A tepid reception for TV shopping

May 1, 2015 03:27 PM

Katy Perry didn’t just sing to the 118.5 million U.S. viewers during her halftime performance at the Super Bowl this past February: She also sold to them.

Viewers living in the roughly 26 million U.S. households with web-enabled or so-called smart TVs could buy Perry-branded accessories and apparel during the broadcast—either by checking out on their TV screens using their remote controls or by entering their cellphone numbers on the TV screens with their remotes to receive text messages and links to complete purchases on the mobile web. They could also go online to buy four Perry-approved items via Twitter, YouTube and the music app Shazam, with Delivery Agent Inc.’s technology handling all the transactions.

The joint initiative of Perry, Universal Music Group and Delivery Agent represented one of the most publicized efforts to sell directly to consumers via their TV sets to date. But the companies involved have declined to release sales numbers.

Michael Fitzsimmons, CEO of Delivery Agent, which sells the TV commerce technology and services that made the shopping possible, characterizes the sales event as “a great success, especially given that we were able to get some real-time insights.” However, the only numbers that he would provide is that “the remote control-based and mobile engagement were somewhere in the area of 40% each,” with consumers turning to their desktop PCs for the remaining 20% of transactions.

The absence of sales data makes it tough to assess how interested consumers were in linking their Super Bowl viewing to online shopping through their TV sets. But other research makes clear that consumers do shop online while watching TV, just not through their TV sets. 44% of tablet users say they shop online on their tablets while watching television, with 14% saying they will buy a product or service they see advertised on TV, according to media measurement firm The Nielsen Co.’s 2014 Digital Consumer Report. Meanwhile, 24% of smartphone users say they shop online on their phones while watching TV, with 7% saying they will buy what they see advertised.

While it’s not clear whether consumers will put down their tablets and phones and pick up their remotes to buy on their TVs, some e-retailers and brands are testing ways to interact with, and sell to, shoppers through Internet-connected TVs. The results of early experiments from the likes of Perry, Inc., Discovery Communications Inc. and Domino’s Pizza Inc. may demonstrate the viability of TVs as a medium for online shopping.

A fifth of U.S. households are expected this year to have at least one web-enabled TV that accesses the Internet at least once a month; that percentage will jump to 31% by 2018, eMarketer Inc. projects. And retailers are taking note.

Discovery Communications last August dipped its toes into the TV commerce waters to see if consumers would bite during its annual “Shark Week” programming on Discovery Channel. Shark Week, which is the network’s biggest programming event of the year, is the network’s Super Bowl, says Christine Wacker, Discovery Communications’ director of commerce partnerships. “It is the week in August when we really grab TV viewers’ attention and build big audiences.”

More than 42 million people tuned into Shark Week 2014, Nielsen says, making it the top-rated network—broadcast and cable—for men under 50 during the week.

To capitalize on those huge viewership numbers, Discovery Channel worked with Delivery Agent to set up a Shark Week-themed TV commerce venture. When web-connected TV owners watched primetime programs such as “Lair of the Mega Shark” during the week, they saw an interactive overlay similar to a network advertisement during a show notifying them they could “Shop Today’s Shark Week Daily Deal.” Products offered included Shark Week T-shirts, glassware, hats and DVDs of previously aired Shark Week programs. The message pushed up the viewing screen so as not to cut off any of the picture. Viewers could close out the message immediately with their remote, wait for it to go away after about 30 seconds or use the remote to select the message to shop.

If the viewer chose to shop, a box appeared displaying the items for sale. A consumer with smart TVs could use his remotes to surf to a special shopping page. When it was time to check out, a full-screen page came up that allowed him to text his order to his smartphone. After entering his cellphone number, the shopper received a text message with a link guiding him to a page to complete the transaction from his phone. A consumer with Samsung-brand smart TV could complete his purchase on his TV through Delivery Agent’s ShopTV app, which is pre-installed on newer models of Samsung smart TVs.

“We saw about 2% to 3% engagement among our viewing audience in using the smart TV buying option, which worked out to about 2,000 people,” Wacker says, defining engagement as those who interacted with the shopping tool, including those who did not complete a purchase. “This level of response to a first-time, one-off venture was phenomenal.” Discovery Channel would not say how much the Shark Week promotion cost.

Overstock is taking a different approach to engaging consumers with web-connected TVs. Unlike Perry and Discovery that ran their TV experiments during programming, Overstock layers interactive elements into its TV commercials.

While Overstock exclusively sells online, it’s long considered TV an important marketing channel. It has run Overstock TV ads for more than a dozen years, featuring a range of celebrities and messages. “Our goal is to engage with our customers via all touch points,” says JP Knab, the e-retailer’s vice president of marketing. “The average household spends 5-plus hours a day watching TV. If we can make the viewing experience of our ads better for consumers, then we’ve won.”

Overstock first tested TV’s power to drive sales last October, with its “Overstocktober” sales campaign. The ad ran for four weeks and any time a viewer saw the ad on a TV with a live Internet connection, he saw a message to “Shop’s deals now on TV or on mobile.” Using his remote, the consumer could press Enter to launch Delivery Agent’s ShopTV app (if the app is available on the viewer’s TV or set-top box), or enter his cellphone number on the screen to receive a text message with a link directing him to Overstock’s mobile home page. The ShopTV app is available on some models of Samsung, Sony and LG web-enabled TVs and on Roku streaming media devices.

