Advertisers: Don't Believe All the Hype About Connected TV

Despite the Buzz, There is No Audience Yet on Connected TV

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From Apple TV to Chromecast, and Roku to Amazon Fire, there's a lot of talk in the ad world about connected TV. On publications all over the web, it's billed as the next hot platform for brands to engage their consumers. It potentially makes a lot of sense. For marketers, connected TV could represent the best of both the TV and online worlds: a captive audience of consumers relaxing on their sofas watching video from more and more online sources, but also willing to engage with their TV screens, which advertisers can reach with the same precise ad targeting as on the desktop.

But should advertisers believe the connected TV hype? My answer may be surprising coming from a media and ad-tech vet. But I would say no -- at least not yet. Why? There's simply no audience for advertisers on connected TV.

We want our CTV

How can this be? Connected TVs are increasingly conquering our living rooms. As eMarketer predicted in June, this year 45% of internet users will use the web via an internet-connected TV or device at least once a month. Next year, the number will rise to over 54%.

For more and more of us, connected TV is becoming synonymous with TV itself. But what are we actually tuning in to watch on our internet-connected boob tubes?

The same 10 channels

When we first started Current TV, David Hill (then head of entertainment at DirecTV and one of Rupert Murdoch's right-hand guys who created Fox Sports) flew up to San Francisco with his key lieutenants to meet with us. At the tail end of our conversation, he said something that stuck in my mind: "When we had 100 cable channels, people watched 10; then we had 200 and people watched 11; then we grew to 300 and people went back to watching 10."

And that's the thing about connected TV. The curated options like Apple TV have around 50 apps, but more open platforms have hundreds or even thousands. Roku, for example, has over 1,800 channels. And whether it's out of 50 or 500, audiences still watch programs from the same handful of recognizable content creators and curators, namely Netflix, Hulu Plus, Showtime Plus, HBO Go, Amazon Instant Video, and maybe a sports site or two. These are generally subscription-based models that don't contain advertising.

Why are we all watching the same few channels when there are so many to choose from? Poor navigation and content quality issues.

Where's my map?

Truth is it's just really difficult to discover new content options and platforms on connected TVs. While cable TV is its own morass, at least there is a central guide, a recognized place where you can search for and discover content, channel-by-channel.

On connected TVs, you're lost in screens of apps or icons. Though the degree to which this is a problem differs on each platform, there's no real TV-like guide and most options lack a cross-channel search function altogether. We don't know where to go, so naturally we zero in on brand names that we already know and love.

Quality content costs

Then there's the content hurdle. There's just no getting around the fact that producing quality shows takes tremendous resources. And outside of the premium services, there's just not enough quality content to fill all those connected-TV apps.

Could be that it's a chicken-or-egg situation. Since the advertising dollars aren't there, providers don't spend the money necessary to create quality content. And since the quality content isn't there, the eyeballs are missing, so advertisers don't advertise.

I'm not saying that connected TV is necessarily a lost cause for advertisers. There are glimmers of hope. Navigation is improving. Roku features true cross-app search and both Apple TV and Chromecast allow you use apps on your smartphone, tablet or computer to send content to your streaming device. And the premium sites are starting to allow commercial spots, like hyper-targeted interactive spots within Hulu Plus shows and pre-roll ads that run before the latest crop of Amazon Studios-produced original series pilots.

This is where connected TVs need to head before advertising dollars will flow. Once there are easy-to-use, holistic navigation and improved content options, advertisers will finally be able to connect with their consumers on their connected TVs and the promise of this medium can be realized.

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