Owning The Living Room: Advertising The Future of TV
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Owning The
Living Room:
The Future of TV
Advertising
Brands need to deliver meaningful content for
the highly interactive platforms of smart TVs and
new gaming consoles if they want to connect the
dialogue from living room to second screen to
in-store/online purchase.O
Owning The Living Room:
The Future of TV Advertising
Executive Summary
Internet TV platforms (Apple TV, Samsung Smart TV, Roku, etc.) and new multi-interaction gaming consoles
(such as Xbox One and PS4) are providing consumers an unprecedented level of entertainment and
personalized engagement that they can’t get with traditional TV. On-demand entertainment, streaming services,
video chat, web browsing, gaming, social media capabilities and online shopping will soon become integral to
the standard TV experience. Brands need to deliver relevant and useful content for the new home entertainment
platforms that are making yesterday’s vaguely targeted TV commercials as passé as the passenger pigeon.
In this free report from the Phenomblue Strategic Insight Series, our brand experience experts provide strategic
insights and action steps on how you can adapt to the future of TV advertising before your competitors do,
including:
— Offering high-quality, relevant video content for audiences that prefer streaming content
services (e.g. Netflix) to pay TV (e.g. cable/satellite).
— Personalizing interactions the right way on the right devices.
— Connecting the dialogue between brands and consumers from the living room to the
second screen to an in-store or online purchase.
©2014 PHENOMBLUE LLC. 2Introduction About 95 percent of American households still
gravitate toward traditional cable and satellite TV for
The living room is changing. The age-old center and content.
symbol of home has always concentrated on the
technology of the day: fire, cushions, radios, TVs, A growing number of households are avoiding
etc. Tomorrow’s living room will be more connected traditional cable and satellite providers in favor of
than ever, with entire walls becoming screens, and multiple devices and content delivery platforms.
augmented-reality experiences scaring our pets. The “zero TV” audience has more than doubled since
Smart furniture will merge form and function, offering 2007, growing to 5 million (or 5 percent of) viewers.
touch-responsive physical and digital experiences.
Consumers are spending more time accessing
But nothing is revolutionizing the living room as content on multiple devices, particularly mobile
quickly as the new generation of Internet TVs, phones, computers and game consoles. And a quickly
cloud-based streaming devices and video game growing “zero TV” audience heralds a massive
consoles. These new platforms offer consumers change in content consumption — brands need to
an unprecedented level of entertainment and pay attention to this audience when allocating TV
personalized engagement they can’t get with advertising budget.
traditional TV.
Stated in plain terms, it sounds absurd: Brands need
Internet TV lets users bypass cable and satellite to direct more of their TV budget toward zero TV
providers to stream video directly from the web. households.
Xbox One and PS4 package gaming, online TV, video Zero TV doesn’t mean zero viewership. These
chat, Internet, social media and online purchasing households simply use multiple devices and
into one affordable package. These kinds of platforms to circumvent traditional cable and satellite
multichannel functions will soon become integral to companies, without sacrificing the entertainment or
the TV experience. information they crave. Their numbers are growing.
For marketers, TV advertising will mean more than More than 75 percent of zero TV households own
commercials and sponsorships, it will mean new at least one TV that they use to watch DVDs, play
opportunities for branded content, second-screen games or browse the Internet. Sixty-seven percent
experiences and relevant interactions. use other devices to access video content: 37 percent
via computer; 16 percent on Internet TV, 8 percent via
Whoever offers the most useful and compelling brand smartphones, and 6 percent via tablets.
experiences in this space will effectively own the living
room. In this report, we’ll delve into the TV-watching About 48 percent of zero TV households watch TV
audiences and the possibilities offered by the new content through subscription services.
consoles. For immediate, device-specific takeaways, Half of zero TV households are 34-years-old or under.
turn to page seven.
• Thirty-six percent cite cost and 31 percent say
lack of interest are the primary reasons they do
Adjusting the Picture of the Viewer not use pay TV.
To understand the future of TV advertising we need • Only 18 percent of these households are even
to first understand how people use media. Nielsen’s considering subscribing to pay TV services.
March 2013 Cross-Platform Report* provides great
Hunger for new content and the use of multiple
insights on the way Americans navigate the content
devices to stay informed and entertained unites both
landscape.
zero TV and traditional TV audiences.
The average American spends more than 41 hours
per week engaging with content across all screens.
* All stats on this page from Nielsen’s March 2013 Cross
Platform Report.
©2014 PHENOMBLUE LLC. 3“The future of TV advertising lies in delivering
relevant experiences to people’s home
entertainment consoles and continuing
the dialogue on second screens.”
©2014 PHENOMBLUE LLC. 4A Clear Picture of the Viewer Still, though audience size and consumption have
plateaued, TV ad expenditures continue to rise.*
• Traditional and zero TV audiences alike rely on
home entertainment devices to stream content • 38 percent ($63.8 billion) of 2012 ad revenues
they want or that they can’t get with their current came from TV.
provider.
