Television advertising is the biggest sector of the U.S. ad market, so it’s easy to see why Internet ad companies would want to steal some of that spending. With online video growing, and “connected” living room gadgets getting better, they’re even “where the puck is going,” tech-wise.
But bringing TV advertising into the 21st Century is going to be surprisingly complicated. The video distribution market is starting to get very fragmented — and it’s going to take a while to sort out the winners and losers.
In theory, the companies that would most easily be able to revolutionise TV advertising are the cable giants, such as Comcast and Time Warner Cable. They’re the ones with a super-fast pipe into your living room, they’re the ones who own your set-top box, and they’re the ones already delivering hundreds of channels to your TV. It could be lucrative to be able to upsell interactive features in cable TV ads.
But it is taking a long time.
In 2008, the nation’s biggest cable companies launched a new company called Canoe Ventures, whose goal was to “make their growing suite of advanced advertising solutions easier to buy, use and measure.” But cable’s ageing infrastructure — and lack of experience making good software — hasn’t helped.
Canoe bailed on its first product, and most cable TV advertising still looks the same as it did a decade ago, save for the switch to HD. Who knows when cable’s interactive advertising and content features — now being pushed under a new brand called ExpandTV — will actually become mainstream.
Google, meanwhile, has been working with other TV carriers on ad targeting and measurement technology, and now reaches almost a third of TV homes in the U.S., via deals with DirecTV, Dish Network, Verizon FiOS, and recently with Viamedia, a cable ad player. But while ad agencies are getting more and better data about their ads through the Google system, we’re still talking about plain-vanilla TV advertisements.
In the meantime, online video content and distribution has been growing, especially to “connected TV” sets. Almost every TV set and Blu-ray player sold today can access online video services, ranging from YouTube to Netflix to others.
This, in theory, will be another ripe market for online ad firms to capture some of the TV ad dollars, with interactive advertising and more modern “apps as ads.” But even if that’s a good idea, it, too, is insanely complicated and fragmented.
Each TV manufacturer, for instance, has its own operating system. Some are starting to use Google’s “Google TV” OS for some TVs, but Google Android for others, and yet other OSes for other TVs. This won’t help standardize anything.
Apple’s Apple TV set-top box doesn’t (yet) run ads, but if it did, it would probably be some sort of Apple iAd, an entirely self-contained service. Microsoft’s Xbox 360 is becoming a formidable online video viewing device, but its ad platform probably wouldn’t play nice with Google’s or Apple’s, either.
So far, you see, there’s nothing close to the TV equivalent of an “open web,” where Internet advertising took off because every browser could display the same HTML code and image files. (And even then, it wasn’t always perfect or easy to make things look the same on everyone’s computer.)
And it doesn’t look like this is going to get any less fragmented any time soon.
Even when you get past all the technology differences, there isn’t enough consolidated viewing activity yet to really jump-start any major ad platforms on Internet TV apps. (Maybe Google and YouTube will be the first? Netflix has shown no interest in ads, sticking with its proven subscription business.)
So it’s going to take a while to get this all sorted out. And, as you can see, it’s quite complicated. And that’s just distribution — never mind selling the actual ads!
But with $60 billion in U.S. TV ad spending expected this year, you can bet that a bunch of companies will be trying.
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