Interactivity in 2000: An Industry Viewpoint
Helen Katz
Zenith Media
Abstract
This article describes the current and possible future impact of technology on the practice of advertising. Advertisers have traditionally divided media into two groups according to the way that the advertising message is disseminated. Broadcast media, such as TV and radio, are considered “passive” because the consumer passively receives the message and does not choose whether or not to view or to listen (other than by changing the channel). Print media, including magazines, newspapers, and outdoor billboards, are thought of as “active”, requiring a conscious decision on the part of consumers to look at the message. In the interactive arena, all advertising is potentially “active”. It will be up to the viewer/user to decide which messages he or she consumes, and at what level of detail. With Web-based applications, such as Geocast or Worldgate, the user could select the first screen of the ad, but then decide he isn’t really interested and not go any further. Technologies such as PVRs permit users to skip commercials altogether, whether or not they are relevant, personalized, or entertaining. The author provides a comprehensive list of such technologies and gives their implications for the future of advertising practice.
Introduction
It’s 8pm and
you’re home for the evening. Do you a) turn on the TV set to watch
what is airing at that moment on one of the networks? Or b) turn
on your computer to comparison shop on the Web? Or c) turn on
your VCR to watch a program that you recorded last week?
Or d), do you turn on a single appliance that can do all of this
and more? For some people, that last answer is what they believe
the majority of us will be doing in the not-too-distant future.
The plain old TV set will become as archaic as the betamax VCR
or the 8-track tape. In order for that to happen, there need to
be changes in regulation, technology, and to some degree, consumer
habits. This paper will outline where we are right now in terms
of the interactive technologies that are available or about to
be launched, along with an assessment of the issues that need
to be dealt with in order for these technologies to succeed.
First, a brief history of interactivity. While many believe that
“interactivity” is a new and wondrous thing, it actually isn’t
all that new. The first picture-phone, for example, was exhibited
at the World’s Fair back in 1964. The first interactive TV show
actually preceded that. Children growing up in the 1950s were
glued to their sets every Saturday morning to watch “Winky Dink
and You”, which offered them clear plastic sheets that they could
stick onto their sets and crayon over to help the characters on
screen escape the bad guys or rescue the heroine. The excitement
waned quickly once parents realized that their children were not
just putting crayon on the sheet, but “going over the lines” and
coloring the actual set.[i]
Later efforts included Warner Cable’s QUBE test in Columbus, Ohio,
in the 1970s, which offered two-way interactivity on separate
TV channels on the cable system. Telephone companies tried to
get in on the act in the 1980s. Bell Atlantic attempted interaction
in Atlanta in its Stargazer test, and GTE offered Main Street
in California. Neither succeeded. The biggest offering of the
following decade was Time Warner’s ambitious Full Service Network
of 500 channels, in Orlando, which was set up in 4,000 households
in 1994. Homes could select the programs that they wanted to watch,
or order through the set. But the technology to enable the project
to work was so expensive that Time Warner closed it down three
years later. What is interesting to note about all of these tests
is that consumer response was always very positive. In Columbus,
for example, more than 50% of those who could take up the service,
did so.
These ventures
failed for two reasons: content and technology. That is, they
overpromised on what the consumer would receive from the service
and underdelivered in their ability to use technology to provide
the functions of the systems. GTE’s Main Street, for instance,
purported to provide “video on demand”, allowing viewers the opportunity
to select movies to watch whenever they wanted. The reality behind
the scenes was that when someone called up a movie on their TV
set, the person sitting at the Main Street central location had
to load up a VCR at central headquarters in order that the household
could watch it. While that might have worked for a handful of
homes, it was clearly infeasible for thousands upon thousands
of subscribers.
Another common thread of both yesterday’s and tomorrow’s interactive
services is the inclusion of advertising. This has almost always
been a key element, present from the beginning, whether in the
form of standard 30-second commercials, or as sponsorship of different
elements of the service or, going forward, through interactivity
with consumers and the possibility of e-commerce or “t-commerce”
(as in television-commerce). The prognosticators claim that the
day is not too far distant when you will watch an episode of Frasier,
on NBC, like the look of the sweater he is wearing, and be able
to click a button and order one just like it for yourself through
the TV set. According to Paul Kagan Associates, 7.6 million homes
will have interactive television by the end of 2000, 46.3 million
by 2005 and 63.9 million by 2010[ii].
