Who Is Watching Whom: Are Regulations Keeping Up With Internet-Connected TVs?

Marketers are increasingly able to collect data as consumers binge their favorite shows

Consumers' privacy is at risk with the rapid expansion of internet-connected TVs.
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Traditional television ad spend is down, indicative of the fact that the TV screen, which for so long was the epicenter of most homes in the U.S., is no longer king of the media jungle. And the numbers reflect this: Per eMarketer, mobile surpassed TV in terms of ad spend in 2018 with wireless devices commanding 33.9 percent of all U.S. media budgets compared to 31.6 percent for TV. The market research company also reports that TV ad spend dipped 0.5 percent in 2018 to $69.87 billion and will fall another 1 percent to $69.17 billion this year.

The pressure for marketers to better demonstrate ROI on their TV ad dollars is increasingly being facilitated by technical progressions in the consumer electronics and media landscape. Like internet-connected TV sets.

More than two-thirds (70 percent) of global TV shipments in 2018 were units that can connect to the internet, according to IHS Markit. This is helping to shape viewing habits, with Nielsen recently noting how Americans spend nearly 8 billion hours per month watching such devices.

“With the increasing number of U.S. households using connected devices, comprehensive measurement is imperative for publishers to better understand how consumers are spending their viewing time,” read the report.

Meanwhile, as television manufacturers seek new business models—away from their earlier “box-pushing” revenue streams—which are dependent upon intimate relationships with consumers, many are opting to enter the media business.

These ambitions involve equipping devices with targeting and monitoring technologies, such as automated content recognition sensors, which generate data that can help advertisers better demonstrate the effectiveness of their TV ad spend. These devices can record what content their owners watch and then send this information to media businesses.

However, given the rising tide of privacy among the U.S. public, just how does this sit with lawmakers and with the U.S. public at large?

All TV television manufacturers contacted for this story did not provide comment by time of publication.

Negative headlines have beset some of the biggest brands in the space, with Samsung in particular receiving bad press over the wording of its privacy policy and Samba TV subject to unflattering mentions in The New York Times earlier this year. And it looks like Vizio is wrapping up a data-tracking class-action lawsuit that alleged the company was spying on consumers.

Additionally, a 2018 Consumer Reports study found widespread vulnerabilities in the data security features of leading models in the market. Maria Rerecich, head of electronics testing at the research outfit, noted how such devices “can transmit a remarkable amount of information about their users back to the TV manufacturers.”

This is also incurring the wrath of state authorities, who point out the Federal Trade Commission fined TV vendor Vizio $1.5 million for collecting data without consumers’ consent in 2017.

The FTC has since issued guidance on how TV manufacturers can best allay such concerns:

  • Get consumers’ consent before you collect and share highly specific information about their entertainment preferences.
  • Make it easy for consumers to exercise options.
  • Established consumer protection principles apply to new technology.
  • Explain your data collection practices up front.

Most privacy controls can be used to opt out of tracking capabilities that make them vulnerable to data hacks. However, a critical July New York Times article looking at the extent of tracking capabilities of Samba TV prompted Sens. Edward Markey, D-Mass., and Richard Blumenthal, D-Conn., to pen an open letter criticizing the FTC for not fully enforcing its consent recommendation.

“Televisions have entered a new era, but that does not mean that users’ sensitive information no longer deserves protection,” states the letter. “We respectfully request that the FTC continue its efforts on smart TVs and launch an investigation into the privacy policies and practices of smart TV manufacturers.”

One industry source speaking with Adweek on condition of anonymity noted how only a minority of connected TV devices currently available in the U.S. were compliant with the above guidelines: “Becoming compliant means you have to change your entire privacy regime, and then you then have to push that change to your existing footprint of TVs. That’s a really labor-intensive process that simply takes time.”

Meanwhile, Ameet Shah, senior director of global technology and data strategy at Prohaska Consulting, noted how the prospect of such data handlers having to specifically request that consumers opt in to such targeting is now a key question.

“Big data and consumer privacy are just now being discussed and will go even deeper at future [congressional] hearings … the impact on advertising technology could be profound,” he said. “In the future, business processes and controls will have to be more robust.”

This story first appeared in the Jan. 7, 2019, issue of Adweek magazine. Click here to subscribe.

@ronan_shields ronan.shields@adweek.com Ronan Shields is a programmatic reporter at Adweek, focusing on ad-tech.
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