Smart TVs come with an easy to use interface to access streaming video. Photo: Silas Stein/dpa ... [+]
As the advertising industry focuses on the next generation of audience measurement, most analysts agree with large data sets from web connected Smart TVs will play a critical role. More than half the households in the U.S. now have a Smart TV which has the capability of passively measuring all video activities on television. As a result, some Smart TV manufacturers have struck licensing agreements for their automated content recognition (ACR) data to audience measurement and ad tech companies.
Additionally, unlike set top boxes from cable/satellite, the household penetration of smart TVs has been steadily increasing. Another positive, Smart TV users tend to be younger and ethnically diverse, popular targets for many marketers. From an advertising perspective, the information from Smart TVs can be integrated with other large data sets (i.e., first party) allowing marketers to “hyper target” consumers with measurable results.
While there is a long tail of OEM (original equipment manufacturers) in the Smart TV marketplace, the three largest suppliers LG Ad Solutions, Samsung Ads and Vizio account for over half of all sets sold. We reached out to executives at all three companies to find out the role Smart TVs plays in an ever-evolving video landscape.
Respondents:
LG Ads Solutions: Raghu Kodige, CEO & Allen Bush, CMO
Samsung Ads: Justin Evans, Global Head of Analytics & Insights
VIZIO: Mike O’Donnell, the Chief Revenue and Strategic Growth Officer
Do you license its tuning data to any third-party audience measurement providers?
LG: We used to license data to large players in the market. Nowadays, LG does not license data out to anyone for advertising use cases where you can use data for targeting — it is only available through LG Ads. But, for measurement and analytics, we license the data through a few select partnerships, such as with iSpot.TV, but it is limited.
Samsung: Samsung does not license its data.
VIZIO: Yes - we license our Inscape automatic content recognition (ACR) data to ad technology companies, agencies and networks. VIZIO’s Inscape ACR data powers measurement solutions, aids in ad buying decisions and enables dynamic advertising insertion (DAI) capabilities. Our currency grade data is helping fuel the transformation of the TV industry and supports outcome-based measurement with first-party opt-in viewing data from millions of connected TV devices (including cable box, set top box, DVR, etc.), as well as our built-in streaming platform.
Industry has concerns about CTV fraud and frequency capping. What’s your policy and how is it different from others in the industry?
LG: Fraud usually comes when people don’t know where they are buying from. If you go through a middle man…you get what you paid for. You are going to get a lot of things through that channel without knowing what it is. With LG Ads, not only do you know all the content, where the ads are running, we own the operating system.
If advertisers are buying individually across multiple platforms and multiple apps, there is no easy way for them to do frequency capping. A huge advantage to working with someone like LG Ads is its usually the primary TV in the home, because they are in the living room, you have control of how many times people see the app on the TV. Also, LG doesn’t sell a single app, there is access to inventory across a multitude of apps that they may be using on the TV. LG Ads can combine all of this, using the targeting that goes across linear and streaming to deliver the reach for advertisers.
Samsung: CTV Ad Fraud: At Samsung Ads, our mission is to provide a premium experience while ensuring brand safety. We are always developing new ad experiences and we invest in first-party inventory to deliver a great advertiser experience. Samsung’s owned and operated inventory is verified at less than 0.01% NHG (non-human traffic) by multiple third-party vendors, including Human (formerly WhiteOps). We actively monitor all activity on our platform to ensure that campaigns only run on inventory from trusted, premium, and human verified sources and publishers.
Also, unlike others, our Tizen operating system ensures that apps that stream through our OS are shut down when the TV is turned off. We have found that CTV ads running with TV set turned off is primarily an issue with connected devices.
Frequency: With the visibility from our ACR data, Samsung Ads has a competitive advantage when it comes to frequency capping. In fact, we launched our Samsung DSP, so that brands can use our proprietary ACR to manage the reach and frequency of their linear TV, CTV, and mobile/desktop campaigns in one platform. This allows them to avoid overexposure, and to reach the viewers they’re missing on linear all in one platform.
VIZIO: We built our VIZIO Ads direct-to-device offering to provide a brand safe, well lit environment for advertisers and their marketing messages. When you buy an ad from us, we provide transparency both pre and post campaigns to ensure advertisers know exactly where their ads ran. By using ACR, we can validate that the ads hit the screen.
We also have Universal Frequency Control, a capability that enables brands to set limits on how often a VIZIO TV is exposed to specific ad creative when placing an ad through our platform. This helps solve one of the biggest problems plaguing the CTV marketplace. Universal Frequency Control persistently measures the number of times an ad is exposed at the glass-level on each VIZIO TV in a household and across linear, CTV, VOD (video on demand) and OTT. This is important, because with in-flight optimization, brands can limit the number of times a VIZIO Ads media buy reaches a device per day, week and month.
