Forecasters Say Interactive TV Market Slow to Develop

At last month’s Consumer Electronics Show, manufacturers rolled out their latest line of Smart TVs.  Analysts believe that unit sales of Internet-​ready TVs will approach the sales levels of traditional TVs within 4 years. But marketers may be much slower to shift some of their ad budgets to this format.

For one thing, Andrew Ladbrook argues that manufacturers are hampering the progress in this field by not offering easier ways for users to connect with the Internet. Currently, Ethernet is the dominant method. And while unit sales of Smart TVs are increasing, they are only expected to account for 20% of TVs in use by 2016. The numbers of consumers using Smart TVs may not be significant enough for some advertisers who are accustomed to reach big audiences through traditional TV.

And then, there are the competing platforms. Currently, 42% of advertisers buy video ad space on the iPhone platform and 35% of publishers support video ads on this same platform. Similarly, 31% of advertisers use the Android platform and 28% of publishers support it. But, only 8% of advertisers promote on connected TV, a number that is unchanged from the previous year. Publisher support for the connected TV platform has increased in the past year though, from 11% to 17%.

Advertisers may be holding back while they wait to see how this market forms. Hardware operators like Samsung are developing proprietary systems and launching their own ad services. And tech giant Google has its Google TV platform and is serving large media companies. Simon Murray, an analyst with Digital TV Research suspects that until this market builds critical mass, it may continue to be “fairly minor..at least for the next 5 years.”

[Sources: Ladbrook, Andrew. Challenges Ahead Before 2012 is Year of Connected TV. Informa Telecoms & Media. 12 Jan. 2012. Web. 1 Feb. 2012; Lunden, Ingrid. Interactive TV Advertising. Paidcontent​.org. 16 Jan. 2012. Web. 1 Feb. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.