Buyers, Sellers Weigh Tech Advances

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In trying to plot a strategic course for interactive-TV advertising, TiVo Inc. chief programming officer Stacy Jolna turned to a wise sage: baseball hall-of-famer Yogi Berra.

"When you get to the fork in the road, take it," Jolna advised, underscoring advertisers' uncertainty over how to cope with the rapid advances in technology.

But ad-sales players were less fuzzy in recognizing the earlier technological advances, which have led to widespread implementation of digital ad insertion and interconnects.

By making it much easier to buy cable commercial time, those advances positively affect cable's ad-sales efforts, buyers and sellers agreed.

"Interconnects make sense for one reason," said TN Media Inc. senior vice president and director of local broadcast Howard Nass. "They put cable on a level playing field with broadcast television stations."

He praised cable operators, vendors and others who played a role in interconnects and ad insertion.

Interconnects generally are "more professional than individual operators" in the way they market, price and sell their inventory, he said. Too many operators, in Nass' view, still haven't figured out how to price themselves or conduct the research that would make them more competitive.

Adlink, the Los Angeles interconnect, has set the industry standard for that sector, Nass added.

National Cable Communications' new Consolidated Interconnect initiative, aimed at ultimately bringing one-stop shopping to the top 100 markets, "absolutely makes sense," Nass said. The adman, who said he often attends the Western Show and other conferences as a panelist, said he also likes to check out the vendors' new wares on the exhibit floor.

STILL A 'HEADACHE'

Digital ad-insertion vendors have played a key role in bolstering MSO and interconnect ad-sales volume in the past five years, various buyers and sellers said. Still, Nass said technology could be deployed even more widely than today's "selected pockets."

Some operators still regard such hardware purchases "as a headache," he added.

Operators will now have to brace for intensified competition from broadcast stations, Nass warned, given the currently softer economy. "The broadcasters will be looking to protect their turf," he said.

Interactivity is the next big thing on the technology front, and ITV platforms already range from broadcast and cable TV to the Internet to various wireless and mobile devices to in-room interactive entertainment at hotels.

On Command Corp. recently named AdForce Inc. to sell, place and track ads using its interactive platform in 100,000 U.S. hotel rooms.

Like many others in the ad community, Nass said TN Media is "fascinated by interactive."

"We're putting our feet in the water," he said. "There will be a lot of learning before we come out big time."

Advertisers and viewers will get more excited about interactivity when its content becomes more interesting-and when its household penetration grows substantially, various industry sources said.

National advertisers aren't likely to get heavily involved in ITV until its reach is much broader, noted Microsoft TV senior group manager of interactive TV Paul Mitchell.

"The economics won't work unless you've got this ubiquity," Mitchell said at October's Myers Forum for Interactive Television Development.

Wink Communications Inc. senior vice president and general manager Kevin Smith agreed, as did various advertising executives.

"Enhanced" or interactive TV currently is available in about 1.5 million homes, mostly linked to Wink. That number soon will jump, thanks to Wink's recent agreement with DirecTV Inc.

Compelling programming-not advertising-will drive ITV's growth, said Jason Kuperman, director of international marketing and convergence strategy at TBWA/ Chiat/Day. His ad agency's clients include Levi Strauss & Co., Nissan Motor Corp. and Circuit City Inc.

"You need to deliver something of value besides advertising," agreed Microsoft's Mitchell. "Selling Jennifer Aniston's sweater [on NBC's
Friends
] is not a business model."

ESPN and ABC Sports will soon announce several advertising relationships and MSO alliances for ITV testing, said ESPN/ABC Sports president of customer marketing and sales Ed Erhardt. These will range from "walled-garden" concepts with affiliates to retail-mall concepts with marketers.

However, Erhardt cautioned: "I'm not sure consumers will click, click, click all night. I don't think that's going to happen."

TRACKING NEEDED

On the business side, the ITV industry needs to adjust its focus, according to Erhardt.

"Measure ITV success on sales, not on awareness, as we do now," he suggested. "Not, 'I moved the needle.' How about, 'I moved the product?'"

