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.