If you’re a gambler, placing money that the phrase “shoppable advertising” will occur in any given TV company sales pitch is a safe bet. The format, which aims to scratch consumers’ shopping itch while they’re settled in for a movie night or binge-viewing session, has become a favorite plaything for streamers and connected TV platforms.

Commerce in the TV industry isn’t new—throwback to the heyday of QVC and infomercials—and shoppable ad formats themselves have become a common fixture of scrolling social media. But with the heightened tech of the streaming era, TV companies are pushing new opportunities to allow advertisers more ways to get their products in the hands of consumers. This allows the TV companies to boost their own ad revenues, even as advertisers question the effectiveness of investing in the increasingly fragmented space.

Also read: 18 streaming TV predictions for 2024

But given all the hullabaloo, what are shoppable ads? What can they do for brands and what do they mean for the TV ad market? Ad Age has gathered answers to some of the most commonly asked questions about streaming’s hottest ad format.

What is shoppable TV?

Shoppable TV is just what it sounds like—the ability for a consumer to browse and purchase products on their TVs. Although the idea harkens back to call-to-order TV spots, the defining trait of modern shoppable ads, also called TV commerce or T-commerce, is that a transaction can take place either directly on the TV or by an interaction that will send purchase details to the viewer’s phone.

Shoppable TV can take various forms—in-show product placement, an interactive ad break or overlays during content—but the differentiator from former iterations is that a consumer doesn’t have to leave content (or go further than their phone) to buy products seen in a show or ad.

Related: How Roku is training TV viewers on shoppable TV

Why are brands interested in shoppable ads? 

Shoppable TV is a capability made possible by streaming, bridging the gap between the marketing roles traditionally filled by TV and digital advertising. Shoppable formats are of particular use to the retail and consumer packaged goods categories.

For brands, TV has always functioned as a medium for messaging and awareness—the objectives that make up the uppermost tier of the marketing funnel. TV has also been the go-to for creativity (think the annual Super Bowl commercial frenzy). On the other end of the funnel, digital advertising, particularly search, display and social, have been drivers of consumer action.

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But in the era of online shopping and discount retailers, big brands that have paid the big bucks in TV are now hyper-focused on closing the deal. And business outcomes have become an increasingly important metric in TV advertising where reach used to be king. Thus shoppable ads are developing at a time when TV’s tech has made it possible in streaming and marketers and TV sellers both are looking to boost business.

What are the different forms of TV commerce?

TV commerce can take a few forms. Shoppable ads have become a fundamental format for commerce in streaming. This typically interactive format occurs during commercial breaks, and features common elements such as product carousels and different methods for checking out such as QR codes, phone notifications and click-to-purchase.

Other platforms have taken a more integrated approach. For example, pairing product placement in an episode immediately followed by a shoppable ad unit, or overlaying menus that allow viewers to see products featured in an episode while it plays.

Which TV network groups and brands are using shoppable ad formats? 

On the streamer side, network group apps such as NBCUniversal’s Peacock and Disney’s Hulu have leaned into interactive ad formats, with the latter announcing new shoppable formats as recently as CES. 

Read more: Disney debuts new shoppable ads unit

Peacock and Hulu’s shoppable ads share a similar look: a video spot plays while product assets and messaging surround it, ideally curated for different audiences targeted by the brand. QR codes offer viewers a familiar way to scan for more information, and some variants also allow viewers to send purchase details to phones via stored contact information with the streamer.

While streamers are somewhat limited by the need to adapt to the device they’re being played on, CTV platforms have a bit more tech freedom as well as stored consumer data, and have tapped into these advantages in their shoppable innovation. Roku, for example, has partnered with retailers from Walmart to DoorDash to test new formats. Roku has the capability to move beyond QR codes and allow users to shop for products completely with their remotes. The “click-to-purchase” capability utilizes stored shipping and checkout information to move the checkout process without leaving the TV.

Read more: Roku and Doordash team up on shoppable ads

Walmart has been a consistent partner across many shoppable efforts. The mega-retailer is an ideal fit for TV commerce because it has an immense direct-to-consumer business and can easily fit its transaction process into streaming shopping feeds from product selection through to transaction and shipping. But Walmart has tested more than interactive ad units—it has also partnered with media companies to develop shoppable series and experiences integrated directly into programming.

A holiday series developed with Roku featured products throughout that were then highlighted on a devoted Walmart website for viewers to browse. 

Read more: Walmart and Roku team up on shoppable holiday series 

Being able to integrate shopping directly into a program could add an additional layer to the future of shoppable ads. Amazon has tested a similar capability within its own ecosystem. Its Prime Video series “Daisy Jones and the Six” would prompt watchers to “shop the store” via its pause overlay that also displays featured actors and music. The button would then deliver users to a curated selection of apparel similar to that worn by the characters.

