Wink Chief: We're Building an ITV Customer Base

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Like other technology sectors, the interactive television category has taken its share of hits over the past few months, leading many to question whether ITV's future will continue to be held at bay. Wink Communications Inc., which offers enhanced television services mainly to direct-broadcast satellite customers, is forging ahead despite the uncertainties. In an interview last month with Multichannel News marketing editor Monica Hogan, Wink president and CEO Maggie Wilderotter discussed the company's ongoing challenges. An edited transcript follows.

MCN: How has the overall advertising downturn affected Wink?

Wilderotter:
As in any other business environment, it's tougher to get attention on the part of advertisers when they're distracted based upon what's going on in the economy.

We are a little worried about the economy in terms of when the turnaround will be. We're still doing well with our advertisers. But there is this level of distraction that you see in the advertising industry, as they're wrestling with how much money do they spend on television advertising and what are they doing with networks and how many new things do they want to try?

Decisions do take longer. They're still making the decisions. That's the good news.

MCN: How do you answer critics who say that Wink should have more revenues by this time since you've been a company for a few years now?

Wilderotter:
The interactive-television business is a very complicated business. It's a chicken and an egg. You have to have distribution in households. You have to have broadcast and cable programming network partners in order to display content.

Then you need to be able to do all of the integration work to make sure that advertisements can be enhanced through dub houses, through agencies, through the scheduling and master control systems at every one of these programming networks.

It's building that infrastructure and putting all of those deals together that are predicated on an advertiser saying, 'Hmm, there's enough households here and it's easy enough for me to integrate this into my basic business.'

Wink has today over 140 partnerships that we've put in place in order to make that happen. These partnerships are long to come about.

You add the element of uncertainty with technology and with partners not necessarily sure what directions they're heading in and with things always taking longer to deploy than they think it's going to.

All of those things have added up to Wink spending three to four years putting all of this foundation work in place so we can now start generating revenue.

This is the shortest time frame of anyone getting to the point to be able to generate revenue for interactive television that's ever been tried since the early '70s and the first forays into interactive TV.

We're also the first company to be able to deliver an interactive service to millions of households around the country.

MCN: Have there been days when you've been discouraged about the potential of ITV as a whole?

Wilderotter:
Sometimes there are more days like that than not.

It's very hard to pull off a service like this, because there are a lot of uncertainties and there are a lot of partners. That builds competitive advantage in and of itself.

There's a lot to do in order to get interactive TV to a mass-market deployment environment. There have been a lot of hills to climb.

MCN: How many homes do you expect to be in front of by the end of the year?

Wilderotter:
Our analysts are all predicting that we'll be in over 6 million homes [from a current 3.3 million, mostly from direct-broadcast satellite]. We're very comfortable with those numbers.

As far as I know, there are no other interactive-television companies that have any deployments even up to one million households — or 500,000 households here in the United States.

MCN: How many Wink-enabled homes have actually used the service to date? And, how closely are you able to monitor those results?

Wilderotter:
We can monitor those results every day. For example, in the first quarter of this year, 62 percent of all households that have Wink used it on average 11 times a month. That's very high usage for a new service.

If you think about it, of those 3.3 million homes, we had 300,000 homes as of September 30th of last year. Those incremental three million homes have all come on over the last six months. To get that level of activity very early on is terrific.

In the fourth quarter we had about 60 percent of households using it on average six times a month. We're seeing usage almost doubling on a monthly basis.

MCN: How many charter advertisers have you signed up to date?

Wilderotter:
Thirty.

MCN: Do you expect to turn any of those charter advertisers into long-term advertising clients?

Wilderotter:
Yes. We have 17 pay-as-you-go advertisers now that we've converted over. And we're continuing to add more and more on a monthly basis.

MCN: What is that relationship?

Wilderotter:
When a consumer clicks a request for product information or for a purchase, when we provide that qualified lead or sale to an advertiser, the advertiser pays us a transaction fee, anywhere from $1.50 to $3.50 on average, for that qualified lead or purchase.

We only get paid for the transactions we deliver. It's a performance-based model.

MCN: What do you mean by only the transactions that you deliver?

Wilderotter:
There are a lot of different models for how companies get paid. Ours is all about delivering on a performance basis. In other words, when somebody clicks on the 'i' and just views an offer, an advertiser doesn't necessarily pay for that. They pay when we deliver a customer or a potential customer.

MCN: So they have to do something more than just click through, like request a coupon or some information?

Wilderotter:
Or a sample, or 'send me this product' or 'I'm registering my opinion on something' if there's a research question. There has to be some value-added we're delivering back to an advertiser.

We also charge our advertisers for reporting. We do give them media effectiveness reports that include when consumers just click and view offers and might not take them. At least they know that a consumer actually did see the ad.

MCN: How much luck are you having with cable operators in getting your service deployed in cable homes?

Wilderotter:
We finished the first quarter at 775,000 cable customers. We have 45 cable systems that are deployed with Wink around the country in big cities like New York and Los Angeles and St. Louis, and small cities as well, like Johnson City and Marysville. We have a great cross-section of Americana in the cable world using our services.

We are continuing to do very aggressive rollouts with Comcast, Adelphia and Charter, which are the three major MSOs that have commitments to launch Wink on their digital boxes.

MCN: How have consumers responded to the interactive-television features that you've offered to date?

Wilderotter:
There are some things that were validated for us: sports, weather, news are killer-application categories. Consumers have an insatiable appetite for information.

It's no wonder that on The Weather Channel's interactive full-screen channel on DirecTV, they get 850,000 visits a week. People are curious about their weather. They want to know what their five-day forecasts are.

The same with sports. We find that informational categories are definitely highly supported.

We also find that cult-following shows have a lot of usage, whether that's wrestling or reruns of shows that were popular and have trivia questions and information associated with those shows. We find shows like Dinner & a Movie
[on TBS] have very high usage, where consumers print out the recipes for the food that you're actually making for dinner while watching the movie. There have been some 'aha' [moments] for us.

On commercials, if you think about it, 30 seconds is a very short period of time to see that 'i', click on it, view an offer and take an offer. We're getting about a 2-percent impression rate, and then 40 to 45 percent of viewers that view an offer are actually taking them. We feel very good about the takes we're getting and the interactive experience we're seeing on the part of consumers.

MCN: Do you expect that electronic commerce will play a big role among Wink customers?

Wilderotter:
At the end of the day, the consumer can impulse-buy. We already have their name and address information based upon our integration with the billing services, and then you add to that a registered credit card with us and we have an electronic wallet that stores that information. The consumer only has to enter it once. It allows for true e-commerce on television.

MCN: Has that been a big application to date, in terms of purchases made?

Wilderotter:
No, only because we have not really launched a lot of content in that area.

We had about 240 opportunities for consumers to buy product in the first quarter. We see that scaling up substantially in the third and fourth quarters, when we launch a number of shopping channels in the walled-garden service for DirecTV.

You'll have books and sports merchandise and CDs and a number of channels where consumers can actually go to purchase merchandise. That's when you'll see e-commerce really start to take off.

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