Commentary
Convergence: TV/Cable: The Domino’s Effect
- by June 14, 2002
Did you know that if your household is typical, your family watches seven hours of television per day and owns more TVs than telephones? So said RePlay TV CEO Kim LeMasters at the recent Consumer Electronics Show in Las Vegas, and he has a vested interest in making sure that statistic is true. After all, it's his company that will share advertising revenues with U.S. cable companies as enhanced television strides towards becoming mainstream—so he wants your kids in front of their e-commerce-enabled, set-top box using TVs with remotes in hand. Eventually, most electronics manufacturers will probably just dispense with all this cumbersome box stuff and build interactive technologies right into their televisions. Zenith Electronics, for one, is already testing a $600, 27" TV with a 56K modem for $600.
The progress of “convergence” as it applies to broadcast advertisers has been slower than some technology harbingers thought. It seems there’s just not enough ROI on broadcast cross-media buys…yet. It is, however, on the way., and global media buyers and planners for large international entertainment companies say interactive television is sweeping Latin America and beyond.
At last count, there were 100 million TV households in the United States, of which about 25 million are cable-enabled and have set top boxes. These boxes can be fed interactive television programming by a number of different players in the market: TiVo, Microsoft TV’s Ultimate TV platform, WebTV, a Liberate-enabled box, or AOLTV. They all work with Wink and RespondTV’s technologies to provide your client with enhanced ads and will soon expand to include up and coming TiVo competitors like Quantum—whose (HDD) QuickView IEEE 1394 DVR Subsystem builds on already existing DVR features by adding more memory for program storage and better streaming video technology. Panasonic is the first manufacturer to work with the Quickview technology and will be introducing new boxes in about five months.
Other emerging players include Thomson Multimedia, which has integrated WebTV’s Ultimate PC service into its RCA-DIRECTV DWD490RE system. Here, a digital satellite TV receiver bundles DIRECTV programming, DVR functionality, interactive TV/advertising, and Internet access. It also, of course, has a hard disk recording element, so a viewer’s favorite shows can be stored, even as he or she is watching another program. Another new player is Motorola, who recently released its Streamaster 5000T set-top box. The company has an alliance with Blockbuster, which has plans to offer movies on demand via the Streamaster’s DSL-enabled connection, in some cities. The combined voice, video, and data stream capabilities of this particular product will allow for advertising content to be delivered to consumers in new ways. As for what AOL— and AOLTV—has up its sleeve, look for a set-top box that delivers all of the functions of the AOL online service without the user having to be online. Their big interactive play, which has an inherent advertising opportunity? The instant messaging market for kids, who could communicate with their friends during, say, WWF, while watching your client’s ads.
It has been said that cable and satellite companies will make big money for themselves as personal television floods the American market. The reality is that the public’s acceptance and purchase of the new enhanced technologies has been quite a bit slower, making the stock prices of companies that offer high speed Internet access (translation: speedier e-commerce ROI for your retail clients) or cable sag. Presumably, advertiser rates on interactive TV services will increase proportionately as cable and satellite providers get enhanced television into more homes, increasing the visibility of said ads.
As the devices go mainstream and enhanced ads grow in popularity, what will they look like? What will their main features be? RespondTV’s recent alliance with Coca-Cola is a good example of cross-media, or “converged” buying. This relationship is worth noting because Coke is a Respond “charter advertiser,” meaning that the soda conglomerate is responsible for going directly to its agency and “selling” the notion of enhanced advertisements, something the agency traditionally does for the client. Tracy Swedlow, President of InteractiveTV Today (www.itvt.com), a daily newsletter chronicling the evolution and business of enhanced television, says this is a normal part of getting deals done in a new advertising medium. “There is a much more robust set of platforms on the way: this is just the beginning,” she says. “RespondTV has real-world experience and they’re generating campaigns for advertisers [on their own].”
Thus far, it’s mostly been retail goods and services advertisers who have successfully utilized enhanced spots. In Europe, Swedlow says Domino’s Pizza has been ahead of the curve in “delivering” enhanced ads that work. She calls enhanced ads that work beneficiaries of the Pizza Model. Via OpenTV in Europe and in the U.S., in certain local markets, one can order a pizza in real time as the spot airs. Presumably, consumers can get their pizza in 30 minutes or less by using their television remote; it is also worth noting that at press time, consumers could not order a pizza online. “All advertisers want e-commerce to drive their revenues” when doing an enhanced ad, says Swedlow, though it seems some of them are starting tentatively with free offers, rather than retailing items that bring in cash, to see how much attention they can draw and measure.
Coke, which started running its annual holiday “Polar Bear Twins” spots last November, allowed viewers with an enhancement-enabling set-top box to order a free polar bear stuffed animal using their remote control. The campaign ran through December 24 and was different than anything Coke had done to reach consumers before. “We view interactive television as an innovative opportunity to connect with people in an exciting new way,” said Darryl Cobbin, Coca-Cola North America’s Vice President of Consumer Communications, “and RespondTV provides us with the support we need to do that effectively.”
Freelance writer Alli Joseph can be reached at Shakagirl@aol.com.
