Shoppable ads move to the checkout

US viewers of February’s Super Bowl saw a 15-second ad for lip gloss promoted by Cardi B which had been censored and edited because of its non-family-friendly innuendo. However, those watching online or an internet-connected TV could see the uncut 50-second version by scanning a QR code featured in the commercial.

This publicity-generating engagement by the beauty brand is the latest example of the trend towards shoppable TV.

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The equivalent of click-to-purchase on social media, shoppable TV is the ability for marketers to shorten the path from viewing an ad to purchasing a product made possible by the increasing adoption of smart TVs which come with built-in internet connectivity and app stores.

“Shopping via TV is quickly manifesting into reality,” declared LG Ad Solution in its Shoppable TV Report 2024. LG offers ‘direct to glass’ technology that enables advertising in the navigation screen that is clickable and enables web navigation right on the screen.

Consultant Deloitte describes the expanded commerce experience as shoppable media: “The use of interactive content across any media to encourage consumers to make a direct purchase and enable them to buy instantly”. Touchpoints include social media, metaverse-like experiences and video games (where many gamers already make in-game purchases). With nearly all US and UK consumers subscribing to at least one paid SVOD service, the connected TV (CTV) is becoming the new battleground for advertising revenue.

“CTV could be synonymous with shoppable TV,” says James Smith, EVP & GM, Global Ads Sales & Programmatic at Amagi. “The US is ahead of the game where CTV adoption started a little earlier but we’re now seeing massive growth in the main EU markets.”

In the US, in January, Disney launched a beta program for its first streaming shoppable ad format – called Gateway Shop partnered with advertisers like Unilever. Consumers streaming shows on Hulu and Disney+ will receive personalised prompts for products related to on-screen ads that are sent directly to their phones via push notifications or email.

Previously, CTV maker Roku and online merchant Shopify teamed to enable Roku viewers to buy goods from Shopify sellers from their TV.

“CTV is a digital channel, and ultimately, viewers will interact directly on the big screen. It is up to CTV publishers to create opportunities for this to happen,” says Dave Dembowski, SVP of Global Sales at Operative.

The 800-pound gorilla is Amazon, which recently introduced ads on Prime Video and, as a Bloomberg report points out, has the advantage over other streaming services by owning a massive e-commerce marketplace. It experimented with shoppable ads during an NFL game last December where ads featured on-screen QR codes linking to Amazon’s Black Friday deals. Other activations include July 2023’s The Victoria’s Secret World Tour which was accompanied by a ‘Shop the Collection’ button embedded in the Prime Video app.

Retail brand Walmart just spent $2.3bn to acquire TV set maker Vizio in a bid to rival Amazon in the shoppable TV space.

Second screening

This next evolution of commerce interactivity taps into the natural behaviour of streaming audiences – which is that most viewers watch TV with a second screen in their hand or nearby. Research suggests that when given the opportunity to engage with interactive video experiences, consumers choose to do so. According to a survey conducted by Lucid in 2023, 75% of viewers agree they would rather see an interactive TV ad than a standard commercial, particularly when consumers can find out more information about a product or redeem a special discount or offer.

QR codes are the gateway, presenting advertisers with the opportunity to create more interactivity and engagement with TV viewers. LG reported 66% of CTV users recalled seeing an ad with a QR code in the past three months, that 7 in 10 CTV users like ads with QR codes - especially if they include a discount, and that nearly half of CTV users scanned a QR code specifically to get a discount code.

“The introduction of QR codes into the CTV shopping experience has been industry changing,” says Mārtiņš Magone, CTO at TV maker Veset. “The next logical step from here is to bring these interactive experiences directly onto one TV screen and create a non-intrusive yet engaging shoppable experience.”

More than three-quarters of viewers use their smartphones while watching TV, and QR codes take advantage of this multi-screen behaviour. Digitally native Gen Y and Gen Z viewers are also used to ‘one-click shopping’, which means they are primed for commerce experiences even while they are watching TV.

Smartphone vs remote

However, research has found that consumers are more likely to click ‘OK’ on their remote instead of scanning a QR code on their phones. In this case, Smart TVs can enable “full-funnel consumer activity, acting as another screen – the largest screen – in the home to drive ad attention and purchase,” says Roxanne Harley, Head of Strategy & Client Development at digital media platform Azerion.

