As the Second Screen has moved from learning to monetization, the topic of 2nd Screen Ads comes up more frequently both in the crystal balling and the concrete. In theory, Second Screen Ads could be seen as Mobile Ads redux (eyeballs, impressions, problem solved!), but in practice not quite so. Second screen doesn’t have the eyeball volume (as I chronicled here and here) to adopt a monetization model based purely on volume of impressions. Nor does it have a rich location vocabulary of mobile apps (unless you consider ‘left side of couch’ and ‘right side of couch’ as separately interesting ad buys). However TV Context is a weapon second screens do have, and a variety of programmers are following the tri-part formula of – a) build proprietary app to ‘own’ your TV context, b) use the simplest possible Ad real-estate (i.e. clickable banner) as a window to monetize this context, and c) recycle your traditional ad inventory to fill this real estate.
The problem with this seemingly pragmatic strategy (i.e. use familiar Ad User Experience and existing inventory in new market) is that it is as effective as bringing a Ukelele to a Symphony. Current web Ad formats are designed for (visually) simple & targeted experiences. This is fundamentally at odds with Second Screen experiences that are and will remain complex visual experiences for two reasons :
- Today – Complexity as Organizational Reality. 2nd Screen Apps are rife, 2nd Screen strategies not so much. What I mean is that most media organizations are putting out 2nd screen Apps so as to not be left behind. Few have really thought out what it means in terms of storytelling. Consequently, Apps by RFP are the vogue (a big dollop of lurid show imagery, a generous side dish of Twitter feeds, and 3 dashes of Trivia please). The App development shops love it (complexity = development and maintenance revenue) the media houses are OK with it (have 2nd Screen Initiative?, check), and the users .. umm, on the fence.
- Tomorrow – Complexity as Visual Throughput. There will be a point where 2nd Screen is burned into every show producer’s vernacular and emerges as an organic part of storytelling. This in turn might obviate the visual complexity that comes from indecision that afflicts today’s Apps. But it is my conjecture that visual complexity will persist because of the ephemeral nature of secondary screen attention. If you want a ‘unit of storytelling’ in the 30 seconds that someone looks away from the TV screen because he is bored by a particularly pompous Bryant Gumbel, or the ad nauseum replay of the Progressive Insurance commercial, then rich visual is the best way to engage with velocity, purpose and enchantment.
If complexity of experience is an invariant for 2nd screens, then Ad formats developed for quick 2.9 word searches may be insufficient. The ability to visually cancel out a banner is easy, in a panoply of visual activity. And for those that don’t visually cancel it out, the Ad is visually and contextually incongruous.
It would seem like the solution is for Ad Units and Second Screen storytelling to be simultaneously co-invented, so that the Brands aren’t intrusive and foreign messages in high velocity storytelling. The success of inline Twitter Ads and the Bluefin extension (a thinly veiled analog to retargeting!) has certainly prompted a surge of interest in Native Advertising, which is closely related to my proposal here.
But what exactly does Native mean for the Second Screen? How does something that works for a targeted and terse storytelling style such as Twitter translate to 2nd screen TV? Perfectly valid questions – and a topic for the next missive.
Another Microsoft product unveiling came and went, with the boos, cat calls and derision (sometimes warranted) that accompany many things Microsoft. Somewhat without precedent, Microsoft messaged this as the Future of TV (i.e. gaming bringing known success in interactivity to TV), trying to triage two camps (TV and Gaming) that aren’t known to be mutually affectionate. Promptly, the TV crowd accused XBox One of being an erstwhile Google TV doppelganger with a somewhat awkward HDMI pass thru overlay on traditional TV. And the gaming crowd, used to being somewhat aloof from TV, didn’t appreciate playing second fiddle to TV. Not to mention, in a business where hardware horsepower is digital testosterone, Xbox One seemed like a strict subset of the PS4 (thus, Xbox One is also a PS4 doppelganger, a day late and a dollar short). Yes and yes notwithstanding, here are a few reasons to take XBox One seriously as both a TV play and a second screen play.
Xbox and TV.
- It may seem like with the HDMI pass thru XBox is trying to ‘play nice’ with traditional TV the way Google TV did, but it isn’t. If XBox’es strategy is to circumscribe TV and (over time) devalue vanilla linear, HDMI pass-thru is an offensive move, not a compromise. Furthermore, it’s a clever business move from the point of view of channel partners such as National Geographic, ESPN or NFL – they can still get their traditional revenue from the traditional subset of TV, while pursuing higher risk/rewards streams (and richer analytics) around Fantasy and interactivity with a device that has the horsepower to do this really well.
- You can take a half full or half empty view on the One announcement around harmonizing gaming and TV. The half empty school would point to a past high profile attempt involving Peter Jackson that fizzled. The half full school would point to the hire of media executive Nancy Tellem who is no stranger to unconventional+success (e.g. Survivor), and the fact that the Halo TV series is backed by Steven Spielberg. Additionally, the sale of their perfectly functional IPTV business to Ericsson would suggest that this is a high conviction bet for Microsoft.
