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Mail Order Catalogs, E-Commerce, M-Commerce: What’s Next?

You are watching Mad Men and you want the dress Peggy is wearing for your 60’s theme party next month. You pick up your remote or keyboard (if you have a Smart TV) and click the ‘buy product’ button. The screen pauses and allows you to select the product & size. You make the selection and click ‘buy now’, the program resumes and the item is delivered at your door step 3 days later. Does this seem too good to be true? Actually, it is much closer to reality than you might think. This is TV-commerce (or T-commerce) and many companies are working together to make it happen. But the ability to let consumers buy in-program products or products shown in ads requires huge investments and changes the way programs are currently broadcast. So why would any company make that investment? Here are some probable reasons:

In-program promotions – These happen currently, but their effect is really subtle. Providing viewers the capability to buy merchandise shown on the TV screen right then will totally change the landscape. The program networks will be able to demand higher rates for the in-program promotions.

Measuring ROI – TV as a marketing channel still garners a large proportion of ad spending[i] but many have questioned the return on TV ad spending. TV ads have been around for a very long time and are very expensive. But despite these facts there is no call to action or feedback loop to determine the productivity of the ad or measure the return of investment. Allowing the audience to make the purchase directly from the TV screen will make the return on TV ads much more measurable than it is now.

Increasing the returns – Impact of an ad is strongest when it is being watched and wanes as time goes by. Even if an ad is impactful, it might not result in a sale since there are numerous other messages the consumer receives between the time he sees the ad and the time he goes shopping.  Instant purchase will increase the return on the ads many fold.

Staying relevant – Today, most ads and promotions seen in online media and through social media sites such as Facebook and Twitter have some level of intelligence embedded in them. The ads you see are relevant to who you are, where you live and even what you and your friends like. And of course, you could follow the link and make a purchase. I believe that the reason for declining returns on TV ads is their irrelevancy. Facebook launched a ‘gifts’ feature that allows users to select from a list of recommended products that your friend might like. Facebook developing full social commerce capability is just a matter of time. Twitter allows brands to be promoted to targeted customers. Google is developing the technology to analyze a video to figure out the objects on the screen. Being the advertising giant that they are, Google’s next step would be to show ads relevant to the video content and allow the viewer to purchase the item. Many mobile apps display ads on the bottom or top of the screen allowing users to click on them and purchase the item. Even the print media ads have QR codes which let consumers make a purchase right when they see the ad. If TV ads do not reinvent themselves in terms of relevancy and call to action, they may well become as extinct as the dinosaurs.

People still watch TV – Americans watch 250 billion hours of TV every year[ii]. This is not insignificant by any standard and can give online, social, mobile and print advertising a run for its money if ads are intelligently placed and provide ‘buy now’ capability.

Following are some examples of companies that have already made TV-commerce possible in one form or the other.

FOX and AmEX have partnered to allow AmEX cardholders to buy merchandise portrayed in the show ‘New Girl’[iii]. But the feature has been decoupled from the TV viewing experience. The users have to go to a website or an app to look for the items from the show and buy them there. Through another integrated offering with NBC Universal, Comcast and Zeebox, AmEX card members can browse the items on their iPad, iOS and iPod while viewing the program on their TV set. Another technology provider, Brightline, enables DVR equipped audience to engage with the brands, but direct purchase is not possible yet.

Even though not possible currently, it will be possible in the future to purchase items shown on TV while watching the program/ad by paying through your pre-synced payment and having it shipped to your profile address (similar to Amazon’s One-Click ordering). Some likely players in the TV-commerce value chain will come from the programming networks, satellite/cable TV providers, online video content providers (Ex. Netflix), Smart TV manufacturers, social networking websites, payment solution providers, video analysis software providers, e-commerce websites, game console makers and retailers/manufacturers wishing to advertise their items. If it still seems hard to believe, I am laying out few plausible scenarios for TV-commerce here.

Through DVR – Your satellite/cable TV provider has your billing information saved. There is a button on your remote to display product recommendations related to the program you are watching. You click that button, select the product and click ok (similar to buying On-Demand shows). The satellite/cable TV provider procures the item and delivers it to your billing address and charges it to your monthly bill.

Through Smart TV – You are watching a program on your Smart TV (connected to internet). The TV has a video image analysis program installed. It scans the screen, finds the products and provides you an option to go to your favorite e-commerce site to complete the purchase. Or the TV allows you to do a single click purchase right from the program screen. It uses your pre-synced e-commerce website and payment information.

With Social recommendation – You are watching the program on your Smart TV or your iPad on which you are also logged into Facebook. Facebook knows which program you are watching by interacting with your Smart TV or iPad browser. Facebook collaborates with programming networks to find out in advance what products are being showcased. It also knows what on-screen products you may like. A crawly appears indicating which of your friends have purchased the product. You are given the option to like or purchase. Facebook fulfills the order and charges to the credit card saved on your Facebook profile.

Through Game consoles – You are watching Netflix through Xbox. Since the programs are pre-recorded, Xbox knows what related products can be offered to the audience for each program. You are provided an option to purchase the product which will be shipped to your address and charged to your payment profile in Xbox live.

Through QR code – You are watching an ad which is also showing a QR code on the right corner. You scan it with your smartphone or tablet and are directed to the company’s website to make the purchase. Though not integrated with your TV, this is also a form of TV-commerce and probably the most feasible one near term.

You might be wondering why I have written this article in a payment solutions blog. Well, first it is an exciting topic with amazing possibilities and second, no commerce is complete without a conducive form of payment. The providers which have your trust and your payment information will be key players in the ecosystem. Apple, with its Apple TV and payment profile of 500 million users, can make significant things happen in this direction. Google, with Android software on Smart TVs, video analysis technology, advertising clout and payment information for millions of users is another strong contender. It might even have an option in its mobile wallet to enable TV-commerce. Facebook is another giant with the technical prowess and the critical mass of users to push this relatively new commerce system. PayPal, after leading e-commerce and m-commerce, might set its eyes on TV-commerce. Traditional TV players such as satellite/cable providers and program networks will also be players to watch.

There are so many pieces to this form of commerce that no player, however big, can do it alone. Several partnerships will be formed trying to deliver commerce to your program watching console (note – it might not be a TV screen) in different ways. The one that blends into the viewing experience most unobtrusively & has your trust shall win. Regardless of the winner, it’s always exciting to watch new things unfold!

Manish Gupta

Marketing Product Manager

CoreCard Software, Inc.

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