• by February 15, 2004

TV advertising, the future of TV, and the media business must be called into question, according to panelists who took part in a discussion on interactive TV. Executives from Nielsen Media Research, Scripps Networks, Masterfoods USA, TiVo, and Starcom MediaVest debated the issues Friday during the American Association of Advertising Agencies Media Conference in Orlando, Fla.

Whether it's video-on-demand, digital video recorders like TiVo, or set-top boxes with DVR capabilities, the function of media and advertising as we know it is on the table. "Technology is not a distant threat--new creative solutions are required," said Adam Gerber, senior vice president-strategy and innovation, MediaVest, who moderated the panel and framed the discussion. "We need a more measurable research model--consumer control is here to stay, and user control displaces advertising as we know it."

Currently, there are 3.5 million households with DVRs, including TiVo. Wireless polling and voting vis-à-vis shows like America Idol, video-on-demand trials, wireless video delivery, addressable and long- form advertising, and the future relevance of Nielsen Media Research data were among the issues panelists addressed.

Marty Yudkovitz, president-TiVo, referring to TiVo's long-form advertising showcases with marketers, said the dialogue between consumers and advertisers is changing. "The question is, can you make the ads that are watched more valuable? More engaging? With more opportunities for opting-in? Can you target ads more? Measure advertising more? Do more direct marketing?" he said, adding that the average time spent by consumers in showcases is four minutes. "That's a lot of time."

Scripps Networks, which has 7.5 million video-on-demand homes, sees TV advertising becoming more and more like programming. For example, a show on kitchen and bath improvements may, in fact, be a brochure sponsored by several advertisers. "Our challenge is to create a mix of programming that's enticing to people," said Channing Dawson, senior vice president-emerging media, Scripps Networks. Dawson's Scripps is known for its long-form video programming.

Advertisers, media agencies, and marketers must confront the issue of consumer control immediately, according to Bob DeSena, director of relationship marketing, Masterfoods USA: "An attitude adjustment is needed. The consumer has moved--we are the ones who need to catch up," DeSena said, striking a chord of urgency. "We need to do tests, pilots, now--this year," he added to audience applause. DeSena also emphasized that marketers need to be more precise with targeting advertising. "Addressability is the killer app--direct marketers have known this for years ... how to precisely target," DeSena noted.

The question of targeting, accountability, and measurement was brought to a head by MediaVest's Gerber, who questioned whether Nielsen plans to include DVR households in its panel and the overall methodology of how TV ratings get reported when, for example, one person watches NBC's "ER" live, versus another watching it on a time-shifted basis. Must playback and viewing of time-shifted content occur within 24 hours of recording? Nielsen hasn't been reporting DVR homes within its panel. Nielsen recently said it would work with TiVo to incorporate its raw data. "The sampling methodology of TV is not keeping up with developments--a more data-centric view is required," said Tim Hanlon, senior vice president-director of emerging contacts, Starcom Worldwide. Hanlon said that cable operators are already developing their own data-mining techniques: "They know there's gold in them there set-top boxes," he said to twitters from the audience.

"TV today is less about watching TV than it is about consuming video in many different environments," Hanlon said. "How do we message in [various] video environments in a nonlinear way?" he questioned, referring to wireless, out-of-home, and other video delivery mechanisms.