In a move that could foreshadow what's to come in Internet Connected Television, leading Korean electronics company LG is adding the ability to serve up ads via its Smart TV product line.
LG and YuMe, a company that makes a video advertising solution for Internet Connected TVs, announced an agreement to embed an ad platform into LG Smart TVs and Blu-ray Disc players. While these kinds of announcements are sometimes met with skepticism from industry-watchers, this particular development is significant because the partners said they already have a charter advertiser for the service, namely, the U.S. division of Toyota.
Toyota will use the ad platform to promote its 2012 Toyota Camry. Dionne Colvin, national marketing media manager at Toyota Motor Sales U.S.A. told the New York Times that the new service presents "a great opportunity to learn more about the connected-TV space." It offers Toyota the opportunity "to design programs and campaigns to speak to [consumers] in a way they want to be spoken to," Colvin stated.
According to YuMe's press release on the LG deal, brand advertisers can buy ads both in the LG Smart TV navigation experience as well as in applications with pre-roll and navigation experience ads.
Frank Barbieri, YuMe's SVP of emerging platforms (who sees content snackers becoming cord cutters), said the LG Smart TV ad platform will take advantage of "the power of Internet advertising with the impact of television advertising." YuMe CEO Jayant Kadambi adds that "we offer brands a way to seamlessly reach consumers at every staged of interaction with the TV, and across all platforms and devices."
Stuart Elliott, who covers advertising and media for the New York Times, writes that "the agreement is indicative of the increasing interest on Madison Avenue in using the online video capabilities of Internet Connected Television as an advertising medium as sales of such sets continue to grow."
Indeed, brand advertisers always seem to be searching for the next new thing when it comes to getting their ads in front of an increasingly connected consumer population, and Internet Connected Television could be just the thing. According to DisplaySearch, a market analytics firm owned by NPD Group, this year, more than 27 percent of televisions shipped worldwide will be able to connect to a network. That figure will rise 54 percent by 2015, with 155 million network-capable televisions shipped.
YuMe and LG promise "to target ads so they're more relevant," says YuMe's Barbieri, but Matthew Durgin, director for LG's Smart TV content business in North America told the Times, "We can't just go and run amok. We have to be tolerant of what the user is willing to accept." Clearly, the company knows relevance is critical and it can't simply feed an endless stream of ads to consumers.
Interestingly, YuMe just received investment capital from Samsung Venture Investment Corporation, which is owned by the Samsung Group, another Korean conglomerate that competes directly with LG. In fact, LG is second only to Samsung in televisions. This latest move will undoubtedly be watched closely by Samsung as well as other makers of Web-Ready TVs.