Connected TVs and Devices Spark Battle for Ad Dollars

--TVOT Panelists Debate how Programmers, Distributors, Tech Vendors Should Split Revenue

New York --- While connected TVs and mobile devices may offer new revenue opportunities for advertisers, programmers, pay TV distributors and technology suppliers, it's still not clear how that revenue will be split among key players. That was a dominant theme here this week at the TVOT NYC Intensive

Lawrence Brickman, a former Cablevision and Insight Communications executive, suggested connected TVs could ignite a battle between cable operators and TV manufacturers over who controls the user interface, programming and advertising that viewers see. "You have dueling remote controls ... and potential for people selling advertising against the advertisers paying for the programming in the first place," Brickman, the founder and managing partner at interactive TV applications developer Cloverleaf Digital, said on a panel session about connected TVs. 

Mobile social TV application providers such as Miso and IntoNow allow viewers to interact with TV programming and create a new outlet for advanced advertising. But there wasn't consensus on whether pay TV distributors should control the advertising that could be delivered to mobile devices. 

Cablevision director of interactive television strategy Dave Alloway suggested that cable operators are in the best position to control how advertising is delivered to mobile devices used for second-screen applications. "We are their customer service lifeline. No one is calling Amazon when their Internet is down. No one is calling HBO if their video is pixelated. We're the best people to relate to the customer, and we are the ones cashing their checks," said Alloway, speaking from the audience during a panel session moderated by "The iTV Doctor" Rick Howe.

Miso has struck deals with DirecTV and AT&T's U-verse TV to deliver content to mobile phones and tablet computers that is synched with TV programming. While Miso hasn't disclosed terms of those deals, the startup could share ad revenue with cable and satellite programmers and distributors. 

Some panelists suggested that working out legal agreements between service providers and technology vendors could slow down deployments. "Working with lawyers is a lot more difficult than working with the technical interfaces of these things," DirecTV senior director of multimedia innovation David Schlact said regarding second-screen applications. 

One of the liveliest panel discussions was focused on delivering advertising to connected TV, featuring executives from YuMe, LG Electronics, adRise, Rovi and Digitas

Digitas SVP Ashley Swartz said focusing on innovation – rather than debating over who should control ad inventory – is crucial. "When you have a market like this, and everyone is trying to retain their own inventory, it's never going to work," she said.

Swartz also emphasized that advertisers shouldn't be focused on traditional metrics, and should look instead at the value in the immersive experience that can be delivered with interactive advertising. "We have to get advertisers around the idea that this is about a value exchange. If conversations end at reach and performance-based metrics, we are not leveraging the power," Swartz said. 

Increased demand for connected TVs could bode well for technology providers such as Rovi and ActiveVideo, which are pitching interactive TV technology to both cable operators and TV manufacturers. 

Comcast, Time Warner Cable and other Canoe Ventures partners are beginning to sell more RFI (request for information) interactive ads to media buyers. Jeff Siegel, SVP of global media sales at interactive program guide vendor Rovi, said he also sees opportunities to sell RFI ads to CE manufacturers. 

"I think the people that win in this space have some kind of relationships with the CE manufacturers," Siegel said. Connected TVs could allow Rovi to deliver advertising that relies on QR (Quick Response) codes and SMS (text messages), Siegel said. 

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