Interactive TV has a BRIGHT future....
Technology Journal:
Do New Ads Click With Viewers?
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Interactive Media Change Rules of Broadcasting
By David Pringle
12/07/1999
The Wall Street Journal Europe
Page 12
(Copyright (c) 1999, Dow Jones & Company, Inc.)
LONDON -- A Procter & Gamble Co. ad for Pantene shampoo in
France begins in the usual way: A glamorous woman sweeps perfectly
groomed, shiny locks from her face as she looks seductively into the
camera. But then something different happens: The viewers of Television
Par Satellite's channel are invited to press a button on their remote
control. Those that do enter an interactive area, rather like a Web site,
where they are asked about the color and thickness of their hair, and how
often they wash it. Then come the personalized tips for hair care.
Welcome to the world of interactive television. As digital broadcasting
technology rolls out across Europe, the ubiquitous "tube" is becoming a
two-way communication tool -- one that's changing the bottom line of the
broadcasting business. For consumers, interactive television allows them
to respond to the hours of programming and commercials they watch.
For broadcasters, it's an opportunity to exploit a new dialogue with
viewers. And for advertisers, it means commercials can become more
powerful -- and expensive.
"You can begin to judge how effective your campaign is and you can
generate real responses for follow-up," says Noah Yasskin, an analyst at
Jupiter Communications, a market-research firm. "And that is pretty
compelling."
Adds Alan Rutherford, world-wide head of media at consumer-goods
company Unilever PLC, which has an annual marketing budget of more
than 5.5 billion euros: "[Interactive television] will be one of the most
flexible mediums for one-to-one communication with the consumer."
Toyota Motor Corp. is just one of the companies availing itself of the new
medium. Earlier this year, the Japanese car giant ran an interactive
advertising campaign on the service of Television Par Satellite. The
broadcaster's computers clocked each subscriber who pressed the "OK"
button on their remote controls and voila -- Toyota had the names and
addresses of 4,100 French consumers potentially interested in buying its
cars.
France is Europe's most advanced digital-broadcasting market. By 2000,
more than one million households will have access to interactive digital
television, according to Jupiter. The U.K., however, is catching up
quickly: Satellite broadcaster British Sky Broadcasting Group PLC
launched interactive services in October. And although a wide choice of
conventional channels has damped demand for premium services in
Germany, Jupiter still predicts there will be two million German
households with access to interactive digital TV by 2002.
Digital technology has made it possible for interactive television to be
transmitted via cable, satellite or traditional terrestrial receivers, although
subscribers to satellite or terrestrial services must use a telephone line to
send data back to the broadcaster. And the proliferation of digital
services means it will not be long before interactive television becomes
commonplace in Europe.
For now, though, several conflicts of interest need to be resolved before
the interactive bandwagon can really begin to roll. One of the most
problematic issues is where to place an interactive ad in the commercial
break. If a consumer is to respond to an ad, they usually need to leave
the main broadcast stream, meaning they would miss subsequent ads.
To get around the misgivings of advertisers, broadcasters have so far
tended to run the interactive advertisements at the end of the commercial
break. That approach has worked in France. "TF1 [a French TV
channel] is our Yahoo," Alain Staron, director of multimedia services at
TPS, said at a recent conference in London. "The easiest way is to put a
banner on TF1 during commercials -- a small message saying if you want
to find out more press `OK.' And as soon as the commercial break is
over, they are taken to the advertiser's site."
But not everyone is happy with this arrangement. Some advertising
agencies say consumers might be reluctant to interact with the ad because
they will miss the program they tuned in to watch. "Are you going to click
on an interactive ad during Coronation Street (a popular U.K. soap
opera)?" asks Alan McCulloch, managing consultant for interactive
television at advertising agency Saatchi & Saatchi PLC.
Once interactive television technology has advanced further, another
possible solution would be for consumers to "bookmark" the ad, allowing
them to explore options later.
But for broadcasters, such problems pale in comparison with the potential
benefits of interactivity. They claim it will not only help them retain paying
subscribers, but also open up new revenue streams from additional
services, such as electronic commerce, online games and
video-on-demand. And they also say that interactive features will enable
them to charge more for advertising.
Canal Plus SA has been running interactive advertisements since June
1997 on its digital satellite services in France. Remi Collard, commercial
director of Thematiques Regie, a subsidiary of Canal Plus, says that
advertisers are charged a 20% premium for an interactive ad. On top of
that, Canal Plus charges six French francs (91 European cents) for each
sales lead it delivers to the advertiser. Canal Plus has standard templates
for interactive ads, but Mr. Collard estimates that an advertiser wishing to
deviate from these formats will have to spend between 80,000 and
200,000 francs developing the interactive element of an ad.
In exchange, Mr. Collard insists that advertisers will achieve better
response rates than they could in other mediums. He says that the
interactive campaigns that Canal Plus has run so far have generated
anywhere between 600 and 36,000 viewer responses. "The results
depend very much on the type of products being advertised," he says. "If
you advertise a new car, you will get fewer clicks than if you run a game
or a competition." But Mr. Collard claims that the average response rate
is about 1 in 100, compared with 1 in 1,000 for campaigns run in French
TV-listing magazines
Advertising agencies recognize interactive television's commercial
potential, but they are wary about the cost. Jacques Bille, vice president
and delegate general of French advertising association AACC, doesn't
think advertisers will be prepared to pay a premium. Adds Unilever's Mr.
Rutherford: "We are never prepared to pay more. But the way in which
television time is bought and sold will be different." He predicts that
commercials will be priced on the basis of cost per lead or even cost per
sale.
At the moment, advertisers typically pay an agreed cost per thousand of
their target audience when they run a conventional television commercial.
Steve Harrison, business-development director at U.S.-based Optimum
Media Direction, sees no reason why this should change. "If the target
audience is wealthy people, which we classify as the top 40% in
somewhere like the U.K., we don't want the other 60%," he says.
Mr. Harrison suggests that the broadcaster should offer the same cost per
thousand to the advertiser, but then sell the unwanted viewers on to
another advertiser with a different target audience. "The TV guys can take
more money. And the consumer won't be receiving advertising messages
that are inappropriate," he explains.
Digital technology makes it technically feasible for broadcasters to
segment out viewers in this way. But so far, they have yet to do it. "Every
set-top box is addressable," says Mr. Collard at Canal Plus. "Advertisers
know about the possibility, but they haven't requested to do it yet."
Advertising professionals have some concerns about these developments.
Mr. McCulloch, for instance, expects that broadcasters will try to levy a
fee for each contact address. He believes that advertisers will increasingly
regard such fees as unfair. Despite his reservations, Mr. McCulloch is
bullish about interactive television.
Jupiter's Mr. Yasskin is more skeptical. "It has to be very simple and fast,
not like on the Internet where you get lots of detailed information on the
product," he says, pointing out that consumers won't want to be
distracted from conventional viewing for very long. Indeed, Canal Plus is
restricting the number of interactive campaigns it runs to one a month to
avoid impinging on its subscribers' viewing experience.
But Canal Plus may find that such a policy is difficult to sustain as the
world's consumer-goods giants realize interactive television's growing
potential. Unilever's Mr. Rutherford is convinced that it will be a
significant advertising medium "within five years in the major Western
markets."
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