• by Susan Stellin , June 20, 2006

How digital media are transforming consumer engagement and changing the rules of the game.

If you want to get an idea of just how much the media landscape has changed, look at people's hands. With their index fingers poised above the mouse button, hands gripping a TV remote or thumbs busy with an iPod, it's clear they're not just passively consuming media anymore.

They're interacting with media  more specifically, actively participating in the experience every time they click on a link, pause live TV, or download a song.

On the one hand, all this interactivity has been a boon to media companies and marketers, enabling them to have a two-way dialogue with their customers  not to mention more accurately track what people are reading, watching, listening to, and downloading. But digital technology has also shifted the balance of power away from once-monolithic media enterprises, and that means companies have to learn not only how to lure consumers, but how to interact with them. And that kind of relationship takes work.

"Technology advances have given consumers more control over how they receive their information and what they receive, and that has led to a whole new way of looking at things," says Robert Davidman, chairman and CEO of EarthQuake Media, an integrated media and marketing agency.

As an example, Davidman points to how newspapers have evolved online.

"I can give my feedback on a particular news piece, I can forward that news piece to a friend, I can say, 'These are the kinds of stories I'd like to see,' and they can provide me more customized news." In that sense, he says, "Interactivity is all about choice."

Customizing Content

While Web portals like Yahoo have long given Internet users the ability to customize pages, choosing which weather reports, newsfeeds, and sports scores they want to see, now even the most tradition-bound media companies are rolling out personalization tools. For instance, The New York Times Co. is introducing a My Times feature to nytimes.com this summer that enables readers to design a personalized page by choosing RSS feeds on topics that interest them.

"It's a news experience that's entirely tailored to your needs and desires rather than programmed for you, and to that extent it's interactive," says Martin Nisenholtz, senior vice president of digital operations for Times Co. "Our special sauce is, of course, the journalistic sense of the newsroom," he adds, explaining that readers looking for an expert's perspective on a topic could turn to pages created by the newsroom staff or, say, the television critic's picks of the most interesting related-related content on the Web.

Interactivity is also about giving consumers a voice, individually and collectively, which is another big shift for media companies like the Times Co. Readers who once interacted with the newspaper primarily by sending a letter to the editor can now submit questions for an editor to answer, send an e-mail to Maureen Dowd, post their own movie and restaurant reviews, and effectively vote on which articles they like best through NYTimes' "most popular" feature.

"Increasingly what we're seeing is that there's a more conversational element to this that's much closer to the telephone," Nisenholtz explains.

While newspapers have arguably embraced the digital era more enthusiastically than magazines (in part out of necessity, given declining circulation numbers), their glossy print cousins have also seen the future. And in that future the reader, not content, is king.

"From the beginning, interactivity was a consumer proposition," ex-plains Sarah Chubb, president of CondéNet, the digital unit of Condé Nast Publications. Early on, Condé Nast resisted simply transferring its magazines to the Web, instead building new online brands like Epicurious, Concierge, and Style.

Although these sites include content from magazines in the CN stable like Gourmet, Condé Nast Traveler, and Vogue, they also offer tools that give readers a chance to participate and interact with the content online and on the go. For instance, one of the highlights on Epicurious is its recipe database: Not only can aspiring cooks search for something to make for dinner, they can also add their own recipes to the mix, save their favorites in an online "recipe box," submit a rating, e-mail a recipe to a friend  even send it to a cell phone.

On Style.com, fashion mavens can save images from designer slide shows to their own "lookbook," which gives Condé Nast insight into what's popular as soon as the clothes show up on the runway.

"We pay very close attention to who is getting saved the most, and we share this information with our advertisers," Chubb says, adding that knowing which designs are generating clicks during fashion shows gives retailers feedback long before the cash register rings.

Condé Nast uses the information it gathers on-line for editorial purposes as well. As an example, Chubb cites Self magazine. "It's full of references not only to what they're doing today on their Web site, but also information they received from Web visitors that they're using in print," Chubb adds. An online survey this spring asked readers to vote for women who inspire them; the results will be published in Self's September issue. And the magazine's annual fitness "Self Challenge" combines print articles and Web tools to help readers follow a diet and exercise plan.

Interactive TV

Though interactivity is primarily associated with computers and the Internet, it was television that first raised the prospect of an interactive media experience  an idea that crashed and burned when early experiments failed, but in recent years has taken on new life.

"Everybody has tried very hard to come up with their own term to redefine interactive TV," notes Tracy Swedlow, publisher and editor-in-chief of Interactive TV Today, a free e-mail newsletter and Web site that tracks developments in interactive TV. Enhanced TV, broadband TV, and participation TV are among the monikers being bandied about. But Swedlow defines interactive television as "where the user has control over something...making them an active participant in how they explore their entertainment or use their television."

In that sense, interactive television encompasses a wide range of experiences: ordering a video on demand, watching a show on your own schedule using a digital video recorder or a video iPod, or sending a text message to vote on the outcome of shows like "American Idol." And cutting-edge applications are giving consumers the ability to find, choose, and interact with video content on a TV, PC, gaming console, handheld device, or cell phone.

Dale Herigstad, executive creative director at Schematic, an interactive agency that specializes in user interfaces, navigation, and design, has worked on a number of projects that break new ground in the interactive video arena. Schematic helped develop CNN's Pipeline service, an online broadband video service that lets subscribers choose what to watch on their computers from various CNN live video feeds, as well as more than 50,000 videos in the site's archive  on-demand and commercial-free. (The ser-vice costs $2.95/month after a free 14-day trial subscription.)