And the two can be paired together. AMC Networks has also dabbled in shoppable TV. In 2022, the cable company debuted an ad product suite called TEAL, which made it possible to pair shoppable ads with product placement for its digital shorts. Hunter Boots was an early adopter, pairing a shoppable ad with an in-show callout from the host of “Show Me More: Killing Eve” who was wearing the product. AMC Networks said its AMC+ ad tier, which launched last fall, would also include shoppable ads.

Other possibilities have been teased. At its NewFronts presentation last year, Roku previewed a cooking competition series that might partner with a delivery service to send viewers meals featured in the show as they watch it. And AI-enabled capabilities have also come to play in shoppable TV.

Does AI play a role in TV commerce?

Great question—yes, it does! Some TV commerce is curated through partnerships, such as a shoppable series created by Vizio and Home Depot to promote the store’s holiday product line. But emerging versions of shoppable TV use AI to match in-show items with similar products available in the viewer’s market. While these formats will also factor in sponsors and retailer inventory, they also create more opportunities for media companies based on audience targeting. 

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For example, Disney previewed an upcoming product called Shop the Stream at its Tech and Data Showcase. The format is supposed to use AI to scan what the viewer is seeing in a show from clothing to products before a menu of goods appears for viewers to browse while they continue enjoying content. And AI would be able to continuously analyze engagement to adjust what would be presented to viewers and when based on previous habits.

Early last year, NBCU announced a similar capability with Must Shop TV that would use AI to scan on-screen items for viewers to browse. The Peacock owner also hinted at the possibility of the format being paired with a post-product placement capability to allow different brand products to be inserted in shows over time based on audience targets. The two capabilities combined might allow advertisers to insert a product for a local market just during a campaign period, and allow viewers to buy it on screen.

What is holding back shoppable advertising? 

One hurdle is TV advertisers are still transitioning from linear TV to streaming, and capabilities unique to streaming may not be at the top of a marketers’ priority list when they’re juggling a campaign across both.

And as streaming platforms develop their shoppable capabilities, the process for an advertiser to activate new formats has been fragmented across the numerous streamers. A recent initiative from GroupM seeks to address this time and budget-consuming discrepancy by joining streamers to set standards for the back end of shoppable ads. This would shorten the time it takes for advertisers to create interactive ad creative, as well as reduce the cost of having to tweak each ad for each streamer and CTV platform’s requirements. 

Also read: Media companies team to create streaming ad standards

The potential result of initiatives like this would be an acceleration of advertisers’ willingness and ability to create more shoppable advertising, which would in turn increase consumer awareness that these formats exist.

How much do shoppable ads cost?

The cost of shoppable ads varies by the platform. For some, the interactive formats are an add-on bonus, while others may sell the inventory at a price increase of up to 10%, according to media buyers.

Do shoppable ads work?

The effectiveness of shoppable ads is still in the early stages of being proven as platforms activate the format and users learn how to interact with it. It can also be dependent on a brand’s objectives for its shoppable campaign. While some advertisers want to drive purchases, others have been able to trace increases in purchase intent back to an interactive ad unit. 

According to a case study from Roku, a shoppable ad from Wendy’s and DoorDash that prompted users to interact for a discount on ordering from the fast food chain saw an 11% increase in average order value as well as a 14% increase in return on ad spend.

Overall, shoppability on Roku has shown 2.5 times increases in brand awareness and purchase intent, meaning the ad format has value to advertisers outside of direct purchases, according to the CTV company’s former VP of ad sales and strategy Alison Levin at Ad Age’s Media Summit last year.

In the early stages of shoppable ads, tracing impact is like following a trail of breadcrumbs, said Alex Combs, VP of ad product, platforms at Disney, in conversations around the company’s Tech and Data Showcase. Two primary differentiators are a brand’s creative as well as the clarity of a platform’s instructions on how to interact with a shoppable ad. But Combs said Disney’s investment in the format equates to the effectiveness observed in early tests.

What do shoppable ads mean for the future of TV advertising?

As shoppable ad formats become more common, consumers will become more accustomed to interacting with their TV sets in ways beyond just consuming entertainment. This will open the door not just for increased commerce in streaming, but for additional interactive and innovative formats to emerge.

As consumers learn to watch TV in new ways, new opportunities for advertisers—both legacy TV advertisers as well as those that have historically allocated budgets to performance media—will follow and potentially welcome back much-needed ad dollars into the TV ad market.