Today, there are four main technologies that hope to enable consumers
to undertake that kind of interactivity: digital set-top boxes,
the Internet, cable modems, and digital subscriber lines (DSL).
Some services are offering a combination of several of these technologies.
Here is a brief description of each.
Digital Set Top Boxes
For most of the 70% of the country that is currently subscribing to cable, the set-top box is very familiar. It sits on top of the TV set, bringing in the 50+ cable channels to the home through a cable wire. The information is mostly one-way, with the TV signals coming in to the home, but no consumer response going out. What is different with the digital box is that the computer chip inside of it makes the box “smart”. This means that two-way communications are now possible, allowing viewers to do everything from select programs on-demand, to banking or shopping directly through the TV, to choosing camera angles or getting additional statistics during sports games. Current estimates suggest that about 6.5 million units were available at the end of 1999, with forecasts that by 2003, 21.9 million will be on the market[iii].
One of the problems with digital set top boxes is that to work to their fullest capacity, they require the use of digital cable. This involves upgrading the existing cable infrastructure to change the copper wire cables that have been in use for up to 40 years with digital, fiber optic cables that have far greater bandwidth to bring more information through the “pipeline”. Another issue for the digital set tops is that there is currently no standard in place, so different manufacturers are producing different versions that may not be compatible with other services or systems.
Cable Modems
This technology marries two key appliances in the modern U.S.
home: the television set and the computer. Cable modems are being
deployed primarily to enhance computer usage rather than offering
computer functionality in the television set. What the cable modem
does is provide high speed data to the computer through two-way
cable wires instead of standard phone lines. This means that the
speed of data going through the cable modem is about 100 times
faster than in a standard 56K computer. It costs up to $40 per
month more than regular cable service. At this point, the clearest
benefit of the technology is high speed access to the Internet.
According to the Yankee Group, there are currently about 1.85
million cable modems in use, with projections for 2004 at close
to 10 million.
A problem with cable modems is that, much like the phone line,
the speed of access is dependent upon the number of other users.
The more users, the greater the demand on the pipeline and the
slower the speed for each individual. Nonetheless, the two largest
cable operators each offer cable modem service. AT&T Broadband
Services (which bought out TCI and MediaOne to become the country’s
largest cable Multiple System Operator, or MSO) has the [email protected]
service, while AOL Time Warner offers a similar system called
Road Runner.
Digital Subscriber Lines
Competition from the telephone companies themselves is increasing rapidly in the digital arena. Right now, Digital Subscriber Lines (or DSL) provide high speed Internet access over the regular copper phone lines. The digital data is carried separately from the voice data, and at a speed that is two to three times faster than the standard 56K computer modem. Last year alone, growth went from 40,000 subscribers at the start of the year to 330,000 at the end. And according to eMarketer, by 2003, more than 9 million people will be accessing the Web in this way. The cost to consumers is about $40 per month.
The biggest
problem for DSL, which is targeting both businesses and consumers,
is the requirement that the customers to the service be physically
located close to the telephone company’s central office (or wherever
they choose to headquarter the digital lines). This has been a
difficult problem to solve given the physical limitations involved.
An interesting test was reported in the New York Times at the
end of 1999. The movie trailer to the Star Wars sequel, “Episode
One: A Phantom Menace” was downloaded from the Internet using
three different technologies: regular 56K computer modem, cable
modem, and DSL. The file was 25 megabytes in size, and involved
text, audio, and video. The slowest route, not surprisingly, was
the standard computer modem, which took an hour to finish downloading.
DSL came in second, at 3 minutes, 20 seconds. The time the cable
modem took was a mere 1minute and 40 seconds.[iv]
The remainder of this paper will examine the different kinds of
interactive TV services available today, along with the advertising
opportunities being offered or promised.
Analog TV: Baby Steps
What most people think of as “just TV” is really TV in analog
form. That is, the signals come in through the regular cable wire
and appear on the screen in the same way that they have for decades.
Nonetheless, there are opportunities for some interactivity available.
Two companies have such services: Wink Communications and Worldgate.
