No Need to Dream of Interactive TV -- It's Already Here
The dream of interactive TV has been around for almost two decades. We've imagined a TV that allows us to transition seamlessly from watching a Yankees game to pulling up a music video on demand to ordering an advertiser's product. But iTV as we conceived it remained elusive for the brightest of minds, even for the likes of Steve Jobs.
But today's TV is increasingly a laptop, mobile or tablet experience, unless it arrives on a "proper" TV screen through a broadband-enabled device like an Xbox or Roku. It's not coming through the cable operators that, at one time, were thought to hold the keys to iTV. In fact iTV is already here, all but ready to deliver everything we've been waiting for. We've just been waiting for it on the wrong screen.
Nielsen's March Cross Platform Report recently dove into the deep end of this trend, describing the five million homes in the United States that it classifies as "Zero TV" because they eschew traditional cable or satellite viewing -- often for streaming alternatives. Two-thirds of these "Zero TV" homes consume video content on other devices, and the distribution across age groups of "Zero TV" homes is not as concentrated as you might think. Almost two-thirds are age 44 and under, but a healthy chunk -- more than one-third -- fell into older demographics.
Add this group to the tens of millions of people in the United States who watch traditional TV but also use their smartphone to access Hulu, for example, and their iPad to stream TV from Comcast, and what you have is a burgeoning iTV market.
It's predictable that devices -- and consumer behavior -- are well ahead of content providers and marketers. Adoption of technology almost always outpaces the business models that will grow up around them. But given the rapid embrace of iTV services, it is not worth waiting around for the day when seamless, TV-based interactive video is a reality. Let's accept that the hardware -- the devices and infrastructure -- are in place, but the "software" -- the partnerships and standards for iTV -- are not.
Building this "software" will require the media and marketing industries to stop making meaningless distinctions between video-delivery systems, and think of ways to unite older delivery and measurement standards with the expanded possibilities for marketing and content that iTV provides. Building out these capabilities will generally focus around measurement, addressability and accountability, which will be necessary to make iTV attractive to advertisers.
Addressability is one of the great promises of iTV, and there are only a handful of examples of addressable TV advertising, but bringing it to the digital-video marketplace should not be such a big leap. Addressable's cousin, behavioral targeting, has been dominant in digital display for years. It's time to get serious about bringing similar targeting to iTV.
A surprising weakness in accountability is also holding back the video-advertising marketplace, which helps explain why, even though advertisers love video, it still only accounted for 6% of digital advertising spend in 2012, according to the Interactive Advertising Bureau. Advertisers need assurances that their video was served, let alone seen, before they will commit big-time to video advertising outside of TV.
And then there's the issue of audience-measurement standards. Fortunately, the industry is finally getting over its skittishness about measuring off-TV viewing, as Nielsen's embrace of "Zero TV" homes demonstrates. It's about time. That said, we're only scratching the surface in terms of what's possible. In-stream advertising holds the potential to tell advertisers when and whether viewers watched an ad, whether they followed through on embedded calls-to-action, and so forth.
Of course, it's a delicate dance to incorporate traditional targeting and measurement methods with new ones; what will be most important is the ability to build bridges that can transition slowly from one approach to another.
When will people finally realize that iTV has arrived? In 1993, the seven-year-old Fox network shocked the TV world when it won the rights to broadcast National Football League games, outbidding CBS. Just as that deal proved a Trojan Horse for getting Fox into the broadcast mainstream, so it will be with iTV. It's only a matter of time until Google -- or someone like Google -- buys the rights to the Super Bowl and studs it with interactive commercials. But don't wait until the first YouTube Super Bowl to recognize iTV's emergence. By that point, no one will care what device we're watching with.