The interactive television and convergent media landscape is rapidly evolving, marked by a proliferation of different platforms and fluctuating standards. With true broadband access, every website will have the capacity to perform the functions of a broadcaster. Video on demand, music, and other entertainment content will all be delivered via the Internet. In the meantime, transitional technologies such as streaming, downloadable, and other rich media are changing the way we experience the web.

Traditional advertisers, agencies, and programmers alike are in need of guidance and direction as they struggle to adapt to this rapidly evolving environment and the unique demands of interactive and convergent media advertising.

The future of successful advertising and media content will increasingly be driven by the consumer - advertisers must be prepared to give consumers what they want, when they want it, where they want it.

“New” technology [it’s been around for about two years already] enables programmers and advertisers to enhance television programming, advertising and promotion with interactive overlays that appear as supplemental text and graphics on the TV screen. When the services are available to a television viewer, a small symbol appears on the TV screen. The viewer can choose to interact with the show or ad by using the remote control. The services are free to the user, requiring no infrastructure upgrades or additional hardware – provided there is an existing digital broadcast system (cable/satellite/DTT) and set top box installed.

Some key advantages of TV-interactive advertising include:
· Increased awareness by offering instant incentives during commercials.
· Regionalisation of national campaigns.
· Direct targeting of specific market segments.
· Allowing for simple, impulse-type responses via the remote control.
· Provides quantitative data and analysis to the advertiser.
· Can work with interactive programming (eg: game shows) to increase response.

In the UK, most interactive ads send viewers to a microsite on whichever digital platform they are using (Sky, NTL, Telewest, ONDigital). Ntl and Carlton Interactive (on ONDigital) offer interactive advertising without leaving the primary broadcast stream. Sky Digital viewers are taken to the Open… shopping “walled garden” and this extra step (as well as higher development costs) may affect advertiser demand. To date, Sky’s leadership in subscriber numbers has driven demand for their interactive ad services.

One of the UK’s first interactive commercial trials was for P&G’s Pantene shampoo – on Cable & Wireless. The 70% response rate (ie: viewers accessed a personal hair diagnosis and free sample using the remote control) exceeded expectations and prompted a wide range of other brands to invest in interactive advertising. Dove Soap, Max Factor, Ford and others ran “successful” campaigns and, although response levels should decrease as the novelty factor wears off, interactive advertising continues to grow.

The popularity has certainly been maintained in the US. Two of the leading enhanced/interactive TV software developers (Wink and RespondTV) claim the following statistics:

Viewer response:
· Wink: “In the first quarter of 2000, 42% of all households who clicked to view the interactive offers in ads responded 'YES' to the available offers. Among ads that offer viewers the option to make purchases, nearly 20% of households who viewed an interactive offer for merchandise completed the purchase of that item.”
· RespondTV: “For the first half of 2000, enhanced campaigns achieved an average completion rate of 23%.”

Client-side demand:
· Wink: “Advertisers collectively aired over 1,000 interactive commercials during the fourth quarter of 1999.”
· RespondTV: “In the last six months we have enabled over 500 enhanced 30-second spots.”

Some examples of the kind of campaigns that have been run:
· A packaged goods advertiser provided coupons and samples to prospects who do not currently use the product, and collected information about current brand usage
· An automotive manufacturer captured sales leads and provided product information by mailing a brochure for a new line of cars to self-identified prospects
· A Hollywood studio generated entries into a contest tied to a new movie
· A financial services company captured qualified sales and mailed account kits to qualified prospects
In many ways, the current format of the commercials is not much more than a glorified form of direct marketing. Ad agencies will increasingly need to seek creative solutions to maintaining interactivity with consumers. Interactive/enhanced programmes and gaming channels are obvious routes to holding viewers and developing unique opportunities for advertisers. Platform owners are also starting to sell video ad space on EPG menus although this service does not allow for any interactivity at present it does place brands in a prominent place in the multi-channel viewing environment.

Broadband Internet (rolling out, albeit slowly, through cable modem and ADSL services) will allow for broadcast quality video and audio. This obviously presents new opportunities for interactive advertising.

Latest News…
14.09.00: Interactive TV broadcasters have this week welcomed a new independent committee being launched to set standards and definitions for interactive TV advertising: The Interactive TV Advertising Association.
14.09.00: OnDigital is setting up a team to sell advertising for its Internet TV service ONnet, due to launch next week.

03.10.00: inaugural meeting of the Interactive Forum to discuss “models and procedures for interactive advertising, standards, skills sharing and training, promoting the creative use of interactivity, budgeting for interactive etc.”

And the future? Below are some of the developments that may take place between 2003 and 2010.

With Broadband Internet the distinction between online advertising and TV advertising starts to blur. Broadcast rights for programmes/events will incorporate both media and advertisers will take their TV/cinema commercials online, with minimal reformatting.

As interactive commercials complicate the traditional commercial break, television airtime sales starts to more closely resemble a publishing model ie: owning a position becomes as important as time of day and type of show.

As hard-drive set-tops and EPG’s alter viewing habits, live TV events generate an even greater premium and are only sold via an auction/bidding process.

Digital media ad revenue surpasses traditional media and analogue channels.

Airtime/media sales as we know it starts to break down, as account execs/sales reps start to act as access brokers to specific audiences.

TV channels with a stake in “original content” (film/programme producers, digital production houses, talent agencies, sports team/event owners, archive libraries etc.) are responsible for compiling complete advertising/sponsorship packages across the media spectrum. Partnerships and joint ventures are sought with media buying/planning houses. Sponsorships are sold across platforms and across audience types e.g. Pepsi will have sole sponsorship rights to the Grammy Awards for 16-24, upper income Londoners -Heineken will have similar rights, but for 24-35 upper income users/members/viewers across Europe. Platforms that don’t support this level of customisation will suffer.

“Member/User Propensity to Spend” or a similar industry-standard index (combining member interaction time, spend activity, income profile, psychological profile) will become the basis of all media commercial activity and the key fundamental behind stock market valuations of media companies.

The short answer is that the commercial sector, including TV compnaies will get it right, or sufficient numbers of them will anyway, whilst the options of the iTV platforms and networks are limited.

Interactive Advertising models, gaming and gambling enhanced TV models, private network VOD and other near future applications have all shown their revenue and user acceptance worth in one recent instance or other.

The industry is, however, protected by the thing it regularly laments - proprietary standards.

Liberate, OpenTV, MHEG, IP Domain blocking (or no IP access at all) and other technical incompatibility are holding all the content away from public networks. The reduction of many of these middleware layers down to open standards (common HTML Specs, Universal IP gateways, ATVEF insertion, MHP i.e. Java) will shake up the iTV landscape enourmously, allowing peer to peer communication, universally available Settop box applications that are independent of platform owner contstraints and other examples of the ineradicably uncontrollable nature of public Net-like networks.

At that point, like with broadband internet today, its evolution becomes much much harder to define. Until that point, the possibilities are limited enough, and the commercial interests clear enough, to be reasonably confident about the immediate future of iTV

Hows that for hubris.