Wink Communications. The term best used to describe the
service from Wink is “enhanced broadcasting”. That is both its
benefit and its drawback. Lines 21 or 22 of the TV signal, known
as the Vertical Blanking Interval (VBI) offer broadcasters the
opportunity to insert additional information. Currently, that
line conveys closed captioning or dual language for certain programs
or channels. Wink is using it to provide interactive graphics
or a data and text overlay on either program content or advertising.
The software to enable this service resides at the cable headend,
where the cable signal itself comes from. If it is the programming
material that is being enhanced, that takes place at the programming
network.
Wink allows both programs and ads to be enhanced. When the viewer
sees a special icon appear in the top left-hand corner, she can
click on it to bring up the information overlay on the screen.
It replaces the existing screen content, so that the viewer cannot
see the ongoing program while involved with the interactive element.
However, in an effort to appease advertisers, who are concerned
that someone interacting with the first ad in a commercial break
would then be unavailable to see the second or subsequent spots,
Wink maintains that the interaction itself cannot last longer
than 30-seconds. Viewers are not permitted to begin interacting
with an ad unless there is sufficient time to complete the interaction.
If that is not the case, they are directed to a special, dedicated
cable channel where all the Wink-enabled ads reside, so that they
can explore them at their leisure.
The company has the financial and strategic support from a number
of areas in the industry. Its cable operators, who control distribution,
include all of the major players: AOL Time Warner, AT&T, Comcast,
Cox, and Charter Communications. These multiple system operators
(MSOs) receive payments from Wink based on user activity. That
is, when someone clicks on an ad to respond to it, some of the
purchase payment goes to the cable operator.
Additional support for Wink comes from the set-top box manufacturers
(e.g., General Instrument, Scientific Atlanta), the TV set manufacturers
(Thomson/RCA, Toshiba, and Matsushita), and the TV networks (ABC,
NBC, CBS, Fox, CNN, ESPN, Nickelodeon, TBS, TNT, Lifetime, Food
Network, and USA). Microsoft has taken a 10% stake in the company,
using Wink as the processing system for its Web TV devices. DirecTV
has a 5% stake, planning to launch the system in 500,000 households
in Spring 2000, and have it in two million of its satellite homes
by the end of the year. Advertisers on Wink can interact in various
ways. They can question viewers directly (“do you use Brand X?”
“What are the most important features of Product Y?”), with the
responses being given using the remote control keypad. Coupons
can be offered (“click here to receive a coupon”), along with
informational brochures. The viewer can also sign up for a test
drive with the local car dealer. All responses are sent first
to Wink and then on to the advertiser or fulfillment center.
Currently, Wink claims to be enhancing about 1,200 program hours
per week. In the last three months of 1999, it served up 1,500
interactive ads. Responses to individual ads have ranged from
about 0.2% of viewers to 3%v. The service is available in eight
cable systems, reaching 147,000 homes in California, Connecticut,
Illinois, Missouri, New York, Tennessee, and Texas. There is no
charge for subscribers, since the costs are borne by the cable
operators and networks involved
Worldgate. This hybrid offering can be made available in
either analog or digital form. Like Wink, the Worldgate service
uses standard analog cable set-top boxes and the existing infrastructure
offered by the cable system, putting its special software at the
cable headend. Worldgate has received financial support from cable
operators and set top box manufacturers.
There are three different types of service that bring varying
levels of online service to the TV set. The basic one is called
My Town. Here, subscribers can get local information about events
or companies in their local area, as well as channel hyperlinking
to the Web but not full access to it. At the next level up, My
Friends, additional capabilities include e-mail, chat, and instant
messaging. Subscribers to My World have full Internet access as
well.
The system is currently in use by 13,000 households across 22
cable systems in states such as Georgia, California, Ohio, North
Carolina, and Washington. Subscribers pay anywhere from $5 to
$15 per month on top of their regular cable bill, with payments
going through their cable operators. They access the service similarly
to Wink. That is, a special icon appears on screen when interaction
is permitted, allowing the viewer to click and hyperlink to an
existing Web page or a special bridge page. Again, in the analog
world the regular TV picture disappears at this point (in digital,
the regular screen goes to picture-in-picture).
Advertisers are able to offer information or coupons, samples,
or brochures, much as Wink does. In addition, because of the Internet
connection, ads can be hyperlinked to the advertiser’s Web site
or a specially created bridge page to store a special Worldgate-linked
offer. Responses are sent directly to the advertiser.
