Last week, I had a chance to catch up with Russ Schafer, Senior Director of Global Product Marketing for Yahoo! Connected TV. As I mentioned in my CES roundup, Yahoo Connected TV rather quietly announced a deal with Sony to deploy their Yahoo Broadcast Interactivity service on existing 2011 Sony TVs and upcoming 2012 TV sets. Video 

Russ+Schaefer

First announced at CES 2011, this latest version of Yahoo! Connected TV includes Broadcast Interactivity, a platform feature that utilizes audio ACR technology from Into_Now . Yahoo acquired Into_Now about a year ago. At CES 2012, Yahoo demonstrated Broadcast Interactivity implementations including an enhanced sports content TV app from Showtime, shopping TV app from HSN and interactive advertising with Fidelity Investments. The initial Yahoo! Broadcast Interactivity advertisers also included Ford and Mattel.

Boxing

More recently, Yahoo Connected TV provided Mercedes-Benz with interactive TV advertising as part of a broad NCAA Basketball tournament campaign that Yahoo extended across multiple screens including pc, smartphones, and tablets. Whenever the 2012 Mercedes C-Class Television Ads played, Yahoo Connected TV delivered an interactive TV ad featuring information, photos and videos for the Mercedes-Benz C30 sedan and coupe. (article and video)

In addition – and here's where Yahoo starts to differentiate - Mercedes-Benz also sponsored the Yahoo Sports TV App utilizing the Yahoo's In-App TV Advertising. This enabled them to use same Mercedes-Benz C-Class interactive TV ads on millions of TVs that have the standard Yahoo Connected TV platform, but don't have Yahoo's new Broadcast Interactivity feature. In this case, the user downloads the Yahoo Sports TV App from the Yahoo Connected TV store to access Internet content that complements TV sporting events. For college basketball TV fans, Yahoo provided consumers Internet delivered NCAA Basketball news, scores, schedules, videos and photos.

basketball

The Fidelity Investments campaign provides another good example of Yahoo's strategy to combine Yahoo Broadcast Interactivity and In-App Advertising. Yahoo worked with Fidelity Investments to enable both Broadcast iTV Advertising on their TV Ads with a sponsorship of the Yahoo Finance TV App.

Analytically, we tend to think of ACR TV as a standalone offering. It's new and structurally discrete. What Yahoo is showing us is that it's really in many respects just another tool in the marketing mix and when time comes to sell, it will likely be part of a broader campaign strategy.

In fact, Yahoo is taking what might be called more of a 360 approach to consumer marketing services across its various consumer and advertising platforms. In practice, advertisers like Mercedes-Benz are getting a considerable amount of exposure across multiple screens on PC, mobile and Smart TV.

Yahoo Broadcast Interactivity and In-App Advertising are being sold separately and as part of multi-screen campaigns with advertisers, but this ability to bundle Broadcast iTV with the larger campaigns is one of the main differentiators between Yahoo's entry into and strategy for ACR TV by comparison to most other proponents. This video presents Broadcast Interactivity as part of a multiscreen vision of the future. 

Yahoo has a large portfolio of offerings for advertisers. They deal directly and expansively with major brand advertisers. And they can bundle ACR enabled Yahoo Broadcast Interactivity Advertising into their integrated offerings. Given the comparatively very small footprint that Broadcast Interactivity offers today when compared to Yahoo's expansive web audience, that bundling effect probably helps get it sold in many cases where it might otherwise not be.

All that seems pretty natural and sensible for Yahoo Connected TV, but it is a bit different, generally speaking, from the strategy and plans of most other ACR TV programs that I've discussed with industry players. For many, the plan is for the TV manufacturer to make ACR functionality available to TV networks who will then sell enhanced advertising inventory to their advertisers.

That's not to say that Yahoo doesn't work with TV networks. They do. Yahoo has been working with major TV Broadcasters to utilize Broadcast Interactivity to enable their businesses. Early partners along these lines are Showtime and HSN, both of whom have developed Broadcast Interactivity apps for their networks.

Twiggy+Fashion

However, the Yahoo approach is different and worth thinking about.. The recent demise of Canoe left some proponents with reduced enthusiasm and there certainly is a camp in the executive ranks of the TV industry that thinks the TV should be left alone.

It takes a long time to turn a great ship and those views will be with us for a while. Most that see the new capabilities on Smart TV recognize the arrival of new medium. ITV on Smart TVs is strategically quite different from all previous forms and there are many reasons to believe that as Smart ITV (a better name than ACR TV?) trends towards critical mass, the opportunity to bring fresh innovation to the medium will prove irresistible. Today, it is still small enough to ignore. We both believe that will change over the course of this year.

In the meantime, Yahoo Connected TV is in a unique position to leverage its broad access to advertisers and its ability to develop multi-screen campaigns that include Yahoo Broadcast Interactivity and In-App advertising to drive experimentation and usage.

As we talked about implementation and market development, Russ emphasized the rather large backend requirements associated with delivery of a 360 campaign like the one they brought to market for Mercedes and Fidelity Investments. The campaign featured apps on multiple devices – phone, tablet, PC, Smart TV (both widget and iTV app) – and all those apps drew from a pretty robust set of content assets that all had to be ingested and prepared for consumption on those various devices. For Russ, this expansive backend is actually a big part of the value add that Yahoo has to offer.

Yahoo Broadcast Interactivity is currently available on certain 2011 and 2012 Sony TV models. It's difficult to know how Sony's decision to slash investment in the TV business will impact their commitment to Smart TV and the Yahoo partnership, but we can be sure that Yahoo is looking to expand its footprint.

In terms of overall market growth, Yahoo has previously stated publicly that Yahoo Connected TV has a universe of 8-10m Smart TVs and an active monthly user base of well over 1 million consumers. Yahoo expects additional TV manufacturers will add Broadcast ITV to their 2012 models and they are anticipating that 500k – 1m TVs will be Broadcast iTV capable by the end of the 2012 model year.

We talked for a bit about total market math. I've been digging around trying to figure out what portion of total flat panels shipped are actually Smart TVs. Based on their publicly released products, Russ estimates that VIZIO, Sony and Samsung lead the market in terms of percent of models that are Smart TVs. (I did my own count a while ago and I think LG is about the same level. ) However, actual shipments of Smart TVs from 2009 to 2011 ranged from 20-30% of inventory by unit volume on a manufacturer by manufacturer basis. 2012 may be the year of transition with the expectation that actual unit volume will cross 50% for a number of manufacturers. This suggests that the Smart TV will soon become a standard requirement for the American consumer.

Will ACR provide Smart TV with the killer apps that accelerate this trend? Hard to say, of course, but it does seem like the Smart TV should be able to launch TV apps to actually be smart, doesn't it?

Michael Collette is the founder and general manager of MediaTech Strategies, a consulting company specializing in commercialization of new media technologies. Recently, we’ve been very active in Smart TV/Connected TV, Advanced Advertising and Interactive Television. Michael can be reached at michael@collette.com.

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