant of the trends observed over the past 12 months is the growing number of homes with the ability to 'interact' with their TV experience using the remote control or a mobile device (now 90+ million in the U.S., alone), the substantial increase in total ad campaigns that includes interactivity, and the frequency with which big U.S. companies are launching iTV campaigns -- all strong signs that stabs at creating a conversation with viewers is achieving important results. These audience and ad effectiveness stats help understand the trend:
Viewers with satellite TV service (which make up about 31 percent of U.S. homes) needed only to turn on their TV sets to see new offers to interact with compelling product promotions launched every week in 2011. And in 54 million cable homes with video-on-demand services, viewers discovered, interesting ad experiences within their VOD offerings that both complemented and extended many of the very same iTV campaigns seen on satellite.
Brands across most product types, from Lipton and Abreva, to AXE and Cheez-It, saw audiences use their remote control to "click-through" and interact with their ads at rates as high as 6.8 percent; and viewers spent up to three minutes interacting with brands on their televisions. On top of these striking statistics, cost efficiency benchmarks continued to dip far below internet ads, making iTV as much as 98 percent more efficient than the average search buy and more cost effective than digital display from a cost-per-click perspective.
Because the TV service we utilize in the home varies based on geographic location, some naturally assume that the number of viewers able to interact in compelling ways with their television experience is small and restricted to a handful of cable and satellite service providers. The numbers show that this is not true. Today, there are a variety of digital TV distribution platforms that have joined the satellite and cable companies to offer interactive TV in the living room including telecommunications (Telco) companies, gaming consoles, and tablets to over 75 percent of U.S. homes. This continuing proliferation of providers and choices available to consumers is fueling further advances in viewer behavior, and in turn, the use of iTV for advertising.
Satellite platforms provide designated channel numbers that can be used as interactive destinations for an advertiser; they are becoming a staple for consumers to use their remote control to engage with their TV. Similar branded experiences across emerging telco platforms such as ATT U-Verse and Verizon FiOS are also demonstrating substantial growth. In the second half of 2011, telco iTV campaigns generated click-through rates, visits and audience engagement levels in line with that of satellite homes; and U-Verse ran more iTV campaigns than any other TV entertainment platform in Q4 of 2011. These developments offer clear proof that consumers on the receiving end of a carefully crafted iTV campaign are willing and able to engage with TV, provided their experience is simple, the message is relevant and the content is valuable
• Gaming Consoles
Another key area of growth that is reshaping our overall television behavior is gaming platforms, or "connected entertainment systems" as they often describe themselves. Microsoft's Xbox and Sony's PS3 now reach a combined 35 million homes, and continue to make big waves for marketers across many different product categories. In 2011, audiences clicked-through to interact with compelling ads cleverly embedded into the Xbox and PlayStation gaming environments at rates as high as 4.75 percent, delivering hundreds of thousands of voluntary visits and even more branded video views in just a few weeks. Further, hundreds of thousands of gamers chose to extend their engagement with products / brands by opting to download branded skins and icons (gamer talk) to personalize their consoles. One young, male-targeted product left an indelible footprint on their audience; logging 500,000 downloads - meaning half a million consumers were voluntarily "wearing" their favorite brand virtually.
There is no doubt that more and more of us are turning to mobile devices like smart phones and tablets as a way to stay connected to our favorite social media network, email account, text exchange and TV show. We're using technology to seamlessly weave messaging and content into our busy lives, and it's an important opportunity for brands to engage consumers on their own terms.
According to a recent Google blog post, "Consumers are engaging with useful, relevant and rich ads that take advantage of the touch screen interface on tablets. Some consumers expect more interactivity from ads on tablets than they do from ads on their desktop computer."
Twenty-four percent of U.S. tablet owners click on an ad to view the full advertisement or product offering, and 16 percent have made purchases in-store based on ads they saw on their devices. Compare that to online banner ads that generate lifts in purchase intent of a mere 1.2 percent, and you'll easily see the impact iAds can represent.
The effect that digital television services and the devices we can now use to take our TV experience with us are permanently changing the way we watch and engage. How quickly all marketers take advantage of the stellar attributes is still a question, but the brands and products leading in the race are already exploiting the power of consumers' new relationship with content and seeing tremendous results. TV technology's making it easier for consumers to enhance their lifestyle; now even advertisements seem a whole lot more palatable, dare I say it, even enjoyable.