Roku is in the remote control camp. “We believe that the future of shoppable ads lies in leveraging the remote control rather than purely relying solely on second screens like smartphones or tablets,” says Mike Shaw, Director, International Ad Sales, Roku.

However, no one method has yet emerged as the best approach. “Not only is the technology very early, viewers are just getting used to interacting with their TVs,” says Dembowski. He advises advertisers to work with CTV companies to test each option and understand for themselves which approach works best. “For retailers with robust shopping sites, a second screen might work best to allow viewers to get into a full shopping experience. Brands looking to engage more through CTV might prefer to test new options right on the big screen.”

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Other ways of interacting with a TV ad include voice which allows users to verbally command their CTV to add items to their shopping cart or make purchases directly through voice assistants like Roku Voice. Gesture recognition enables viewers to interact with shoppable content using hand gestures or motion controls, “enhancing the immersive shopping experience,” according to Shaw. “Augmented reality (AR) overlays allow users to visualise products in their own environment before making a purchase, while gamification rewards viewers for engaging with shoppable content, encouraging repeat interactions, and driving higher conversion rates for advertisers.”

The answer will depend on the audience and the device they are consuming content on. Harley warns that the more creative you make the experience, for example, by introducing voice, the greater the potential of a brand ending up excluding certain consumer groups.

“While younger audiences are willing to interact with shoppable ads, the next hurdle for shoppable video involves engaging more than only this demographic,” she says. “As viewing habits change, so will the way viewers interact with ads on TV. In turn, both the technology concerning the TV set and remote needs to catch up with innovations in advertising to ensure a seamless consumer experience.”

ITV was the first UK broadcaster to introduce a shoppable TV service. Launched around Love Island in 2021, developed by The Take, and on LG CTVs and with Boots as ad partner, ITV was optimistic of scaling the service.

ITV Marketing Director Paul Ridsdale anticipated a vital alternative revenue stream calling shoppable TV “a wonderful innovation” that was “filling a real gap in the market.”

Yet the broadcaster quietly abandoned the trial, telling IBC “we hope to have some news in this area later [this year].”

Personalisation

Dembowski outlines several challenges that come with a new advertising experience. “First is creating a seamless buying, order management and delivery process to make sure that advertisers get what they want and publishers actually profit from this new ad type.” Second, he says, advertisers need to test more to know what engages consumers most effectively, and they need insights and expertise from CTV publishers. “Since consumers aren’t in the habit of shopping while they’re watching TV, this emerging behaviour will need to be studied before it’s perfected.”

The relevance of the ad is crucial. “The biggest mistake is failing to deliver the right message to the right user working within GDPR and privacy controls,” says Smith. “There’s no reason to put an ad in front of a user who has already purchased that product.”

The stakes are higher when an ad is shown on live TV when there’s risk of interrupting crucial action. Dembowski says, “publishers need to be very confident in their operations and delivery to ensure that the ad experience meets advertiser expectations. This requires state-of-the-art order management technology that works across CTV and any other channel such as mobile or desktop. Advertisers also need to be smart about their creative approach. Anything can happen on live TV, and so it’s harder to perfectly design the ad experience to fit with the content.”

The exclusivity of sports broadcast also poses a challenge for CTV integrations. Harley says that selecting and delivering campaigns programmatically in real-time while sticking to exclusivity is a hurdle to overcome with contractual commitments versus increasing revenue.

“Ultimately, consumers invested in watching a sports game might not be inclined to spend time ‘shopping’ and would instead prefer to watch the halftime recap or chat with their mates about the score. So, it’s a case for brands to balance engagement with consumer passion, to avoid ads becoming intrusive.”

The technology and the user experience is still in the experimental phase. While interactive TV ads and personalised shopping experiences promise to move consumers “down the funnel” in marketing parlance, with more efficiency than before, budgets are only slowly following suit.

“Advertisers want return on ad spend when moving budgets off linear TV onto CTV,” says Smith. “Once we put KPIs and metrics against conversion, that is when you start to see money moving over from traditional TV. We are starting to see that now.”

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