Moving From Connected To Smart TV: LG’s Durgin On New Platform And YuMe Partnership

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November 7, 2011 – 12:14 am

Matt Durgin of LGLast week, LG and YuMe announced a new partnership which will bring YuMe's video advertising solution for Internet Connected TVs to LG’s Smart TV platform. Toyota is the platform's first customer. Read the release. And, read more in The NY Times. What inspired LG’s decision to get into the ad platform business?

MD:  Before this year, we realized that our connected device strategy was starting to become a platform. In the early days of our device strategy, we made a few content partnerships that were very strong. We put them into the device and made them a part of the actual product. The market evolution into a platform happened over the course of those first couple of years.

This year, we launched an application environment and knew we needed an economic business model for the developers who are on the platform.

We knew we needed consumers to be able to pay developers for the apps, which we implemented a few months ago. And, if it's a free app, we still wanted to have an economic model attached to it -and that's an ad network. We are finally able to announce that we're bringing our ad network into the play.

So you decided to go with YuMe? Why choose YuMe?

YuMe is a great choice for us for a couple of reasons. They are extremely strong in the delivery of video online, in an integrated system which knows which video to play to which person, and when to stop - and when to have it available. It's user‑focused that way, but it's also advertiser‑focused because it can meet their goals.

The second thing that is critical is that they bring their own ad sales network, so we didn't have to worry about ad inventory being sold into this world‑class system.

Stepping back to the idea of “Connected TV,” is there a definition that you guys work off of for Connected TV? And, how does LG address Connected TV in terms of devices?

First, let’s talk a little bit about the difference between “Connected” and “Smart” and why we’ve evolved into using "Smart."

For us, from a strategic standpoint, we felt that "Smart" was really a promise to the user that their TV was going to continue to be more relevant to them even after they’ve bought it.

Essentially, we would be building a platform to which we're going to constantly be able to add new partnerships, applications and functionalities. The TV, as soon as they get it home, is going to be different for each home. Prior to this time, we were putting in a collection of partnerships, which we had made decisions on, based on research and focus groups that were our consumers. But WE were making those decisions about what that device was going to be - and that was a Connected TV.

And it’s still a great product, but we made changes to it. It was not a natural promise of the product that it was going to be different six months or a year later, or that a consumer could just choose what they wanted to pull out of it.

That was a big dividing line between what we considered a Connected TV and a Smart TV.

Where do you think we are in the evolution of Connected TVs and Smart TVs overall, industrywise?

From a technology standpoint, we're in the middle. I think we're going to be in the middle for a long time. I don't think that we really see any kind of finality to this. There’s still a lot of opportunity to grow, change and evolve.

From a consumer standpoint, it's a little different though. We're finally getting out of the awareness phase and now we're starting to get into a phase where consumers are actively seeking what's right for them.

I would call that moving from phase one to phase two, to go from awareness to understanding, then starting to actively seek it out.

Let's talk about the marketer. With this announcement, what's in it for them?

There are three keys here for marketers. The first thing is their opportunity to get to the biggest, best screen in the house in a way that they have not done before. We're not trying to change existing models, but we're trying to add another option for people to get to that big, great, beautiful screen in the living room that the family is enjoying.

The second thing is, because this is based off the connected, smart, cloud‑based world, it brings in capability for us to do accurate measurement, tracking and targeting. Advertisers will know more about what they're doing, and they'll be able to tweak it to meet their goals. One example that comes up is, some advertisers go out and buy [ad] impressions, but they get all the impressions at 3:00 a.m. to the wrong people. For us, we'll be able to say, "No. We'll make it the right target, and no more than five per day." We can bring a lot more targeting and specificity to the program on behalf of the advertiser.

The third point is, we're a global company and we provide our Smart TV globally so marketers can play in a global economy easily with us.

And, drilling down on those targeting capabilities - those capabilities are what YuMe is providing, correct?

Yes, and the system is already in place and embedded into the actual software of the device itself.  It's going to be able to bring people the right ad, based on their demographic or geographic targeting, or even their device - or content‑based targeting.

 By John Ebbert

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November 7, 2011 – 12:14 am

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