The shoppable TV revolution: will consumers buy it?

In the advertising world, one of the major advantages the internet has over TV is that the journey from seeing an ad to making a purchase can be measured in a single click.

Replicating that quality – the short distance between exposure to advertising and making a purchase – is one of the big goals of those applying advanced advertising technology in the smart TV world currently.

Streamers and broadcasters alike are now homing in on ‘shoppable TV’ to supercharge the value of their advertising inventory, investigating the potential appeal of ad formats that allow consumers to purchase goods and services directly from the TV screen.

Shoppable TV – interactive advertising leading to a decision to purchase – has been experimented on for years, without leading to any kind of step-change in the way advertising works.

The simplest way to turn a TV ad into a shoppable ad is to display a QR code on the screen that viewers can scan with their phones to link to a website. But this obviously requires effort on the part of consumers.

Prompting viewers to use their remote controls to click when prompted by the TV, on the other hand, offers a more efficient route to the same result, but could alienate consumers (even if the use of the second screen – the mobile device – for the interactive element is now clearly seen as more palatable than taking the viewers away from their viewing experience into some sort of advertising walled garden on the TV itself).

Fatima Dowlet, Head of Streaming and Social Media Propositions at UK ad-funded public broadcaster Channel 4, says that the broadcaster is looking at the potential of interactive advertising where “there is some kind of purchase path that links back to affiliates that then fulfil that purchase – we’re fairly early on in our journey with that but we’re really going to be looking at it”.

For Dowlet, however, one of the major challenges – at least in the context of the UK – is that the TV business is highly regulated, meaning that anything broadcasters do must be compliant with the Ofcom Broadcasting Code.

“Regulations are there for a reason and we wouldn’t fight against that, but it does make things a bit trickier,” she says.

Channel 4 has nevertheless experimented with some shoppable formats, for example using QR codes in ads on-screen, and even in programmes. However, she points out that experimentation within programmes is very limited, not least because Channel 4 historically has not owned its IP.

Democratising advertising

“If you are able to provide more metrics for conversion, you will enable what we can call performance ads on TV” Mathias Guille, Broadpeak

Regulatory challenges aside, interest in shoppable formats is clearly growing.

For Mathias Guille, VP, Cloud Platform at TV technology outfit Broadpeak, making TV shoppable is a way of democratising advertising.

“You have a very limited number of advertisers buying inventory on TV right now. It’s the big guys with big budgets – Mercedes, BMW and so on – and there is a very limited number of them,” he says. “If you are able to provide more metrics for conversion, you will enable what we can call performance ads on TV and you will attract many more advertisers.”

If small or locally focused advertisers can deliver targeted ads and measure the return on investment via a metric such as click-through rate on their website.

A vastly greater number of entities currently advertise products and services on the web or on social media than on TV. And the TV ad pie is not growing, or not growing very fast. Guille argues that streamers and broadcasters could tap a greater number of potential advertisers including those with relatively small budgets if they can show a return on investment.

Even if media companies can increase their advertising fill rate and increase CPMs through programmatic bidding for inventory, they are unlikely to match the exponential ad growth experienced by web giants such as Meta and Google. However, introducing shoppable formats, enabling hyper-local and niche targeting of clickable ads, could change the name of the game, opening the market up to a much larger group of smaller companies with smaller budgets.

As its shoppable ads play, Broadpeak recently introduced click2, a new offering that taps its ability to provide Interactive Advertising Bureau (IAB)-certified client-side tracking via an SDK library that can be installed at the client, as part of its server-side ad insertion (SSAI) offering.

A relevant URL from the advertiser is included in the manifest from the ad server. Interacting with the player, the technology resizes the ad in the targeted stream to include a clickable banner at the bottom of the screen. Clicking on the banner via the TV remote control triggers a notification to be sent to the user’s phone, enabling them to access an opportunity to purchase the advertised product via this second screen.

