As programmers move into the upfront season, a growing number of networks and second-screen app providers are deploying applications for selling goods directly to consumers.
FX, Fox, A+E Networks, Verizon FiOS, ConnecTV, Shazam and others have already embraced the idea, which can turn any network, app, multichannel provider and TV set into a kind of home shopping network.
The 30-Second Mall
Perhaps the biggest development is the push by Shazam, ConnecTV and others to reinvent the 30-second spot with second-screen apps that enable viewers to buy products from mobile devices. These apps are synced up with TV programs and ads so they can serve separate content and ads onto smartphones, tablets and other Internet-connected devices. Then at key points in a show, users can be prompted with opportunities to buy products related to what they are watching on TV.
Shazam, with 85 million U.S. users, is already selling around half a million items per day through partners including iTunes and Amazon and is bringing in around $300 million a year in digital music sales. “We can make TV ads interactive for engagement or transactions at a large scale,” notes David Jones, Shazam executive VP of marketing.
In episodes of Fox’s American Idol this year, ConnecTV has run second-screen apps that allowed users to place orders at Pizza Hut, notes ConnecTV CEO Ian Aaron. Second-screen app providers including ConnecTV and Shazam have also run campaigns that allow users to click on a secondscreen ad to buy tickets for a movie trailer they watched on TV.
Programmers such as FX, Fox, A+E Networks, Showtime and HBO are also increasingly pitching merchandise tied to their shows on mobile sites or secondscreen apps. FX’s Sons of Anarchy has already sold merchandise with a retail value of “tens of millions” of dollars, notes Michael Waghalter, VP of FX Productions.
Looking forward, Waghalter says FX would like to work with its TV advertisers on interactive ads and to work with multichannel distributors on second-screen apps that are tied to larger TV Everywhere deals.
Technologies that sync second-screen apps with TV programming also open up new advertising and commerce applications. ConnecTV allows broadcast stations to sell second-screen ads for mobile devices that will pop up whenever certain words, such as an actor’s name, are mentioned. Then the user can be prompted to buy movie tickets or a TV program, which means that a promotional appearance on a TV show can be turned into direct sales.
Data Mining for Dollars
In such efforts, systems for analyzing data from consumer usage are crucial. Delivery Agent, which works with three of the four largest broadcasters and more than 50 cable networks to sell licensed merchandise from TV programming, has systems that combine viewing data, social media traffic and purchase volume to help them improve their sales efforts, says CEO Mike Fitzsimmons.
“It allows us to be very smart about how we test new products and marketing campaigns,” he says.
Newer interactive applications for buying merchandise are also being launched by operators and TV set manufacturers.
Maitreyi Krishnaswamy, director of product services for Verizon, notes the company’s interactive platform includes commerce applications from Home Shopping Network and some A+E Networks channels. Verizon is developing a new HTML 5 platform that will greatly simplify the development of new apps for multiple devices.
Delivery Agent is launching a commerce application on Rovi’s multichannel program guides that have been deployed by many operators and on 2013 Samsung connected TVs, with plans to expand that effort to mobile devices. “Margins on TV sets are so low that even $5 a month in revenue per set is very exciting opportunity for them,” Fitzsimmons notes.
Opportunities for Disruption
The movement of big consumer electronics players in TV commerce highlights both the opportunities and the potential disruptive impact of these technologies.
ConnecTV is working with a number of major station groups and will be bundling those second-screen ads with one broadcast network during this year’s upfronts, Aaron says.
Broadcasters that fail to quickly embrace the concept could risk losing some of their ad business to outsiders. “When you have the ability to create additional inventory [from second-screen apps] across 400-some channels that can be very disruptive, because you are not dependent on anyone to sell those ads,” he notes.
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