• by March 21, 2005

TORCHED EARTH SOLILOQUY - Finally, some real interactive TV ad deals are happening. And just think, it only took a couple of decades to come to fruition. By "real," we don't mean the kind of R&D, "let's get into a test-bed together to see if this stuff even works" kind of deals, but honest to goodness media buys. You know, the kind that actually involve ad budgets, media plans, and strategically sound marketing goals. The funny thing is they're not coming from the place we all thought they'd be coming from: cable TV operators. Instead, they're coming from someone who actually wants to develop a new advertising marketplace: a satellite TV operator.

The deal that interactive ad shop Critical Mass and interactive media rep Turner Media Group crafted for Mercedes Benz on EchoStar's Dish Network is significant, because it represents the first in a new generation of interactive media buys you'll be reading more about soon. It's also significant, because unlike the interactive TV applications being embraced by a handful of cable systems, this one was national in scope. Sure it only reaches the 10 million Dish subscribers, but it's reaching them nationwide, and that's a pretty good start for national marketers like Mercedes.

It's no coincidence that the Dish deal involved an auto marketer. Automakers are among those pushing interactive TV developers to make this stuff real. The reason: They believe it will generate real results. Specifically, they see it as a direct extension of their own sales force, giving them the ability, as the Web did, to extend their reach directly to consumers in car buying mode - or those just starting to go into one - to make an offer that gets them in a showroom. That offer could be the kind of interactive brochureware Mercedes will be serving up to satellite TV subs, as well as virtual test drives, or the ability to "build your own car." Look for the next generation of interactive TV ads to become far more addressable, making specific offers to specific consumers that specifically get them to show up on a dealer's lot.

"Automobiles is a very competitive arena. They're going to try anything they think can generate showroom traffic. It's the lowest hanging fruit," says one interactive TV sales exec, adding, "It's worth the time and the money of auto manufacturers to go after people interactively, because every sale is worth so much. It's not like a tube of toothpaste."

Other categories that are ripe for interaction include pharmaceuticals and motion pictures, or any category that has a relatively high capital expenditure and needs a long form message attached to it. One of the beautiful things about Mercedes' Dish deal is it lets people jump from a short-form advertising message to a long-form interactive experience, all with a click of the remote. Substitute the word "mouse" for "remote" and the deal might sound a lot like a Web buy. That's no surprise; automakers are among the leaders in developing interactive advertising applications via the Web and they're simply looking to take that super efficiency to the medium that has proven to move cars off the lot. The one with sight, sound, and motion. No, not the broadband enabled one, but the other one that the average American spends hours each day absorbed with.

In fact, the only thing surprising about the Mercedes deal isn't that it happened, but that it didn't happen with a major cable operator. They, not the satellite companies, are the ones with a truly dynamic backchannel, as well as the ability to geographically target an interactive ad message. They're also the ones who don't seem to want to do that. Oh sure, there is a smattering of systems that are beginning to develop interactive ad opportunities, adding interactive applications from Gold Pocket, Navic, and Visible World, but they don't seem to be going anywhere fast, and certainly not as fast as they could if they really committed to it on a systemic basis. You know, at the corporate level.

There are many theories about why the cable TV industry has been dragging its feet on the development of interactive and addressable advertising, but we've narrowed it down to three:

A) They've seen the data and they don't like what it's telling them. B) They've seen the data and they really like what it's telling them. C) They haven't even looked and the data, and really don't care what it could tell them - at least not right now.

Of those three scenarios, A is scary, B is horrifying, and we don't even want to start thinking about the implications of C. Here's why:

If, as scenario A suggests, they've seen the data and they don't like what it shows, then they're simply playing lip service to marketers to keep them at bay, while they develop the market that really matters most to them: cable TV subscribers. That's bad for advertisers, but it's just a stall.

If it's scenario B, that means cable operators recognize there is a powerful advertising marketplace to be developed from interactive TV apps, and they're simply taking their time to develop it and to ensure that it's developed in a way they ultimately control.

But if it's scenario C, that means they don't even care about the opportunity to enhance the cable advertising experience - that they are so subsumed by their quest to maximize subscriber revenue growth that they're ignoring what could become a critical underpinning of TV advertising's future, not to mention the gross domestic product.

We've rattled those scenarios around our noggin a bit and have come to the only logical conclusion: That the cable industry knows exactly what's going on. Not simply with interactive TV advertising, or even with interactive TV programming, but they know what's going on with every conceivable aspect of the TV viewing experience... at least those viewing experiences that take place through a cable digital set-top. Why wouldn't they? They've got the data. And they've got guys like Comcast Corp.'s Jonathan Sims who knows how to analyze it. They know what the data says, and they probably know it doesn't say what many people think it says. And they've got a strategy for how to use that knowledge.

Now here's the scariest scenario of all. What if they know exactly how to maximize the TV viewing and advertising experience? What if they know precisely how to deliver advertising - interactive ads at that - to the right people at the right time to generate the right results? What if they know all this and they're still sitting idly by as TiVo, the remote control, and the Internet destroy the last vestiges of TV advertising as we know it? What do they know about the potential outcomes of that scenario?

If it's what we think it might be, maybe the cable industry is simply applying a scorched earth strategy to the TV advertising marketplace: Let the whole thing burn up in one massive firestorm of disbelief. Then step in and plant new seedlings that may be the new TV advertising model of the future.

In the meantime, we'd suggest anyone interested in cultivating a piece of that future go running as fast as possible to the horticulturalists at EchoStar, DirecTV, or anyone else who's serious about developing the interactive TV ad marketplace today.