“We don’t need a specific player or a specific ad server – we use what is already available and we don’t need to touch the ad itself,” says Guille. “With this you can decide whether to make every single ad going on TV interactive.”

Guille says that the fact that Broadpeak’s solution does not require a specific player or ad server to work enables publishers to scale up this type of interactive advertising.

“It’s super-important because if you want to scale this, you don’t want to re-transcode the ad and you don’t want to put a QR code on the ad on the fly. By doing it this way, we can track the click from the remote, and also the follow-up click – because typically when you click on the remote, we send a notification to the user’s phone,” says Guille. “You get the URL on your phone and then you click from the phone. So you have much more information about the viewer’s engagement and potentially revenue associated with it.”

A second stage could see broadcasters and streamers team up with retailers to enable the remote control to click the TV banner to place a product direct to the user’s shopping basket from that retailer’s website.

Guille believes that the time is right for this type of shoppable ad to gain traction, opening the market up to a new class of advertisers. These smaller, budget-conscious advertisers will be helped along the journey to embracing TV by the falling cost of producing ads thanks to innovations in AI.

Attribution of outcomes

“We have some ideas about a form of attribution API, particularly for the CTV ecosystem” Anthony Katsur, IAB Tech Labs

Given the greater responsiveness of consumers to engage with shopping on a second screen, this type of shoppable TV obviously will only work with viewers who have shared their contact details with the publisher. It is therefore particularly suited to subscription or registration-required services – whether paid or free – where the viewer may also have the publisher’s app already installed on his or her phone.

Shoppable ads also provide an opening for telecom service providers with set-top or app-based TV services as part of their overall offering to increase their video revenues. Partnerships between operators and broadcasters allow the latter to sell shoppable formats not only via their own direct-to-consumer streaming apps but via the set-tops of the operators.

For Anthony Katsur, CEO of technical standards outfit IAB Tech Labs, the success of shoppable TV formats comes down to measurement, with an industry need for more work on attribution of outcomes. But attribution of a decision to buy something could be applied to exposure to any ad, not just one that is directly ‘shoppable’.

“I think it’s something the industry is still wrapping its arms around. We have some ideas about a form of attribution API, particularly for the CTV ecosystem,” says Katsur, adding that IAB Tech Lab is thinking about the introduction of something like a conversion API framework next year.

IAB Tech Lab has already been active in this area through two recent initiatives – Publisher Advertiser Identity Reconciliation (PAIR) and the Attribution Data Matching Protocol (ADMaP).

PAIR, donated to IAB Tech Lab by Google, enables advertisers and publishers to match and activate respective first-party audiences for advertising securely and with respect for privacy without relying on third-party cookies. It is an open standard that enables interoperability between data clean rooms. The tech outfit plans to update it to enable use by all data clean rooms and demand-side platforms.

ADMaP is designed to enable advertisers and publishers to share and measure purchase or conversion data without revealing details of the user’s identity.

Katsur says that this work provides a secure identifier to attribute conversion to a unique ID that can be at individual, household or cohort level.

“What is really interesting, and where I think we’re going overall, is to a world of cohorts or micro-cohorts,” he says, each with an ID that delivers an aggregated set of secure, anonymised data.

The industry clearly sees a strong case for the ability to attribute conversion – decisions to purchase – to prior exposure to an ad. But for some, directly prompting someone to make a purchase, either direct from the TV or, more likely, from a second screen, via a clickable banner or, more crudely, an onscreen QR code, may be a bridge too far.

Are consumers willing and eager to engage with shoppable formats? IAB Tech Lab’s Katsur questions whether the industry has done enough to gauge the consumer appetite for interactive advertising on TV, arguing that TV would probably do well to avoid the kind of experience, common on mobile and web environments, where advertising intrudes directly on the viewing experience by covering the content.

If the potential of ‘t-commerce’ has been discussed since the dawn of digital TV, with little sign of any transformative breakthrough, the jury is still out on whether the potential of advanced platform capabilities and a more subtle second-screen approach can change that.