Schematic also developed interactive content for the first two seasons of the hit CBS show "CSI." The show's Web site featured an area with graphical information and content that's contextual to the main action; it offered more information about the equipment used in the show's investigations and alternative views of crime scenes.

"We built the application to be sort of 'sit back and you get extra content,' almost like a living DVD," Herigstad notes. "But there's also interactivity, where you can take over what's going on," he adds, explaining that viewers can pull up a map of Las Vegas and see where various episodes take place, or get biographical information about the characters. "It's a concept I call 'extended media'  you can watch it a different way and maybe learn more about it the second and third time you watch it," Herigstad explains.

As for the long-touted promise of giving consumers the ability to purchase items they see on television  which Swedlow described as the industry cliché of "selling Jennifer Aniston's sweater"  the biggest hurdle is that cable and satellite operators need to put standards in place. Although Swedlow cites a few examples of what's known as a "single-screen" shopping experience  in which a consumer can make a purchase using a set-top box, instead of the "two-screen" experience of using a computer or cell phone  Swedlow sees viewer participation as the more significant trend.

"People expect to control the programming more and more every day and have a part in it," Swedlow comments. "To participate, to interact, to provide content is the wave of the future  television and all programming will be interactive."

That said, it's still a bit of a guessing game to determine which technologies will ultimately catch on with consumers. Debbie Solomon, senior partner and group research director at MindShare, says her company is fielding a study to gauge consumers' interest in various new video technologies, like mobile TV and video-on-demand. "I think this year we're going to see an explosion in the video opportunities available to consumers," she says. "What will be interesting will be to see which ones consumers actually adopt."

For instance, Solomon wonders, "Are you going to want to watch an episode of  '24' on your mobile? Maybe a quick clip about how Jack Bauer is getting in trouble tonight, but would you want to watch a full episode on your cell phone? I think the jury is still out. I think the technology is ahead of the consumer." 

Advertising Conundrum

And what does all this interactivity mean for advertisers?

"The real value is that it gives advertisers some measure of consumer involvement with the message, as opposed to simple exposure," notes Erwin Ephron, an independent media consultant. That involvement, also referred to as "engagement," has the potential to create stronger relationships between advertisers and their customers, not to mention the two-way dialogue promised by interactivity.

But here's the scary part, at least from a marketing perspective: "Consumers manage the relationship, not the advertiser," Ephron says. "I think where you see this in its most arresting form is in television right now." He cites the ad-skipping features of DVRs and research showing that the more "engaging" the show, the more likely viewers are to fast-forward through the ads. "The problem is not really creating engagement  it's not losing engagement when the commercials appear."

Within the advertising community, there's plenty of consensus that the balance of power has shifted. Michael Koziol, an executive vice president with the interactive marketing agency Nurun/Ant Farm Interactive, framed that change in terms of the one-to-one relationship marketers hoped technology would deliver. "That perspective assumed that the marketer was in control of the relationship, but it's really flipped," he says. "It's people who are in control."

That means marketers will have to work harder to deliver messages that are relevant to consumers, taking advantage of new technologies that enable consumers to request more information about products that interest them. For example, Tracey Scheppach, vice president and video innovation director at Starcom USA, says set-top boxes will eventually enable consumers to click on a 30-second ad to see more video content about a product, or to search archived advertising messages as they do with video-on-demand. TiVo launched a "product watch" service recently that enables subscribers to watch video content from more than 70 advertisers, ranging from cooking demonstrations from Kraft to new auto highlights from General Motors Co.

"If I'm doing a remodel on my house, there are clearly some products I'm interested in at this point in time," Scheppach offers, adding that longer-form video messages could "provide value to me because I'm interested in the product and getting more information than a 30-second spot can deliver."

Bob Greenberg, chairman, CEO and chief creative officer of the interactive agency R/GA, maintains that instead of focusing on "customer relationship management," marketers should embrace an era of "customer-managed relationships." In other words, give customers the opportunity to choose how they engage with brands.

To that end, R/GA has worked with advertisers to develop outdoor ads consumers can interact with via cell phone, such as a billboard for Nike iD that enabled pedestrians to dial a toll-free number and take a turn designing a shoe on a sign in Times Square. Nike sent an image to participants of the shoes they designed, as well as a link to buy the sneakers online.

"When you go through the process of customizing your shoes, then you get them delivered, and then you wear them, you have a whole different experience with the brand," Greenberg explains. At the same time, Nike gained insight into its customers' shoe preferences based on the styles people chose to design.

A company called Reactrix has developed technology that projects an interactive advertising display on the floor in malls, movie theaters, and other public areas. The projected image "reacts" to the movements of people passing by; for instance, it enables consumers to kick a virtual Adidas soccer ball that moves across the floor, or step on kernels that explode into Orville Redenbacher popcorn.

"It's not about pouring information at someone," says Janis Nakano Spivack, Reactrix's vice president of experience design. "It's about helping the consumer have a good time...and then walk away feeling good about the brand."

But even Spivack acknowledges that the challenge for marketers is breaking through the information overload that technology has created in an increasingly interactive era. In other words, when people already feel burdened by keeping up with e-mail, text messages, and other communications from family, colleagues, and friends, do they really want to have a relationship with all the marketers that seek a relationship with them?

"It's become harder and harder in the dialogue to get someone to talk to you, because they have choices," Spivack says.

Ephron summed up consumers' attitude toward marketers that hope to engage them: "They don't really want to have a relationship unless there's something in it for them."