Walt Disney Internet Group began testing enhanced TV in 1998, said senior vice president Jonathan Leess. It's now becoming "a real business.

"ITV is technology-driven [but] our approach is content-driven," Leess said. "Our primary objective is to keep our viewers tuned to our channels and programs."

Citing an interactive play-along PC component to ABC's
Who Wants to Be a Millionaire
, he said that even during the commercial breaks, the network aims to keep viewers interested by offering them interactive trivia games about commercials for such sponsors as Toyota and Mazda.

Don Ohlmeyer, executive producer of ABC's
Monday Night Football
, made note of the one factor that isn't likely to change-the consumer.

Even though the technology may change five years hence, "viewers' desire to be engaged, informed, touched won't change," said Ohlmeyer. "The viewer is not driven by the technology. The technology will be driven by what the consumer wants."

The former NBC programming executive faulted industry executives for putting too much emphasis on hardware and software. When computer executives talk about the promise of full-motion video over the PC, for instance, he said he is not impressed.

"Hell, we've had full-motion video for years-it's called television," he said.

The interactivity that since late October has allowed viewers to learn more about comic Dennis Miller's sometimes obtuse references during his
Monday Night Football

commentaries, Ohlmeyer said, is "engaging the viewer.it's not just a device."

But many viewers aren't desperately seeking out interactivity, Ohlmeyer noted. For a lot of folks, the TV set is meant for "zoning out" and relaxation.

For such couch potatoes, Ohlmeyer said, "the interactivity is the remote. These are not the new adapters."

MADISON AVENUE INTEREST

"There's a lot of interest" in ITV within the ad community, said ACTV Inc. senior vice president of ad sales and electronic commerce Art Cohen, who also chairs the Addressable Media Coalition. "They want to get on the digital train, not [be] under it or dragged by it."

Nevertheless, some ad buyers remain cautious, and even skeptical.

"Nothing is a must buy," said Linda Thomas-Brooks, executive vice president and managing director of General Motors Corp.'s GM Mediaworks & Cyberworks unit, at last July's Myers ITV forum.

Still, because interest in ITV is client-driven, "I think you're going to see agencies respond," said DDB Worldwide Communications Group Inc. worldwide media director Page Thompson.

MediaCom Worldwide-the buying unit of Grey Global Group-recently became the latest agency to develop interactive and addressable advertising using ACTV subsidiary Digital ADCO Inc.'s "SpotOn" technology, said Cohen. ACTV had previously signed similar agreements with Young & Rubicam's The Media Edge and Starcom MediaVest Group.

On the MSO side, ACTV plans to test SpotOn in AT&T Broadband's Aurora, Colo., system by year's end with unspecified advertisers. The trial will involve Motorola Broadband Communication Sector "DCT-1000" and "DCT-2000" digital set-top boxes.

The interactive ads will "feature full-motion video, just like we see in the traditional TV environment," said Judi Heady, senior vice president of AT&T Media Services.

RespondTV president Richard Fisher offered some ITV examples involving his company's clients and Microsoft's WebTV, which he called "a wonderful sandbox." An enhanced spot for American Airlines, in which two trip tickets are offered as a contest prize, generated 126 clicks in 16 states during its first five days, he disclosed.

Another spot offered a 30 percent discount on a Melissa Etheridge CD via CDNow, he said. Twenty-two percent of viewers ordered it.

Home & Garden Television pitched a free issue of its
Ideas

magazine, and 142 viewers requested it over a three-month span-and 20 percent have converted to subscriptions so far, he added.

For Ralston Purina Co., RespondTV offered a puppy-care video that also generated strong interest, Fisher said. Though admittedly not scientific, those examples do show ITV's promise, according to Fisher.

RespondTV also is working with such clients as Allstate Insurance Co., Coca-Cola Co., Domino's Pizza and Ford Motor Co., he added.

"Television is in a lot of trouble right now" and ITV can help it, said Microsoft TV senior group business development manager Andy Beers.

But Leading Web Advertisers CEO Michael Kubin (whose company monitors 2,000 Web sites) said that network television is "still a huge factor and marketing tool" for national advertisers-even though its audience share has fallen far below the 90 percent or so it tallied in the 1970s.

