Sephora Settlement Underlines TV Privacy Concerns, Dongles Are Dying But The Hybrid Ecosystem Is Here To Stay

1. Sephora Settlement Underlines Privacy Concerns

Flying a bit under the radar this week was news that beauty brand Sephora had to pay a $1.2 million fine in California for violating the state’s CCPA (California Consumer Protection Act) law.

What did Sephora do to provoke California Attorney General Rob Bonta and his team? Plenty, it seems. They allegedly collected data from online shoppers, including the type of computer they were using, the products they were buying and their location, and then shared that information with third parties.

All without asking for permission or even, it seems, giving shoppers a heads up that they were being tracked.

Ouch.

Why It Matters

The new streaming ecosystem is built on data and knowing things about viewers that makes it easier to target them. Which is all well and good until, of course, it’s not.

Consumers are generally fine with someone tracking their TV viewing. Given the far more private nature of everything that gets tracked online, letting someone know they like reruns of The Simpsons and Monday Night Football seems pretty banal, and most people seem to get the connection to better recommendations and the continued existence of their favorite shows.

But tell them that their credit card purchases are being tracked and it’s a whole new ballgame.

Hence the popularity of privacy laws like the CCPA.

This affects TV because so much of the data that is used to target TV commercials comes from third parties, who are often overzealous in their efforts to understand consumer behavior. (I’m being kind here.)

Point being, there are going to be a lot of pissed off people and a lot less trust in the TV industry in general if TPTB do not start doing something about privacy.

The thing is, it’s not that hard.

All Sephora had to do was tell people it was collecting their data anonymously, explain how it worked and ask their permission.

Sure, a decent number would have said no, but if prior experience is any indication, far more would have said yes. 

And so everybody wins.

What You Need To Do About It

If you are a brand and you advertise on TV, you need to ensure that the data you are basing your ad buys on is kosher, at least in terms of privacy regulations. That means recognizing just how data-reliant all your TV ad spend is about to become and accepting that this data will primarily come from third parties whose business model is usually to collect as much data as possible from as many sources as possible.

So just be upfront—tell people what you are doing and make sure it does not sound stalkerish. The more open you are, the most honest you seem, the more consumers will think good thoughts about you.  

If you are a streaming service selling advertising you need to do a better job of ensuring that your advertisers are using data that won’t get them (and by extension, you) into trouble. And while I get the fear that this might slow down ad sales dollars some, it’s a lot better than winding up on the wrong side of an article about how an advertiser is using your viewers to collect data in an unsavory manner.

If you’re on either side of the TV ad equation, look into the new crop of third party apps like Qonsent which make it easy for you (and your customers) to manage privacy in a way that does not add an extra layer of hassle to the experience.

If you are reading this, chances are you work in some corner of the industry. If you haven’t done so already, try explaining to non-industry friends and family just how data collection works and what data is tracked. Watch their faces when you get to the part about “and whether you then used your credit card to buy the product in that ad.”

Exactly.

2. Dongles Are Dying But The Hybrid Ecosystem Is Here To Stay

53 percent of the time spent on a VIZIO TV is spent on their SmartCast platform, with just seven percent spent on an external media player or dongle, according to CFO Adam Townsend, who also cited a recent customer survey that revealed that 38 percent of the smart TV manufacturer’s customers still have a cable or satellite subscription and are watching linear TV via a traditional set top box .

Those numbers back up two things we’ve been saying for a while now: that smart TV interfaces have improved dramatically, to the point that fewer and fewer people are making use of dongles, which are quickly heading the way of the 8-track, and that while cord cutting is very much real, somewhere between 30 to 40 percent of households are only going to give up cable when someone physically takes their set top boxes away from them.

Meaning the industry is going to need to deal with a hybrid cable and streaming ecosystem that will, fortunately for them, mostly be watched on smart TVs capable of providing insights into both types of viewing.

Why It Matters

Right now—and for the foreseeable future— most viewers fall into the “mostly streaming” or “mostly cable” or “pretty much split down the middle” categories rather than “only streaming” or “only cable.”  

So whether you are on the programming side or the advertising side, you need to adjust to this hybrid ecosystem. 

To make things even more complicated, those categories are not static either.

Someone who is mostly watching cable during football season may wind up mostly watching streaming post-Super Bowl as they try and catch up on all the streaming shows they missed that fall. And that’s not even factoring in all the cable news viewing that’s likely happening around the midterm elections this fall.

As a practical matter, it means advertisers need to plan for audiences that are reachable on both platforms and figure out ways around a system that does not make cross-platform anything very easy.

It also means that promoting shows across platforms is going to be key and that the TV’s native interface (the TV OS) is going to assume an even greater role in helping to promote programming across linear and cable. 

To wit, VIZIO’s survey also revealed that 53 percent of the time spent on VIZIO TVs is spent on their native SmartCast interface. Meaning that if you want to get people to watch the show you are promoting on their VIZIO TV, then Smartcast is the place to reach them, a pattern that holds true across all of the smart TV OEMs.

The final bit to note, is that as per our Emerging Smart TV Ecosystem report, because people watch linear and streaming on the same TV set, the smart TV OEMs are able to track (opted-in) viewers across both platforms, providing valuable data for both programmers and advertisers.

All of which makes the hybrid ecosystem a little easier to handle.

What You Need To Do About It

If you are an advertiser or ad agency, you need to look for audiences on both cable and streaming and figure out how to reach viewers on both. Not an easy task at times, but a necessary one as the hybrid ecosystem is not going away anytime soon. (Though as just noted, smart TVs are your friend here.)

If you are a TV OEM, remember how valuable your operating system is, both in terms of data and in terms of discovery. The more consumer friendly and personalized that interface becomes, the more value it has to consumers, the more likely they are to remain loyal customers.

If you keep writing about how TV is dead and how the #StreamingWars is making cable irrelevant, think again. That story is far from over. You see there are a whole lot of people who still love cable and aren’t ready to give it up just yet. So prepare for a long slow death, with falling ad rates, falling retrans and carriage fees, shrinking bundles, much finger-pointing, heroes, villains and all that.

In other words, a long drama-filled story arc, played out over several seasons. 

Get your popcorn ready.