The future of advertising on TV may involve having a personal billboard in your living room. Telly, a new hardware startup, has something unique to offer — free smart TVs that are completely supported by advertising. And then there is the issue of streaming services adding advertising into the mix.

THE SECOND SCREEN

The hardware startup is led by Pluto TV co-founder Ilya Pozin and it’s giving away 500,000 of its new smart TVs for free. You read that right, free. The only requirement: Users need to watch 24/7 ads while streaming shows and movies.

What makes the Telly setup different is having a smaller screen separated from the main 55-inch 4K display by a soundbar. The smaller display will continuously show advertisements. And it’s not enough to just agree to have the small screen for advertisements; users need to agree to have their viewing data accessed and used by advertisers.

Telly is working with Nielsen to “collect and interpret first-of-itskind viewership and ad effectiveness insights” for advertisers and TV programmers. Plus, there is also involvement with Microsoft, Magnite, and MNTN to power the ads on the TV. Microsoft, if you remember, became Netflix’s advertising partner for its new adsupported tier last year.

At the moment restricted to the US, “Telly will be the first TV paid for by advertisers, not you,” the company informs consumers when they sign up. And advertisers are open to such new ideas. Carmaker Kia is the first marketer working directly with Telly to show advertising on the smaller screen.

According to Telly, about 250,000 people across all 50 US states have signed up to get Telly sets in the first week when they were offered in May. The survey made by the company indicate that most earned $50,000 a year or more, topped the national average for educational attainment, and were primarily millennials or members of Gen Z.

The hardware also allows out-ofthe-box ways to operate the TV. While parents watch the news on the main display, children can play games on the secondary display. Or during a video call, the current speaker appears on the main TV while other participants are shown on the bottom display.

And you can’t cover up the bottom display because TellyOS has HDMI inputs, volume info and other settings there. The success of the business idea will largely depend on how successful is Telly in understanding its target group.

AD-SUPPORTED FUTURE?

In case you are wondering if viewers are open to the idea of advertising in an era when ad-free TV is available, think again. During its recent update to investors, Netflix shared some interesting data. First, the company ended June with more than 238 million subscribers, adding 5.9 million members since March. It’s a big jump when you consider subscriber losses that took place last spring. It shows that the company’s password-sharing crackdown has been effective. After the US, the company is addressing the issue in all countries, including India.

Second, Netflix has now done away with its cheapest subscription plan without ads in the US and the UK. It may encourage budgetconscious subscribers to sign up for the ad-supported tier. On the one hand content expenditure continues to climb, on the other are revenue and subscriber growth, forcing several streaming services to take to cost-cutting measures, like licensing them to ad-supported services. Netflix has managed to avoid drastic measures and for the moment, the company’s crackdown on passwords and recent subscription changes are the road forward. In May, Netflix told advertisers it had five million monthly active users for the ad tier and 25 per cent of new customers were signing up for the plan where it’s available.

Amazon is also reportedly working on an ad-supported tier of Prime Video, according to a recent report from The Wall Street Journal. Discussions are still in the “early stages”. If it happens, subscribers will be, at first, shown more ads and in case they agree to pay more, they can move to ad-free alternative with more features. The ad breaks are expected to be short. Amazon already has an excellent understanding of the advertising industry and an ad-supported tier will be well thought out.

Apple TV+ is a high-quality paid subscription service but, if ever, they decide to go the adsupported way, it will reach more people. The company has even hired advertising executive Lauren Fry to “to help build a video advertising business for its Apple TV Plus streaming service”, according to The Information. But Apple is careful when it comes advertisements, so it remains to be seen how it will work out.

Disney CEO Bob Iger has told CNBC that his company is leaning into its ad-supported streaming option to get to profitability.

Advertising through streaming services has a unique advantage.

Think QR code. Advertisers and services can easily push out QR codes and see how many people scan them. It will help track sales from an ad served on a streaming service. Imagine a situation where QR codes can connect platforms. A car fan is watching a Fast and Furious movie and then decides to head over to a website serving car accessories where they are shown related ads. After that, the viewer can head over to IMDb to look for more car movies and the same, targeted ads can move with them.

At first, we were told that subscription video on-demand (SVOD) services are the future and Wall Street investors loved it. Services like Netflix and Max tried to outdo each other with better and expensive content. But now Wall Street simply wants more subscribers and thus the rise of advertising-based video on demand or AVOD. As cable channels continue to fold, investors need confidence that SVOD players deliver.

A large group of youngsters have been influenced by social media where advertising is rampant. And they are open to advertising on streaming services… they are the future.