For many Americans turning on their brand-new televisions to watch the Super Bowl or the Winter Olympics, ads will be the very first thing they see on their home screen, placed right alongside input and connectivity options.
To advertisers, that ad space is increasingly the best — and last — chance to grab a viewer’s attention before they disappear into Disney+ (DIS), Netflix (NFLX), and other ad-free streaming services.
“We don’t need to even argue about the amount of time a viewer spends in ad-free environments,” Adam Bergman, vice president of national ad sales at Vizio, told Yahoo Finance. “Getting an ad in before they go into Netflix, it’s like a sign saying ‘last gas station for the next 300 miles.’”
Meta content and first-impression ads are increasingly popular also because of the rise of streaming services, particularly ad-free ones like Netflix.
“People are watching streaming where there aren’t any ads,” Dave Morgan, founder and CEO of Simulmedia, an advertising tech company that helps automate ad campaigns, told Yahoo Finance, adding that more viewers are now cord-cutters or even “cord-nevers” — those who have never signed up for linear TV services like cable.
“If you are a brand and want to reach people in a high-impact, highly engaging way, you don’t have many places to do it,” he added.
The importance of first impressions
In this new era, high quality TVs are key gatekeepers where content from any source — a streaming stick, cable TV box, or even a connected laptop — is played.
“Today, the smart TV homepage is becoming the center of your experience,” LG Ads Solutions CEO Raghu Kodige told Yahoo Finance. “You turn on the TV, go to the homepage, and based on what you see there, you might see something to watch or flip on a sports game.”
Even peripheral device makers like Roku (ROKU) are vying to be the gatekeeper device, as their devices include a native banner that takes up a third of the screen and is presented to everyone who turns on a Roku device.
“When you turn it on, you see it,” Roku Brand Studio Head Chris Bruss told Yahoo Finance. “You capture attention right away… Roku is the front door for television.”
According to Morgan, controlling both the content hub and the gateway is key.
He pointed to Roku’s popularity with investors as proof: “Roku is valued not as a hardware company, but as a connected TV and content ad hub.”
These first impressions are a critical part of TV manufacturers’ push into connected TV advertising.
The ad space can be combined with existing technologies like Automatic Content Recognition, which tracks what a viewer watches on a television in the same way a browser cookie tracks what websites a user visits in order to serve up personalized, targeted ads.
“If you can show the right ad to the right user depending on what the previous viewing history is, they are most likely to convert to watch a particular program,” LG’s Kodige said.
Furthermore, the ad space on its televisions is often used to promote shows and content.
“For most entertainment and media clients, this ad unit has become a must-buy because they know the user is already on the TV set,” Kodige added. However, he noted the space can also be used for targeted advertising, where certain ads are shown to users more likely to be receptive to the product.
‘The paradox of choice’
Many experts say that manufacturers are moving into advertising because they recognize not only the power of being a gateway device, but also how powerless they are without original content.
“They don’t own content themselves so they don’t have opportunities to package advertising,” JT Batson, co-founder and CEO of Hudson MX, an advertising tech business focused on ad activation, told Yahoo Finance. “They’re looking for new spots to stick ads.”
Other TV manufacturers say they are treading carefully with the type of content that’s being shown in such a prominent place.
“We don’t sell a masthead,” said Vizio’s Bergman. “We’re not going to turn our home screen into the yellow pages.” (According to Bergman, the home screen ad space in Vizio units will always be used to promote entertainment or media content.)
The focus on shows, videos, and events in first impression ad spaces is an attempt by companies to solve another problem born out of the streaming era: what to watch next.
According to Bruss, Roku users spend up to seven minutes on average trying to choose something new to watch.
“We’re leveraging data to put the right type of content recommendation or experience in front of the right audience,” he said, and added: “There’s the paradox of choice — there’s so much great television and streaming that you almost get paralyzed with the opportunity.”
Mike Juang is a producer for Yahoo Finance.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
,,,
