Social TV’s Marketing Proposition: Capturing Online Ad Dollars That Go To Google (Eventually)

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February 27, 2012 – 12:56 pm

umamiLast night's Oscars represented the TV season’s last big special programming event until the Summer Olympics. In between now and that point, analysis about the value of social media to the networks and advertisers over the past two months will be picked over even more intently to determine the winners, losers and best methods for leveraging "the second screen" experience for content companies and advertisers.

Starting with the Golden Globes, then on to The Super Bowl and the Grammy’s, the numbers of people using “check-in” apps like Shazam, GetGlue, Yahoo’s IntoNow, Viggle, Miso, YapTV and others have been rising steadily. (As social TV analyst Bluefin Labs found, there were 3.8 million references to the Academy Awards via social media outlets during ABC’s broadcast, significantly less than the Grammys' 13 million comments two weeks ago.)

But the pressure has also been rising: when will a clear business model emerge and what is the benefit to networks and studios?  And 12 months from now, who will be on top?

Among the many social TV apps to be released in the last six months is Umami. The app, which launched last fall, uses audio fingerprinting technology to automatically and continuously sync to live and time-shifted programming from 40 major broadcast and cable networks. In addition to the usual check-in function, the app offers an array of info related to the show being viewed, including bios, photos, news and conversation.

Just ahead of the Oscars on Sunday, Umami offered its first big update with two new features that attempt to make the most of the iPad’s large screen with the ability to share screen shots from a show via Twitter and Facebook. It’s a small step in Umami’s development, and not an earth-shattering event in the world of social TV apps. But it does show how the companies in the space are trying to differentiate themselves. In Umami’s case, the idea is that more visuals equals more time spent.

Like most of the apps in the space, Umami doesn’t have requisite scale to make it an attractive advertising option. But CEO and founder Scott Rosenberg told TVExchanger that the company expects to sign some ad deals later this year.

In order to attract major marketer support, Umami (the name refers to the Japanese word for “savory” or “enhanced”), along with its social TV peers, needs to demonstrate that it has enough of an audience to achieve scale. And after that, it needs to prove that its audience is sticking around long enough for an ad to be engaged with. Once that point is met, the social TV app can then deliver on offering user insights.

Umami is still in the beginning stages, but Rosenberg knows that the space is becoming increasingly crowded. With the expectation that most social TV apps will either be clear winners or losers by the end of the year, the need to prove progress on the three points above is crucial.

Defining buzz, not just capturing it: “We feel that for as much buzz as there has been around social TV, the industry has a ways to go to making the conversation more accessible and deeper,” Rosenberg said in an interview. “Talk to an average person, they either don’t know what twitter is, or they just glance at it. Umami is aimed at that average person and no one has cracked the code in how to turn them from what is most likely a casual user into a regular participant. We believe the answer involves providing something more like the TV experience, something that is more visual, as opposed to the text-based experience of Twitter.”

Visuals and data: The new visual tools that Umami rolled out last week included items it calls FreezeFrame, which he describes as a Pinterest-like photo-tagging and sharing function, and Dishboard, which is an infographics dashboard that shows the real-time level of trending topics about any given show the user has checked-in to.

With FreezeFrame, Umami users tap a button that opens a new dialogue box, showing images captured from the last couple of minutes of a broadcast. “The Oscars is the perfect debut, since users want to be able to talk about who’s wearing what dress. But beyond talking about it, the value is being able to show it in real-time. That has more impact then a comment that gets lost in all the chatter,” Rosenberg said.

Dishboard, meanwhile, is part of the data equation and is designed to appeal initially to users who want to get a sense of how much talk is going on. Eventually, it could be a valuable feature for marketers as well, Rosenberg said. “Dishboard allows us to provide more relevance for the average user. This isn’t about just curating hashtags or listing what a program’s cast members are tweeting, though that is a part of it. It’s about elevating the conversation by finding the most popular tweets, offering deeper trending analysis and providing infographics that show momentum of the conversation around the show.”

At what point does it scale?: That’s the big question social TV investors and marketers have been asking, though no one expects a definitive answer at the moment. Right now, the big leaders in terms of the number of users are GetGlue and IntoNow, both of whom surpassed the 2 million user-mark last month.

While GetGlue says it’s not actively focused on revenues -- it wants to build the consumer experience first, CEO Alex Iskold has said –IntoNow has been cultivating its  marketing relationship with the Pepsi Max brand since last spring. Elsewhere, Viggle has positioned itself as a social TV app that functions as a loyalty rewards program and has a dozen deals with major marketers.

Despite the various levels of marketing deals these apps have, no one is claiming to have fully realized what is needed to make these businesses scalable for advertisers.

“I do think you can hit critical mass if you can demonstrate that certain kinds of users or shows have exemplary activity,” Rosenberg said. “If you can say you have an animated audience around content categories like sci-fi or reality, that’s the nugget that marketers look for. The next question is how much time are you driving? What about effectiveness?”

Competing with Google: When it comes to putting a price on how much a TV viewer is worth, broadcast’s huge $70 billion a year business makes it easy to forget that as individuals, the value is fairly small. “A single person watching TV costs about 35- to 50 cents per viewer hour,” Rosenberg said. “Take a show that’s popular and drives $10-to $15 CPMs. You have 25 ad units per hour (for national inventory). Using round numbers, if you assume $10-15 CPMs and 25 national ad spots per hour, you get an aggregate CPM of $250-400. This means the average viewer might be worth $0.25-$0.40 per hour in national ad dollars, more for big shows, less for small shows.

"So it’s about adding up the numbers. That’s the challenge and the promise all of us are chasing. TV is the best medium is the best way to drive interest in a product. And if successful, you help get people to buy it.

“The question for social TV is, ‘Can the TV business be more than $70 billion? Can you take that viewer proposition from 25 cents per hour to a buck?’ Right now, the second screen experience largely involves sending a TV viewer with a computer to Google something they’ve seen in a commercial. Google -- not specifically, I'm using them as a proxy for the internet in general -- is getting the credit and the advertising dollars as a result. Social TV apps offer networks the chance to grab those dollars that are going to Google during web searches. That’s the proposition we present.”

By David Kaplan


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February 27, 2012 – 12:56 pm

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