Tom Wolfe has been helping Rovi grow out its advertising business since 2009. Rovi’s ad network operates online and across connected TVs, and here Tom discusses what Rovi have been doing in the European market and what the future holds for connected TV advertising. Tom also talks about Rovi’s recent research on connected TV advertising in the UK, the scale issue and whether TV advertising might one day be commoditized in the event of a sudden surge in connected TV inventory.
For those who aren’t familiar with Rovi, could you give a little background on what Rovi do?
Rovi is a B2B company that powers the search and discovery of entertainment across a range of platforms. We are perhaps best known for our electronic programme guides (EPGs) and rich entertainment metadata that includes movie and TV show summaries, cast biographies, as well as related multi-media content.
Through our Rovi Advertising Network, we’re able to monetise our EPG footprint with manufacturers such as Samsung, Sony, Toshiba, and Panasonic, as well as more than 200 cable operators with advertising placements. We currently sell advertising in the US, Canada, the UK, Germany, and Italy. In addition, we’ve formed advertising partnerships in Japan and are exploring other market opportunities in other areas of Europe, as well as Latin American.
When you’re serving an ad into an EPG, are you using a regular online video ad server or is different technology required?
There are different standards and sizes for different connected TVs, so we can’t use a regular online video ad server. We’ve created a proprietary system for delivering the ads into TVs called the Rovi Ad Management Tool.
What do you think connected TV is going to offer advertisers that regular TV doesn’t?
Quite simply, what connected TV is offering advertisers today is the best of TV enhanced by the functionality of online. We offer advertisers the chance to engage consumers at a unique point in the entertainment experience – during content discovery – when consumers are paying attention and highly receptive.
In the past, television has been known as a great branding medium with tremendous reach that uses sight, sound and motion in 30 second spots to motivate audiences. That still exists in the linear world of course, but in the connected TV world and the EPG world, the ads we’re selling are more interactive.
We offer advertisers the chance to access consumers at various points of the consumer buying cycle. On EPGs we’ve beautiful HD display ads that reach consumers when they’re actively seeking content, which deliver great branding value.
A little bit further down the funnel, you have consumers who already know what they’re interested in, and they might be in the information-gathering part of the buying cycle. With connected TV, they can click through and find the information they need.
For example, they could check out the specs of an automobile and have an ad where they can spin the car around to view it from different angles, which is one of the things we’re doing in a Honda campaign in the UK.
And if consumers are even further down the cycle and they want information, they can request it. They can get in touch by email, text messaging, or select ‘click-to-call’ so someone from the advertiser’s sales team can call them back.
Soon there will of course be ecommerce opportunities where consumers can buy a product directly through the television. To the best of my knowledge, there isn’t any other advertising medium that delivers more to advertisers than this kind of opportunity.
It’s particularly exciting in the UK because 50 percent of the homes don’t have a VOD service right now, or even cable. Freeview’s going to become more interesting as the digital transition completes and there’s going to be an appetite for on-demand content. At that point I think you’ll see an even bigger explosion in sales of connected devices.
They ship approximately 10 million units a year in the UK, and connectivity rates are in the 50 to 60 percent range, so very quickly – in just a couple of years – you’ll have scale. So we’re going to be able to offer advertisers scale, capabilities and measurement, but it’s really more about the experience they can bring to consumers and how they are able to target them throughout the buying cycle.
On the question of scale, are you at a point yet where you can tell advertisers you can deliver campaigns at scale?
In some of our mature markets such as the US, I think we’re there. In emerging markets we’re quickly ramping up by lining up relationships with manufacturers. Of course, what we are delivering across the board today is far more than scale; we delivering value that is unobtainable on any other medium, including TV.
For instance, I can go to ITV and buy a 30-second spot, but they certainly won’t be able to provide the functionality, measurement, or the uncluttered ad environment offered through our ad network.
With so much new ‘TV-like’ inventory due to come online via connected TV, is there a risk that we could go from a famine to a feast in terms of supply, leading to video and TV advertising becoming commoditized?
There is a risk of course. It’s exciting that you have a lot of content providers building applications. You’ve got lots of distributors who are taking content from more traditional media streams and putting it into connected devices, and in order to justify the investment, they want advertising.
In the US, we have situations where there’s multiple 30-second spots in a movie stream for example and the scarcity factor isn’t quite there yet and sometimes they’re even serving the same ad. So there is a risk that the consumer is turned off by that and I think you’ll see that in a few different apps as the marketplace settles.
Our advice to all of these content providers is to recognise the value of scarcity in advertising. Pre-rolls are great and mid-rolls are great, but if you want as high a CPM as possible, the audience needs to be desirable and they need to be actively engaged with that content, whether it’s an EPG or an app.
Rovi recently conducted some research with Decipher Research on connected TV advertising that uncovered some interesting numbers, particularly on click-through rates and how connected TVs are being used. What do you think lies behind the impressive numbers?
We saw some terrific feedback from our research. We looked at how people use connected devices in general, the effectiveness of campaigns, and ad recall. The numbers were very encouraging.
One of the statistics that surprised us the most was that 60% of people use these connected-devices in environments with others in the room. Before we started the study there was a lot of speculation that connected devices were something that would primarily be used in personal environments. But we’re finding that they’re actually bringing families together again.
Other interesting stats were that 86% of people noticed the ads and that one-in-three clicked through, which is a very high rate. Bear in mind though that’s a consumer-reported number. Although I think most people in advertising would question whether it’s actually that high, I still believe it’s likely that the rates are far higher than online.
With display and mobile, click through rate has declined over time. Do you think connected TV might be going through a honeymoon period, where people are clicking on ads out of curiosity to see what happens as much as anything else?
I think that’s a reasonable assumption to make, at least to some degree. But it’s important to stress that it really is a different kind of environment to what you get with a display ad online. It really is a better and more trustworthy environment to encourage click throughs, although at the same time I think it’s fair to say that some people see these banners and click because they want to understand what the capabilities of these devices are.