Consumers show interest in shoppable TV, but nascent format needs exposure

Half of CTV users wish all TV ads had a shoppable component, according to a streaming survey recently released by LG Ad Solutions. Yet despite this observed appetite, Aluma Insights Senior Analyst Douglas Montgomery believes that exposure of the emerging format should be a key focus, as shoppable TV remains a nascent business area.

Surveying sentiments from 1,200 US consumers with a connected TV, LG’s “The Shoppable TV Report: 2024 and Beyond” found that 53% of CTV users wish all TV ads had a quick option to buy the product, and 63% wish they could view store inventory from their TV. Furthermore, a majority of CTV users’ shopping decisions (81%) were influenced by TV ads, and 47% acted with their wallets after seeing a TV ad.

“The future of television is shaping up to be an immersive canvas of personalized, interactive experiences,” Tony Marlow, CMO at LG Ad Solutions CMO Tony Marlow stated in the survey’s release.  

In the shifting landscape of ad formats, shoppability and interactivity have been a big focal point throughout 2023 and kicking off this year.

Disney recently debuted a shoppable ad beta program for its ad-supported tier, which is now making up more than half of the new subscribers to Disney+, according to Disney President of Global Advertising Rita Ferro. As another example, Vizio and Home Depot partnered over the holidays for a festive shoppable content series.   

Montgomery also emphasized Walmart’s investment in the space, citing the retailer’s partnership with Roku announced back in 2022, where viewers could view products on the Roku platform, buy an item and have it fulfilled by Walmart using their remote.

“We’re working to connect with customers where they are already spending time, shortening the distance from discovery and inspiration to purchase,” Walmart CMO William White said regarding the partnership. 

More collaboration meant more exposure for shoppable TV in 2023 as well, according to Aluma research that Montgomery shared with StreamTV Insider over an email-conducted interview.

Aluma’s findings revealed that six in 10 online adults have seen a shoppable TV ad (up 20% from 2022). While 40% of adults engaged with shoppable TV ads - around the same as in 2022 -  almost three-fourths (73%) of those adults purchased a featured product “immediately or thereafter.” These statistics yield the result that 17% of adults have purchased something featured in a shoppable TV ad — an increase from 14% in 2022. Additionally, only 12% of adults could not recall seeing a shoppable TV ad (down from 19% in 2022).

While the awareness of these features is clearly on the rise, Montgomery noted that because clicking and buying stayed a steady course year over year, increasing exposure to shoppable TV should remain the focus.

Shoppable TV trifecta  

Shoppable TV resulted from many decades of work, according to Montgomery. Yet what catalyzed consumer adoption (or consumer readiness), was a combination of converging technologies, social media-shaped consumer habits and pandemic-propelled familiarity with touchless technology like QR codes.  

COVID-19 and “the need to be touchless super-charged QR adoption,” he told STV via email. “QR codes were not new, although widespread in Asia. [They] achieved mass adoption during the pandemic as restaurants and other consumer-facing entities [had] to be touchless.”

LG’s survey found that seven in 10 viewers like TV ad creatives that include a QR code, with 62% open to scanning one on a TV ad in the next 12 months and 38% likely to make a purchase after scanning. However, Montgomery ultimately disagreed with LG’s concluded positive consumer sentiment on QR codes.

“I don't think consumers like QR codes, just the tech of the moment,” he argued.

The adoption of digital wallets also removed friction from online checkouts, Montgomery noted; moreover, digital shifts brought on by the pandemic that make concepts like shoppable TV possible infrastructurally rely on resilient, dispersed broadband.

Completing the trifecta of influencing factors was evolving consumer habits formed by social media. As Montgomery wrote last year in a guest article for STV, “Actualizing the potential of shoppable video advertising rests largely with Gen Z. Growing up as digital natives, they see little difference between traditional television, social media, streaming video, etc. These are just different ways of using a screen.”

Streaming: The ‘Wild West of Shoppable video’

From the streamer’s side, Montgomery noted another igniting influence was “The Great Netflix Correction of 2022,” when it lost substantial subscribers, prompting a deep drop in the stock price for not only Netflix but other giants in the industry.  

“This forced the industry to consider profitability over sub-growth, which had an immediate pivot to making money from ads,” he said via email. “This led Netflix to reverse course from their position of never selling ads to adding a new ad tier. Now, all streaming services have ad tiers.”

And with more consumers choosing ad-tier options for affordability, further collaborations in the shoppability space are sure to occur, Montgomery asserted.   

“Marketers and non-platform players will have many options to place their ad dollar bets, and as this is still a rather nascent business, it is not clear where the best return will be. Therefore, they will likely need to make many bets, study the results, and tweak where necessary,” he advised, calling the era a “Wild West of shoppable video.”