• TV ad expenditures are projected to grow to
• Forty-seven percent of all home entertainment $66.8 billion in 2013 and $81.6 billion in 2017.
devices are used to stream content, including
It’s understandable why only half of marketers agree
Internet-capable TVs, video game consoles and
that TV commercials are more effective than online
Blu-Ray players.
ads. They have a vested interest in spending as little
• Netflix is the most popular video streaming as possible and being able to reliably measure the
service (40 percent).* impact of their marketing efforts.
As Internet TVs and innovative new gaming consoles But two-thirds of consumers still prefer TV
begin to package multichannel experiences into one advertising to online ads. They do so for a few
affordable box, more households will move away from reasons. Some commercials genuinely entertain,
traditional network and pay TV toward more selective, some enter the cultural consciousness and most are
relevant platforms. Brands need to recognize and less personal and disruptive than online ads.
invest in this consumer behavior shift.
Note: Ad personalization is not the problem. It’s the
That doesn’t mean commercials are out. People love personalization of the platform that matters. The
commercials (sometimes). In fact, 66 percent of more personal/interactive a device is, the less likely
consumers say they prefer commercials to online consumers are to welcome advertising on it. A recent
ads. These ads just need to be more relevant and Microsoft Advertising study conducted by Flamingo
actionable than commercials from the unconnected Research and Ipsos OTX** showed 76 percent of
days. consumers are open to advertising on TV, 56 percent
on computers, 51 percent on tablets, 39 percent on
game consoles and 37 percent on phones.
The Problem with Commercials
Makes sense. People hate to be interrupted when
TV commercials are the most passive, easiest to
they’re trying to complete an action. Actions that
ignore, least-targeted and difficult-to-measure form
require more effort — such as using a mobile phone
of advertising:
to find something while driving — are less open to
• Only 20 percent of TV ad impressions reach a disruption than actions requiring little effort — such
brand’s intended audience.** as watching TV. So, the more personal the device, the
less disruptive you should be.
• It typically costs $350,000 to produce a
30-second spot and $100,000 to $3 million or
more to air it. The Future of TV Advertising
If you can afford it, go for it. The future of TV advertising means delivering
relevant experiences to people’s home entertainment
consoles, and continuing the conversation from living
room to mobile device to in-store or online purchase.
* http://www.marketingcharts.com/wp/television/us-tradi-
* http://www.marketingcharts.com/wp/television/40-of-con- tional-media-outlook-2013-2017-30129/
nected-tv-owners-stream-content-from-netflix-29221/ **http://www.marketingcharts.com/wp/television/
** Accessed from http://benton.org/node/133082 Source: multi-screen-consumers-most-open-to-advertising-on-
Financial Times, London. tv-27841/
©2014 PHENOMBLUE LLC. 5The Future of TV Advertising Gamers aren’t the only ones who will use these
devices. The wide array of entertainment and
• As of September 2012, 56 percent of American
connectivity features will provide utility to all kinds of
homes with a TV owned a video game console.*
living rooms. As TV and gaming experiences become,
• Video-on-demand (VOD) and streaming services paradoxically, more personal and more social, brands
accounted for 22 percent of time spent with need to deliver great, relevant content with as little
consoles such as Playstation 3, Wii and Xbox disruption as possible.
360, up from 19 percent in 2011 and 13 percent
Of course, advertising is fundamentally disruptive.
in 2010.
People don’t like to be interrupted when they’re
• Consumers spend 69 percent more time using trying to complete an action. So act judiciously and
consoles to access streaming services. deliver brand experiences that help people complete
• New gaming platforms will serve as one-stop a meaningful action. This could mean offering an
home entertainment devices that allow users in-store coupon to someone’s phone when they reach
to seamlessly switch back and forth between the point of sale, or letting them skip over your mid-
watching live TV, listening to music, watching a stream YouTube ads forever, as long as they click a
movie, browsing the Internet and simultaneously button allowing you to email them a $5 gift card to
running apps.** your brick-and-mortar location.
• We’re not here to play favorites, but one cool With traditional TV, however, finishing the show and
(and controversial) thing about Xbox One, for turning the TV on or off are pretty much essentially
instance, is its Kinect HD feature. Kinect HD lets the only actions a person can complete. It’s the
users operate the device with voice commands most passive, least personal device people own. So,
and body movements — marketers will be able to unless they’re DVR-ing it, a person is stuck watching
deliver experiences that truly move an audience. commercials until the show returns. With Internet-
capable TV, however, you can capture a person’s IP
• These new consoles will target gamers and non- address and deliver a personalized experience that
gamers alike and replace traditional set-top cable takes into account their predicament (like, “Sorry, we
boxes. know you’re stuck watching commercials”) and offers
• TV ads will offer more creative, useful and something useful (“Here’s a video game to keep you
relevant experiences to keep audiences engaged, occupied”).