Overstock would not release hard numbers on how the campaign performed, but Knab says the retailer gathered some useful data, and it has since run three additional interactive TV ad campaigns.

The data generated by the TV effort “allows us to optimize our buying and creative,” he says. “We can track consumer engagement rates by network, by state and by day part. Until now, these metrics were only available through digital ad campaigns.” Thanks to TV commerce, “our television impressions have become more valuable—our media is working harder for us,” Knab says.

Not everyone is on board with TV commerce’s development to date or its future possibilities. “In terms of buying products from a TV shopping channel, using either a smart TV/remote control combination or a TV with smartphone, we are seeing so little action in this space that it is not worth following it closely,” says Sucharita Mulpuru, Forrester Research Inc. vice president and principal analyst.

She says she doesn’t know why TV commerce has failed to take off, only that it has. “Maybe it is because they are trying to sell products that consumers don’t want,” she says, noting that QVC’s ability to earn billions of dollars annually marketing on TV shows that some retailers better understand what sells and how to sell it. “Whatever the reason, TV commerce is not delivering on its promise.”

That promise has been bandied about for a while. Delivery Agent, the vendor providing the technology behind many of the TV commerce efforts seen today, has been around since 2002 offering a variety of services, including running e-commerce sites selling branded merchandise for TV shows and channels like Delivery Agent doesn’t strictly define TV commerce as a transaction that happens fully on TVs, but rather “a transaction originally inspired by exposure on TV. “Delivery Agent translates consumer demand created by television content—programs and commercials—into sales through the desktop, mobile and directly through the television, the newest channel,” Fitzsimmons says.

The vendor launched its buy-on-TV technology in the fourth quarter of 2011, and got a $5 million cash infusion the following year from Samsung Ventures, the electronics giant’s investment arm. It has raised nearly $140 million in funding to date.

Executives at QVC Group, which has its roots solidly in broadcasting but generated 40.1% of its 2014 sales online, say they are monitoring the TV commerce space to see whether consumers are interested in buying directly on their TVs. Alex Miller, QVC’s senior vice president of digital commerce, says he thinks smartphones and tablets may have leapfrogged the remote control as a way for consumers to digitally interact with retail. “We feel that the emergence of the second screen experience usurped this and the consumer is driving the use of mobile as the preferred ordering device,” he says.

This is why QVC is putting its energy into developing mobile commerce and linking it to its TV and online channels, rather than pushing the remote-controlled option.

QVC recently added features to its iPad app to make it a more useful companion tool for shopping while watching on-air programming. “These enhanced second-screen capabilities deliver a more engaging, useful and user-friendly experience to customers by allowing them to watch the live show on their TV and be presented in real time with synchronized product information, customer reviews, rich product details, social feeds and enhanced imagery,” Miller says. Customers also can watch the live broadcast in the app. Sales conducted on mobile devices accounted for 41.5% of QVC’s e-commerce sales last year, and grew 44.9% year over year, the company says.

QVC is not writing off the possibility of selling directly through web-enabled TVs; it is just waiting to see if it catches on with its customers, which so far it hasn’t, Miller says. “Our customers tend to be early adopters of new technology, so we will continue to pay close attention to innovations across our current platforms and emerging platforms/devices,” he says.

A recent Nielsen survey commissioned by Delivery Agent says that consumers are interested in buying products using their smart TVs and remote controls. Among U.S. adults who have an Internet-connected TV or other device, such as a streaming media player or some models of video game consoles and DVD players that can connect a TV to the web, Nielsen found that 59% of 18- to 34-year-olds would be interested in using their remote to purchase a product or service while watching a TV program compared to 50% of 35- to 49-year-olds and 37% of those 50 and older. The results trended similarly for those watching TV advertising, with 56% of 18- to 34-year-olds saying they would be interested in using their remote to make a purchase, versus 55% of those 35- to 49-years-old and 43% of those 50 and older.

Of course, interest is not the same as purchasing. Assessing the true viability of TV commerce may lie in the results of future and ongoing experiments conducted by a variety of brands and retailers. Coinciding with the final weekend of this year’s NCAA men’s basketball tournament, Domino’s Pizza updated its Domino’s Anyware app to enable pizza-loving college basketball fans to order from their Samsung web-connected TV sets. As of mid-April, Domino’s declined to say how many pizzas it sold with it but said it was happy with the app’s performance. Knab at Overstock says he’s considering running more interactive TV ads in the second half of this year. And Toyota Motor Corp.’s current TV ad campaign for the 2015 Camry called “One Bold Choice Leads to Another,” is interactive; viewers can access data about the car model’s design and performance from their remotes.

But “bold” doesn’t necessarily translate into “sold,” and e-commerce executives are far from sold on the prospects of the TV remote control becoming a significant shopping option.

James Careless is a freelance journalist based in Ottawa, Canada.




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