- Further while, gamers are a different kettle of fish than TV watchers – they influence TV watchers (as your son might influence you). If new forms of storytelling emerge, a conversion of any significant fraction of the 77 million member community would immediately move Microsoft to Tier-1. And this assumes the Xbox One community to be zero sum, which it won’t be if the content is any good.
Xbox and the Second Screen. While XBox One wasn’t a second screen announcement, it has some pretty strong ramifications on the second screen market:
- Firstly, it will raise the bar on what second screen competes against. It’s not tablet vs underpowered browser – it’s tablet against a kick-ass piece of hardware running rich graphics on a 70 inch screen, 3 operating systems that switch on a dime, and 3 forms of content with existing ecosystems.
- Second – XBox One’s Snap feature blur’s the line between screens and windows. You can have two Apps on one screen (Snap mode), two windows on two screens (second screen), 3 windows on 2 screens (second screen a la Microsoft Glass + Snap), ….
- Third – given that game developers have a culture of creating high quality derivative content (content ownership battles notwithstanding), XBox One could jumpstart a broader culture of creating second screen content (something I’ve pointed out in a different context as a barrier to second screen uptake)
- And last but not least – just as the advent of smartphones is leading to mass-market smartphones, there could be a longer term demand equation around set-tops that incorporate some of these capabilities (e.g. casual gaming) in a lighter but more mass market fashion.
In the meanwhile, we have E3 and other upcoming shows to unveil if Halo TV is good, bad or indifferent — and of course the tea leaf reading around the XBox One ship dates.
Fresh off completing a second screen ad study on a notable TV show .. (you know, the kind where you go in with a ‘lets-confirm-or-deny-what-we-think-we-know’ and come out with some of .. ‘hmm-now-we-know-what-we-didn’t-know-we-didn’t-know’). Wanted to use this moment to reflect on a topic of much procrastination — the emerging economics of Second Screen Ads. So here goes — with the caveat and adapted Yogi-ism – 90% of all prognostication is 50% mental.
As with any emerging market, Second Screen Ad prognostications are heavily dependent on your assumptions, which might include:
- Pace of growth of TV Apps Ecosystem in both volume and ‘share of TV eyeballs’
- Emergence of new Ad Units. Surely there’s more to second screen ads than banners & videos. Something that matches the increasing computing power of tablets, and the increasing short spans of focus on any single screen at a time. But what this is is anyone’s guess – and until then, there’s banners and click-thrus.
- The relative valuation of new Ad Units to the incumbent ones. What should the base case of the Ad Unit revenue breadown projection? Banner Ad or more? CPM,CPA,CPC,CP(TBD?)?
- The Trajectory of ‘input costs’ – What assumptions should be made about the costs of creating large varieties of ad units for the same campaign.
- Analytics & Reporting. How about the potential ‘apples and oranges’ issues of adding up the engagement across devices, exposures and interaction styles into something simple and tractable.
Given a position on the above, we have sunny side uppers, the whoops, is that a Chasm I see? crowd (harkening back to the Gorilla Game), and the umbrella-carrying sun worshippers.
- Sunny Side Uppers The assumptions made by sunny side uppers such as this, focus on the *potential* total addressable market. If you take the best case – a) 80% of all (4 billion!?) TV watchers have TV Apps running on their tablets while they watch TV, b) their TV App dwell time is a significant fraction of the program length, and c) their dwell time is handsomely rewarded by some unspecified but superior-to-banner ad style, with a lucrative ‘action-per-thousand-eyeballs’ metric.
- Whoops, is that a Chasm I see? This school of thought is that a large pivot needs to happen in the second screen space before early adoption turns into revenue. Some studies point out that actual second screen use is close to 10% than 80%. This is in line with VC Fred Wilson’s 30/10/10 rule of thumb for any App (TV or non-TV). If you go with Fred’s rule, less than 10% of your app downloaders are active users, and about 1% of your downloaders might be on concurrently (for Social TV or Social Ads). Combine this with my earlier blog (pie chart included below for convenience) showing that most apps have 100K downloads or less – and you have an ad targeting over 10K users and social experiences across 1K users. Not that 10K is a small number, but nowhere near enough for banner style ad economics to add up to more than a month’s rent on a studio apartment.
- Umbrella-carrying Sun Worshippers There is a ‘third way’ – one that acknowledges but triages the best of both the above. It acknowledges the ‘chasm’ view that getting the cross product of app eyeballs and dwell time in the millions isn’t exactly around the corner. However, the sunny side school does have a point that new ad categories may change the economics away from the obsession around eyeball counts in the millions and trying to conjure up large $ numbers from minuscule web by CPM’s. A number of companies are working in this space without yet showing their hand, and a maybe plus a perhaps don’t add up to two is’es. However, between YuMe’s award winning multi-screen ad units, and Adobe’s multi-screen ad inventory management, there are in-market examples of tangible current products trying to create a superior ad experience, nuanced analytics .. and therefore a more viable economic base.
And in the process of building a viable economic edifice for multi-screen TV, second screen ads could blur the lines between ads and content, click thru’s and audience participation- and in an oh-by-the-way manner, commoditize user panels. After all – why ask a user what they would do, when you can know what they do..do.