Electronic Retailer - February 2012 - 30

DR DISRUPTION

households, they found a comfortable home in the most social room of all: the living room. Families and neighbors gathered to watch programming meant for all ages, and the act became a cultural ritual. Eventually, Gordon notes, as society progressed and cable gained in popularity, TV became more of a personal experience as family members within the same household would watch TV in different rooms of the home. The increase in cable channels geared toward specific demographics – MTV for young adults, Nickleodeon for kids and ESPN for men – also promoted individual viewing. However, there has always been the watercooler effect as people gathered at work to discuss programs and television events of the previous night. “Social TV has really now become a global real-time watercooler,” Gordon says. “It really has made TV a social experience again.” But what exactly is social TV? It’s the convergence of television and social media. More specifically, it’s when viewers utilize social media to engage with programs, advertisers and each other to connect, promote, generate buzz … even raise ratings. Social TV has grown quickly in large part due to the technology becoming so easily accessible in the last few years. Today, Nielsen estimates that roughly 40 percent of tablet and smartphone owners in the U.S. use their devices daily while watching TV. Over-the-Top has become an essential part this brave new television world for many of the same reasons that social television experienced its rise. OTT is when video and programming are delivered via the internet to TVs, laptops, gaming stations, tablets and mobile phones – think Netflix or Hulu, for example, two of the biggest OTT providers. “I like to think of it as leapfrogging your cable box,” Condon says. He explains that while OTT TV has been available for a few years, it’s now gaining real traction as consumers get savvier when it comes to technology, 30

which has also become more affordable. “With the wide distribution and faster speeds of broadband and then the rise of HD TVs, it got so much easier to stream video,” Condon says. “Then you add tablets into that, and now as price points are dropping, the timing is just right for consumers to become more engaged in programming on multiple platforms. They actually expect it now.” A recent study by The Diffusion Group illustrates just how much Overthe-Top video use has skyrocketed among viewers. It showed that 106 million households used OTT video services in 2010. And what’s more impressive: That number is expected to grow to 250 million by 2016. “Originally, it looked like interactive television would quickly proliferate through cable and satellite, since they had the set-top boxes and controlled the TV technology in the home,” Mendelson says. “But the cable and satellite companies held back, not wanting to invest money and not wanting to mess with the business model. That left opportunities for Apple, Google, Roku, Boxee and all the screen manufacturers, particularly Samsung, LG, Sony and Vizio, and even gaming consoles to get into the business of delivering TV through the internet. Cable and satellite has responded with the ‘TV Everywhere’ initiative, and they still control the majority of TV in the home, but OTT is here to stay.”

A New Approach to Advertising
As consumers demand more online video and search out ways to engage with programming via social networking, content providers and advertisers are beginning to see the benefits of this potentially lucrative market. While TV viewing is at an all-time high, Gordon notes that these added devices can have a negative effect for advertisers and marketers. “People can be distracted with this second screen experience,” he says. “People are not necessarily watching the commercials or engaging with them.”

A study from IPG Media Labs and YuMe confirmed the long-feared belief that viewers are tuning out during commercial breaks. The study found 94 percent of viewers used some form of “companion media” while watching TV and online video. During ads, viewers shifted their attention to the other media at a level three times higher when watching TV vs. online video. What this shift has done is caused advertisers – both brand and direct – to look for traditional and non-traditional ways to reach audiences. Take Pepsi, for example. The soft drink producer and official sponsor of Fox’s “The X Factor” jumped head first into social TV and launched two platforms for fans of the hit reality competition. Sound Off is a social network where fans of the show can gather online and earn Pepsi rewards, while Pulse is an aggregator of tweets and Facebook posts about the show. Then there’s what CBS did during fall sweeps. The network complemented its sweeps programming with a supercharged social media plan in which stars and CBS Sports anchors took over the Facebook pages and Twitter accounts for their shows and interacted with fans. Ratings increased for many of the network’s shows. NM Incite, a joint venture between Nielsen and McKinsey, was among the first to discover the relationship between social media buzz and ratings. It found that among 18- to 24-year-olds, a 9 percent increase in online chatter in the weeks before a show’s premiere correlates to a 1 percent ratings increase. Condon notes that, more than anything, this conscious move by viewers away from traditional television advertising has forced marketers to get more inventive with their creative. “What marketers are looking at here is a chance to really heighten the level of creativity and engage with their consumers,” he says. “And with this new Over-the-Top technology, you can get them directly to your website with little extra work and have a captive audience who’s ready to buy.”

electronicRETAILER | February 2012

Electronic Retailer - February 2012

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