T-commerce, or trade via a smart digital TV-set, has seen a lot of proof-of-concept activity over the last year and a half and is now poised to take off in 2019.
T-commerce acts as a marketing channel,enabling interactive advertising and addressable advertising. The two primary drivers for its current projected growth are scale and connectivity, both of which are nearing tipping points. In the US, 74% of households now have at least one active connected television device, and voice-enabled devices are expected to reach more than 90 million users by the end of this year. Additional impetus will come from smart TV OEMs anxious to tap into the t-commerce revenue stream to help boost razor-thin margins in a highly competitive industry.
With t-commerce, one can draw parallels to the early stages of mobile commerce. Ten years ago, very few people could have envisioned themselves buying laundry detergent on a mobile device. It took three key developments to change that: massive growth in connectivity following the birth of smartphones, widespread deployment and adoption of user friendly commerce interfaces and the formalization of secure payment systems. M-commerce sales grew from less than $25 billion and 11% of total e-commerce sales in 2012 to an estimated $208 billion and almost 33% of total e-commerce sales in 2018. They are projected to surpass $420 billion and account for nearly 54% of all e-commerce by 2021.
The first element — device connectivity — is already in place for t-commerce growth. With the latest generation of smart TVs boasting a significant increase in processing power, a growing number of viewers regularly rely on them to provide a superior connected experience through the delivery of high-quality video assets. That beefed-up processing power is being harnessed to enable speedy and increasingly seamless t-commerce solutions. This will provide the underlying framework for an emerging t-commerce ecosystem.
M-commerce, or the buying and selling of goods and services through wireless handheld devices, really picked up steam when OEMs and app developers started including user-friendly commerce interfaces on their mobile devices, and that’s already happening with smart TV OEMs. All the major players, from LG to Sony, are enabling t-commerce by building in the capability for retailers to introduce storefronts on their devices. As an example, the ShopTV app is now available for download on almost 50 million smart TVs in the US. The current user community is much smaller, of course, probably in the tens of thousands, and consumer education will be necessary to scale the user base. But the interface is there and available for use.
Smart TV OEMs are motivated to do everything they can to spur the growth of t-commerce. They are in a highly competitive market where margins are getting thinner every year, so they are anxious to pursue all new monetization opportunities. Possible revenue-generation models include payments based on sales generated through the OEM’s platform, viewers driven to the app or CPM-based reach metrics. There will no doubt be a period of testing to determine which models work best and offer the greatest revenue-generation potential, but these are all viable models that already exist in the digital advertising ecosystem.
The third piece of the puzzle — secure payment — will be a slightly greater challenge for t-commerce than it was for m-commerce, as TVs tend to exist as shared household devices. Additional security parameters will have to be put in place to make sure the person making a purchase is the approved individual. A PIN-based solution is one possibility, but as smart TV OEMs begin building technologies like facial recognition into their devices, more advanced solutions will become feasible.
The way viewers physically interact with their TVs is changing from the traditional “lean-back” experience to one that is user-driven and on-demand. Viewers control what they watch and when they watch it, and they can consume different content at will. An offshoot of that evolution is a strong opportunity for brand marketers to use t-commerce as a way to leverage media that they are already purchasing, such as ads on linear TV. Because consumers are already used to engaging with their smart TVs interactively for content purposes, they will be more open to using it for t-commerce transactions.
In marketing terms, TV will no longer be a one-way communication channel. T-commerce will make it a two-way street where viewers can interact with and purchase from their favorite brands. For example, advertisers will be able to introduce special offers that viewers can participate in immediately by providing a mobile number. Ultimately, consumers will be able to make direct purchases of an advertised product via their smart TVs. The t-commerce revolution has the potential both to increase sales and profits, and to radically improve brands’ ROAS (return-on-advertising-spend).
Early adopters in the marketing community stand to reap the greatest benefits from this emerging technology. T-commerce is not a concept anymore. It’s real, it’s here now and several marketers are already implementing strategies to learn the best ways to engage with consumers in new ways, on television. In the evolution of commerce from brick-and-mortar to online to mobile, t-commerce is the next logical step in marketers’ multichannel efforts to give consumers what they want, when they want it. It’s time for marketers to move on this new technology or risk getting left behind.
Tripp Boyle serves as senior vice president at Connekt, where he is responsible for driving strategic business deals and partnerships with advertisers, brands and content companies.