In a test of the system in use in 1,000 homes in Massillon, Ohio,
in 1999, Worldgate found that subscribers interacted with it for
about an hour a day, across three separate viewing occasions.
Each interaction lasted approximately 2.5 minutes for program-related
material, and about one minute for ad-related information.
Digital TV
Once a household is equipped with a digital set-top box, the sky
is almost the limit in terms of what could become available in
the not-too-distant future. The landscape here is likely to grow
more crowded before the biggest players emerge. For now, there
are three companies offering digital applications: ACTV, Respond
TV, and Open TV.
ACTV. ACTV has the backing of several key players, including
General Instrument (maker of set-top boxes), Liberty Media, a
cable programming supplier, and Fox Sports Network, a regional
sports network. ACTV has several products to offer consumers,
all of which are currently still in the test phase. Its Individualized
TV is primarily sports-oriented at this point, giving viewers
the ability to choose different camera angles, see an instant
replay, or access additional program or player statistics. This
venture is being done with Fox Sports and has been testing in
Texas. For advertisers, ACTV has the capability of offering Individualized
Advertising, where different ads can be targeted to different
households, with viewers being able to select which one they see.
For example, an automotive advertiser could provide several different
models from which to choose, and the viewer would pick the one
he is most interested in. The third application being developed
is called Hyper TV. Here, the goal is to offer additional information
about the program or product on the Web, receiving Web content
that is linked to the live or recorded program. It does not provide
full access to the Web via TV.
Respond TV. Another digitally based interactive TV company,
Respond TV uses the VBI to send information to viewers’ set-top
boxes. As with Wink and Worldgate, the viewer can react to a special
icon that appears on-screen during an ad. At that point, the ad
goes to picture-in-picture, leaving the rest of the screen free
for additional information and/or viewer response. When someone
places an order or makes a request, that is fed directly to the
source via the Web, with an automatic response coming back. Respond
has launched in 200,000 homes, in conjunction with one of its
partners, the Chris-Craft TV station group. In addition, it has
funding and support from Liberate Technologies and Web TV.
A test conducted in 1999 by Respond points to the potential impact
that digital television could have on the way that we use television.
The company set up a special test with Domino’s Pizza, allowing
viewers to order their pizza for home delivery through the TV
set. The ads ran during a Star Trek marathon that aired on the
local UPN affiliate. Out of the 1,000 homes that tuned in, 150
pizzas were ordered, representing a 15% response rate. That compares
to a standard direct response rate of around 2%, at best.
Open TV. Last but not least, the digital landscape is likely
to be affected at some point by Open TV. This company considers
itself the worldwide leader in interactive television, having
placed 4.5 million digital set-top boxes in homes across Europe.
It is owned by Thomson Multimedia and Sun Microsystems, giving
it both distribution and technology support. Other strategic partners
include AOL Time Warner, General Instrument and News Corporation.
Currently its applications are being used by 24 different TV networks
in the UK, France, Sweden, Spain, and Italy. Now, Open TV is entering
the U.S. marketplace through a joint venture with the EchoStar
DISH satellite network, which will incorporate Open TV’s software
into its system.
Viewers who
have Open TV on their TV sets can do similar activities to ACTV,
selecting camera angles or viewing highlights or checking on sports
statistics and scores. Beyond that, they can have full online
access to their bank, and to the stock markets. Weather is available
on a local, regional, or national basis. There is also a channel
dedicated to music, where the CDs are on sale for the artists
that appear on-screen, or concert tickets for their live performances
can be purchased. The same idea holds true for programs too, with
viewers able to buy program-related merchandise.
For advertisers, in addition to the commercial opportunities within
programs, different areas of the system are available for sponsorship.
Cable Modem/Broadband
While some believe that the future will give us combination PC-TV
sets, there are others who feel this is not going to happen. They
believe that the different ways those two appliances are used
will continue to stand in the way of full convergence between
them. But even as the television manufacturers and suppliers bring
more computerized functions into the set or the set-top box, there
are additional opportunities being offered on the PC side, bringing
more televisual offerings to the computer.
[email protected]. This cable modem service provides users with
Internet access from their PC via the cable modem. In this way,
users have a much more powerful broadband gateway to the Web.