Walmart has been marketing their own Smart TV and Comcast, Amazon and Roku are reportedly launching their own Smart TV sets, is there something besides market share that would impact revenue?
LG: We are used to competition in the smart TV space, whether that is Samsung, Vizio or Sony, then the longtail of smaller OEMs with either diminished market size or are new and trying to enter the market. It’s not scary or anything new. In fact, it only validates our view that this space is getting bigger and becoming more valuable.
Samsung: From a hardware perspective, we’ve been the number 1 brand due to our consumer-centric innovation and by delivering the personal experiences consumers crave. In terms of selling ads, we have been doing this longer than any other OEM.
VIZIO: We have been in the TV business for 20 years. Competition in the space is nothing new to us. We understand marketing and pricing strategies that increase our market share in large format TVs, and ultimately drive engagement and ARPU. Rumors of other players moving into the integrated TV space validates what we believed six years ago when we entered it, and our ongoing pursuit of the ideal hardware/software experience. We also know that our deep supply chain and retail partner relationships are what help drive success for our device business.
Roku says major Smart TV set OEMs will eventually need to consolidate to a unified OS system. What is your take on this?
LG: There are two possibilities here; If you look at the mobile market, there are plenty of operating systems (Nokia, Blackberry, etc.) and then Apple’s iPhone came out and fundamentally changes the user’s expectation from a smartphone and Android sort of followed suit, but they took two different approaches
Apple approach: Going to do everything. The OS Android model: Give it away, not even going to make the phone, someone else will do it.
Both models have succeeded and everyone else has vanished. Roku was hoping for something like that and to be one of the only surviving ones. But from our vantage point, LG TVs is the best in class and the OLED screens are even licensed by our competitors, so it’s that good of quality; best in class hardware.
Samsung: Consumers want choice – and we are the choice thanks to being the #1 TV operating system in the world available on over 200M devices, providing a superior viewing and content discovery experience. That is why we are making Tizen available for license to other hardware manufacturers around the world.
VIZIO: VIZIO has been building TVs for 20 years and understands that for a truly exceptional customer experience, you need to own both the hardware and software. Having both is critical to understanding viewing habits and delivering programming and relevant advertising. For over six years, VIZIO has invested in and continues to innovate our Smart TV Operating System in order to deliver the best entertainment experience. We know that by owning the hardware and software as well as the data flowing through our platform, is key to innovating for the future of TV.
How prevalent is addressable advertising on Smart TVs?
LG: Everything in the CTV space is addressable, meaning we can check the different TVs in two households next to each other watching the same program. Everything comes almost like a digital ad request; it comes to our service and we know which household it's coming from. We can look at all the data that we have for that household, including things like, “Do they watch a lot of sports? What other content do they watch?” We can combine that with third party data sets to understand other characteristics of their household income and where they are in the country. This actually is what we use when we work with advertisers
Samsung: Very—and it will continue to grow. Clients come to Samsung Ads for a variety of reasons:
To reach the (sizable) audience that is primarily streaming; To reach consumers before they go into non-ad supported environments (and therefore to influence viewing choices) To target specific audience profiles We serve opted-in audiences with the content and ad experiences that they are most interested in. For advertisers, this helps them to engage with their most high-value targeted audiences. And, we like to say, we have more:
More insights: We have insight into more audiences, as the #1 smart device manufacturer in the industry and nearly 75% penetration into US households. More household addressability: With the most ACR enabled devices in the US, we have a powerful scale in household addressability. With our proprietary data coming from devices across our ecosystem, we have the ability to measure exposure across linear, streaming and digital display.
More return: We can also deliver more planning guidance and ultimately more outcomes with predictive campaign planning tools, real-time optimization, and post-campaign impact measurement that uses our proprietary data.
VIZIO: With VIZIO, all advertising in CTV is capable of being addressable. We created VIZIO Ads to help deliver a more relevant advertising experience to consumers and brands alike. Offering premium, addressable advertising inventory inside of our free streaming service, WatchFree+ and across ad supported apps. We help to connect brands with their audiences (local and national) in a down-funnel way that regular linear advertising simply can’t do.
VIZIO Ads provides app-level transparency and screen-level verification to ensure brands can invest with confidence across one of the largest smart TV footprints in the U.S. We provide a direct-to-device guarantee so advertisers know that when they buy with us, their ad is hitting the glass of one of our TVs. Our ACR data gives us contextual intelligence about viewers that allows us to deliver frequency control, incremental reach and targeting capabilities that deliver what the market needs to transition dollars from linear to CTV.
