Fair
enough. At the end of the day, while we are all trying to create a more
engaging experience for the consumer to capitalize on this new behavior that
has been created by the ubiquity of smart phone and tablet presence with
consumers, we are all employed to generate revenue (and profit). In the research we published at
our 2nd Screen Summit during CES, we threw out some bold 2nd Screen revenue
predictions, with a 2012 start point at $490m
and a 2017 forecast of $5.9B.
If you read through the details of that research, you will find that the
primary sources of revenue in the model are advertising and m-commerce (roughly
50-50 by the end of the forecast period). With the mobile and online
advertising market growing to $17B
and the m-commerce market growing to $158B
over the forecast period, it only takes the tiniest sliver of a share for
second screen to achieve its paltry $6B target. So the hype in the
marketplace is warranted, but how does an individual company go about trying to
get their share of that 2nd Screen revenue?
It is
perhaps the most common question I get during the breaks at conferences on the
subject. We put up a panel on 2nd Screen revenue generation and industry
stalwarts talk through what they are doing to attract revenue, but everyone
still walks away with an unclear view of how to translate those success stories
to their own business models.
Here's
a brief primer on where revenue generation is heading in 2nd Screen:
1.
Sponsorship. The most common way for brands
to experiment in this space is to sponsor an experience. Vodafone had a great example of that app it
sponsored for a second screen experience for cricket where the average time the
consumer used the app was measured in hours, with their brand prominent
displayed the entire time. Verizon has
done similar projects with The Voice in the U.S. The approach allows a brand to gain front and
center attention during an experience, but does not provide flexibility to the
app publisher and becomes a very expensive model once there is large
distribution available. Check out Viggle
during primetime to get an idea of how sponsorship feels.
2.
Display
ads. Already being sold in at relatively low CPMs, major networks are
pushing to sell synchronized ads at a 5-10% uplift. With the classic CPM price of $30, that is a
$3 increase for the TV network and a significant engagement opportunity for the
brand itself. There are many examples in
the market driving this approach.
3.
Interactive ads.
The beauty of display ads on the second screen is the ability for them
to generate interaction and thus we expect this revenue stream to move quickly
into the CPC (cost per click) approach.
With the average value of a click on the internet at roughly $0.50 and
the average cost of a click on Twitter at $1.00, you would only need to
generate 0.5% click thru (classic web CTR) at $0.75 per click to generate more
than a 10% uplift on the $30 CPM above ($3.75 for the 5 clicks generated by
1000 viewers). ConnecTV has made real
strides in this space.
4.
M-Commerce. FX Networks Sons of Anarchy app
(published by Magic Ruby) is an app we often refer to in this space where
products ranging from $10 - $500 appear on the screen as a synchronized
experience with an easy UI to drop items in your shopping cart and then to
check-out after the show, but we expect Amazon and Ebay to be the big winners
in this space. Already you are seeing
many apps take the affiliate fee approach (ConnecTV) to generate 5-8% of the
value of the goods in revenue while. Ebay continues to develop their “Watch
With Ebay’ app to try to improve the experience from show level to a
synchronized experience.
5.
Syndicated Content. Sports has paved the
way for many technologies in the living room and is certainly leading the way
forward in monetization. MLB sells a “2nd
Screen Only” experience (audio, stats, graphics) for $20 a season and offers a
converged experience with live streaming video for $125 a season. They are rumored to have several million
subscribers, giving them significant depth and reach with their advanced feature
delivery.
6.
App revenue. In Europe, Formula 1 turned out
an app that allows you to see the telemetry of your favor racers, see his
virtual dashboard, and watch live streams in a converged experience—and consumers
pay 20 pound sterling for the pleasure of installing it on their iPad.
7.
Video ads. Perhaps the biggest and most
underutilized opportunity in the second screen market place today is the
pre-roll video ad. If you watched March
Madness with the app of the same name, you constantly saw several Capitol One
ads as 10 second pre-rolls to the content.
Until recently, this space was handicapped by technology, requiring
client side SDK to be able to tell the server how many streams have been
viewed, did the video stream complete, etc.
Advances in this space look promising, with companies like Unicorn Media
delivering not only the capability to seamlessly stitch ads into the video
stream that are potentially unique to each consumer (translation – higher CPM),
but are doing so in a business model where the publisher actually pays for the
video stream and ad stream delivery in a CPM model. In other words, the cost of delivering the
ads and video to grow your revenue is directly a part of the delivery chain
making it truly a growth vehicle for brands in ANY app. This will herald a powerful change for converged
experiences in the second screen space, kick starting the transition of TV ad
spend from analog to digital in a meaningful way.
Interested
in learning more? Check out our research
(www.2ndScreenSociety.com/research/)
, join us for our webinar on May 23rd covering 2nd Screen
Basics, just us in person on June 27th in NYC (www.2ndScreenSummit.com) or at IBC on
September 15th in Amsterdam.
@ChuckParkerTech
@S32Day
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