But executives said that in the future, network TV would be used differently.

"The 30-second spot is dying," said Myers Reports CEO Jack Myers. "It's not the standard for tomorrow."

AD-SPOT EVOLUTION

Disney's Leess offered a healthier prognosis for the standard commercial, noting positive feedback for the program- and ad-related games involving
Millionaire
.

"The TV commercial need not die," he said.

But it will likely evolve, according to others. Several ITV vendors suggested various possible avenues ITV advertising could take at the Myers Forum for Interactive TV Development in October.

For instance, Cylo chief marketing officer Kirt Gunn said ITV applications could spark a revival of the full-sponsorship model popular in the 1950s. In the interactive era, such a media buy could also encompass sponsorship of related chat rooms.

But Myers wondered if marketers, who long ago moved away from that tack once sponsorship costs became prohibitive, would suddenly become receptive.

Although Veritas partner Mark Heavey doubted it, Gunn countered that such buys might not be as costly as they seem once the importance of forging one-to-one relationships with prospects is factored into the equation. TBWA's Kuperman said that observation had merit.

Noting that Coca-Cola, McDonald's Corp. and Levis are losing their share of the youth market, Gunn argued that those companies should switch to two-way communications.

As DDB Worldwide chairman Keith Reinhard recently observed at a Jupiter Communications conference, terms like target audience suggest shooting at targets, a one-way sport. "The interactive age is more like tennis-your return of my serve initiates a two-way process."

Personal video recorders also will figure in the new-media and interactive spheres, although their precise role remains unclear.

Myers asked if PVRs-which enable users to fast-forward past commercials-might spell "the end of TV advertising as we know it." TiVo's Jolna said the innovation would instead force the ad world to "develop the next generation of TV marketing."

WorldGate Communications Inc. senior vice president Gerard Kunkel said the 30-second ad is not obsolete. Rather, it "now becomes the portal to interactivity."

Peter Kagan, CEO of [+]iTV-which recently produced interactive spots for Ford-said the 30-second spot will become "the teaser" to a broader experience.

But, Kunkel added: "I keep looking around Madison Avenue and asking, 'What are you waiting for?'"

TBWA's Kuperman said other issues need further exploration. For example, "There is concern about what happens to the next commercial," which viewers busy interacting with another marketer's ad won't see.

Programmers have concerns of their own. "In our case," Erhardt said, "we don't want 'em leaving the game."

Thus far, automakers are among the marketers most involved in interactivity and developing one-on-one relationships with consumers.

ReplayTV Inc. research vice president Susan Rynn said that her company just added Ford and Toyota to a short interactive-client list that already contains Universal Studios and Coca-Cola. All are so-called "traditional" accounts that now are exploring new media opportunities, she noted.

PVRS' 'UNIQUE' REACH

Ford global media manager Mark Kaline praised TiVo's "unique targeting capabilities" and said, "we want to get some learning" from this new ad option.

Toyota marketing vice president Steven Sturm liked the idea of "sending information on our Celica to the customer who wants it, versus sending the information to everyone."

Replay senior vice president Michael Teicher later said that Ford's PVR ads will break in November, and Toyota's will bow in January.

Another new opportunity is the ability to generate names and addresses of sales leads, said Wink's Smith. Last month, Wink added four ad agencies to its customer list: Carat North America; Goodby, Silverstein & Partners; Starcom MediaVest Group; and J. Walter Thompson Co.

JWT's convergence manager, Chuck Schultz, also lauded Wink's ability to generate sales leads. His agency has been working with Wink on various accounts since last year, looking for "ways to increase the effectiveness and efficiency of TV handheldadvertising."

Starcom director of emerging contacts Tim O'Hanlon cited its own Wink deal as important in forging relationships with consumers in a time of "increased consumer control and empowerment."

The media landscape is "only going to get exponentially more confusing" due to an explosion in PVRs, as well as wireless and devices, he said.

Although there has been some criticism that the ad industry is not fully supporting ITV, he said, "the big bad media agencies aren't necessarily the obstacles people think they are."

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