aiming to intrigue consumers, not convince
them.*** Device-Specific Takeaways
While game consoles are not ubiquitous in American People have expectations for the kinds of content they
households, more people are spending more time access on their devices, and you have to respect that.
using them to watch TV. The next generation of A four-minute parallel branded storyline or a branded
consoles is packaging video chat, online buying video game may be fine for someone’s tablet, rather
and social media capabilities into highly adaptable, than someone’s mobile phone. As comedian Jack
affordable devices. As these platforms enter more Black said, “The smaller the screen, the shorter my
homes, viewers will interact with their TV sets like attention span.”*
never before, and TVs will become as personal as
tablets and traditional gaming consoles. We came up with some action steps your competitors
aren’t doing yet. You can use these as guides (or just
steal them — we don’t mind) as you develop your new
* http://www.marketingcharts.com/wp/interactive/game- TV strategies.
consoles-increasingly-being-used-to-stream-video-27813/
** http://www.nj.com/business/index.ssf/2013/05/xbox_
one_unveiled_as_microsoft.html
*** http://www.forbes.com/sites/willburns/2013/05/27/ * http://mumbrella.com.au/jack-black-the-smaller-the-
how-xbox-one-will-change-advertising-forever/ screen-the-harder-it-is-to-hold-attention-161816
©2014 PHENOMBLUE LLC. 6Internet TV Mobile Phones
• Keep viewers in the realm of the show. • Figure out a less disruptive way to converge
online and offline experiences. Remember, mobile
• Offer a parallel storyline featuring the show’s
phones are the most personal devices we own.
cast, but let the story feature you. Overlay a one-
Most people are more likely to give someone they
click purchase button onscreen (or on a second
know a weird hug than let a friend borrow their
device) that lets viewers buy the clothes the
cell phone for a few minutes.
characters wear, the beer they drink or anything
else related to the show. • Take the customer data you’ve collected (you’re
doing that, right?) and offer a member of your
8th Generation Game Consoles
audience an in-store discount on their phone
• Millennials are heavily swayed by advertising in when they walk by, preferably after you’ve
video games — about 40 percent of Millennials advertised on one of their favorite shows.
agree that in-game ads influence their buying
• Suggest cool places nearby they should check
decisions more than other forms of advertising*
out, such as a museum or pedestrian trail, but try
— so be sure to target them.
not to get too creepy with this. Make sure you’re
• Take advantage of data and opportunities offered offering them something useful at the same time,
by gamification services.** Netflix is just now such as giving them an online discount if they
rolling out Max for PS3. Max helps customers bring in a ticket stub, leaf or some kind of proof
engage with content, asks them questions about that they went there. That way, you have two
their moods and TV-watching tastes, and offers chances to complete the sale: in-store and after
predictions based on what viewers currently they leave.
enjoy.
• While they’re in-store, send them a text asking
• For streaming video, use any of the Internet TV them to prank call your store manager. Promise
techniques outlined above. another discount if they do. Send them a Vine of
the manager’s hilarious reaction, plus another
Tablets
discount if they return to the store in a week and
• Offer an engaging second-screen experience pretend to apologize.
during the target audience’s favorite shows.
• During a commercial for your awesome new Last Thoughts
amusement park, offer an app that lets them
explore it virtually — rides, funnel cakes and all. The future of TV advertising lies in developing
meaningful content for the highly interactive
• Give users a show-relevant video game to play platforms of Internet TV and 8th generation gaming
during the break. If they win, email them an in- consoles. Brands need to offer device-specific utility
store discount. and, as much as possible, connect the dialogue
between brands and consumers from living room to
second screen to in-store/online purchase.
Whatever you deliver to your audience’s TV, you shall
deliver to their second screens. But whatever you
deliver must be a relevant, non-disruptive and a really
great experience, or you’re just wasting everyone’s
time (including your own).
* http://www.marketingcharts.com/wp/television/watching-
tv-is-americans-favorite-media-activity-videogames-impor-
tant-to-youth-28065/
** http://m.thedrum.com/news/2013/06/30/netflix-aims-
gamify-content-playstation-3-users-through-max-roll-out
©2014 PHENOMBLUE LLC. 7About Us
Phenomblue is a privately held connected
communications firm, building brands to
ensure success in the connected age. Using its
PTSApproach™, Phenomblue partners with
companies of all shapes and sizes to define strategy
and execute transformative creative solutions,
harnessing the modern interaction between people
and brands. Founded in 2004, Phenomblue is a
top communications firm and has been featured
numerous times in USA Today, Wired, Ad Age, Fast
Company, The Wall Street Journal and The New York
Times. For additional information,
visit Phenomblue.com.
©2014 PHENOMBLUE LLC. 8For more information
on Phenomblue, visit:
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