Custom-Made Television Advertising to Appear in the Near Future
June 3, 1999
Denver Post -- May 31--As technology morphs the TV from furniture into interactive tool, advertising will morph with it.
In the next 10 years or so, fiber-optic, digital and satellite technologies will give advertisers using cable, broadcast and satellite TV the tools to zero in on their audiences in ways unimaginable just a few years ago.
Indeed, custom-made TV ads will be able to target age groups, ZIP codes, neighborhoods, whatever. Factor in the power to order products and information through the click of a remote control or a quick trip online, and TV advertising no longer will be a one-size-fits-all exercise.
"It's not about advertising anymore," says Josh Bernoff, an analyst with Cambridge, Mass.-based Forrester Research. "It's about information. "
Louisville-based SkyConnect Inc. is helping lead the way to that future.
Today, its technology gives many of the nation's larger cable systems, including TCI of Colorado's 452,000-subscriber operation, the power to insert commercials on ESPN and CNN for Animal Planet and The Cartoon Channel.
The beauty to advertisers: They can pitch their products to the narrow audiences most interested in those goods -- sports junkies, newshounds, dog lovers, kids, you name it. The message isn't wasted on oceans of viewers -- say, those who tune in to the larger networks such as NBC, CBS and ABC -- who couldn't care less.
Tomorrow, according to SkyConnect President Mike Pohl, TCI of Colorado will use even more refined and powerful technology to carve its Front Range ad territories into more than 100 geographical zones -- up from today's eight. Using high-speed, digital information pipelines and connectors, ads for specific products can be sent to even more specific audiences. In short, micromarketing will supplant mass marketing.
"Clearly, there's a desire (by advertisers) to get closer to their customers," Pohl says. "Next-generation technologies will give operators the tools to identify specifics of a community, which allows advertisers to get 'smaller.'"
Take, for example, a local Ford dealer who wants to zero in on families with a 3-year-old sedan and four kids -- the kind of families that might be in the market for a new minivan. The dealer could tap into a database of cable subscriber information to find people who fit his profile.
Then, an ad with a specific, minivan message could be funneled to only the homes most likely to be interested in that message. Think of it as the video form of direct-mail advertising.
The ad could also have a "for-more-information" icon that would let the viewer order up more information in print or video form with the click of the remote control.
The concept would work nicely for neighborhood businesses such as dry cleaners, restaurants, butcher shops and the like, according to Leslie Hancock, the media director at McClain Finlon Advertising in Denver.
"Take one of our clients, Red Robin Restaurants," she says. "The local outlet could pick a three-mile radius and place its ads within that zone, because we know that people don't want to drive more than 20 minutes to go out to eat."
Along those lines, Tele-Communications Inc., which recently was bought by AT &T, is working with Kraft foods on several interactive ad tests. Want the recipe for a dish featured in, say, a mayonnaise spot? Order it through the click of the remote control. Would you like discount coupons for a new brand of cheese? Point and click.
As Leo Hindery, who runs AT&T's cable and new media division, recently told the National Association of Broadcasters convention in Las Vegas, " Advertisers don't want to count eyeballs anymore. They want greater access to the eyeballs that count."
Developing the technologies to achieve that goal will be even more important to TV advertisers down the road as the Internet -- the ultimate in electronic, one-on-one communication -- evolves.
Internet advertising will generate about $9 billion in annual revenue by 2002, according to e-marketer, a New York-based online business research firm. That's in addition to the $38 billion that national and local TV advertising already generates each year.
Little wonder, then, that several companies -- some huge, some small -- are already working on ways to blend Internet ad content with TV's.
Microsoft Corp.'s WebTV streams World Wide Web pages, and the ads they carry, through the TV. NBC's Interactive Neighborhood division is crafting strategies for ads that would run on TV and the Internet in Los Angeles, Chicago, New York and other markets.
Wink Communications, an interactive TV software company backed by billionaire Paul Allen, and WorldGate Communications, an Internet-over-the-TV operation, are "hyperlinking" TV ads to Web sites.
An example: A short Nike commercial during a Nuggets-Bulls game may feature a new brand of athletic shoe that catches your fancy. The spot's over and the game returns, but you want to know a lot more about the new footwear. Punch a button on your computerized set-top box or remote control, split the screen into a half-TV, half-PC configuration, and call up Nike's Web site.
DirecTv, which serves almost 5 million satellite TV subscribers, has cut a partnership deal with America Online and is working with General Motors on several ad/marketing test applications. Same goes for Littleton-based EchoStar, which is teaming with Microsoft Corp. to explore interactive TV.
Will viewers eventually notice what's going on?
"I don't know that consumers will be aware of the maneuverings that will be going on behind the screen," says Stewart Schley, a Denver-based analyst with Paul Kagan Associates Inc., a media industry research firm. " I'll bet it will be a very evolutionary, very slow process."
Still, if they catch on to what's happening, zap-prone viewers won't be totally defenseless in the spy-vs.-spy war with advertisers.
Forrester Research predicts that in five years, 13 percent of U.S. TV households will purchase so-called "personal video recorders" that will let consumers pick and choose what they want to watch. Those digital devices will have the power to skip commercials altogether. The first of those devices, from Tivo Inc. and Replay Networks Inc., are scheduled to hit the market this autumn, according to the companies.
"Interactive advertising will give both the advertiser and the consumer more choice, control and convenience," says Jim Birschbach, president of Birschbach Media Sales & Marketing, an Aurora-based consulting firm that specializes in broadcast and cable TV advertising.
But, he warns, privacy issues also must be addressed in this brave new world. That means cable companies, broadcasters, advertisers and others should be careful about who gets access to their information, be it telemarketers, government agencies, fund-raising organizations, you name it.
"The advertising industry must self-regulate itself; it has to maintain integrity," Birschbach says. "As soon as we violate privacy, we've lost the consumer's trust."
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(c) 1999, The Denver Post. Distributed by Knight Ridder/Tribune Business News.
[Copyright 1999, Knight Ridder Tribune]
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