The company is the result of a merger of TV and PC entities. Excite
was initially a portal/Web site, while @Home was a broadband cable
service. When the two merged in May 1999, the combined venture
soon became the largest provider of cable broadband services.
Today it has about 1 million subscribers in 105 different markets,
competing primarily with Time Warner’s Road Runner service.
What [email protected] offers is a simpler and more personalized way
to use the Internet. The home page can be customized, as well
as providing original content, much like AOL does. Information
is organized into content channels, such as News, Relationships,
Entertainment, or Family, all of which can take advertising in
various forms. Straightforward banners or buttons are acceptable,
but so are rich media ads that include full audio and video. Advertisers
can create microsites to provide more detailed information on
their products or offers. The company’s own research suggests
that these ads offer a powerful way to communicate with consumers.
Average brand recall for ads appearing on [email protected] was 44%,
compared to just 29% for standard Web ads.
The impact of having fast and continuous Web access via the PC
very much changes the way that the machine is used. Four out of
five (81%) primary users are male, with about two-thirds (64%)
of the secondary users being female. But almost half of those
who subscribe spend 3 or more hours per day on the service. There
is no longer a concern about running up large phone bills, or
having to wait a long time to download information. That, in turn,
encourages purchases. Fully 85% of those responding to a survey
of subscribers said they had ordered something online in the past
year, and more than half, 55%, had purchased online one or more
times per month.
Geocast. A slightly different form of broadband service
is due to be launched at the end of 2000 by Geocast. This is a
data broadcast network that brings digital TV signals to desktop
PCs. It uses the digital spectrum to send local broadcast content
to the computer, by taking national programming material, linking
it on the satellite with local station information, and sending
it back down in digital format to the end-users. By purchasing
a special Geocast receiver, the PC user gets full access to the
Web, e-mail, and so on, along with full broadband capabilities
and repurposed television information and entertainment.
TV stations are likely to find this very attractive, offering
them another source of revenue as their material is downloaded
with additional ads on it. So far, two companies that own TV stations
are signed on: Hearst-Argyle and Belo. Advertisers who don’t come
in through the TV feed can customize their ads based on the preferences
and demographics of the user.
Personal Video Recorders
In a scenario that is somewhat reminiscent of the Betamax versus
Sony competition over VCR formats back in the 1980’s, today we
see two companies vying to lead a newly developed next-generation
VCR known as the Personal Video Recorder, or PVR. This is a video
recorder that includes a computer hard drive. It digitizes the
incoming analog TV signal to enable viewers to manipulate the
program content. The two key players, TiVo and Replay Networks,
sold a total of 30,000 units in 1999, but forecasters believe
that by 2004, more than 12 million will be in use.
Both companies have lined up an impressive array of partners,
coming from consumer electronics (TV set manufacturers), cable
operators, and TV networks. Once the TV signal has been digitized,
that means consumers can pause, fast-forward or show an instant
replay of whatever is on. They can also set up their own program
or genre preferences so that the machine instantly records those
that it matches to the viewers’ specifications. It now becomes
possible to have the PVR record every episode of a program that
appears weekly or select what to record based on program previews.
An electronic program guide is included, and updated nightly.
The feature that has caused the biggest outcry among advertisers
is the commercial skip button on the machine. This allows the
user, when replaying a show, to skip forward in 30-second increments,
thereby avoiding the commercials. While it is true that the same
concern was voiced over VCRs 30 years ago, and subsequently found
to be an insignificant problem, the ease with which today’s PVR
owners can move through the commercial break does provide some
cause for concern.
In an effort to appease the advertisers whose support is going
to be critical to their success, both TiVo and Reply are offering
area sponsorships on their systems in the “network showcase” section
that features programs by selected TV networks. They have also
talked about providing subscribers’ viewing habits to advertisers
to allow them to create customized and personalized ads. Both
are eager to point out that this would only be done with viewer
permission, and given the current debate over consumer privacy
(see below), it is not likely to happen very soon. In the meantime,
Replay has signed up with Nielsen Media Research to try to measure
viewership of those who have these machines. The issue is tricky,
however, because Nielsen’s measurement and analysis systems are
currently set up to assess regular TV viewing and VCR playback.
Usage of the PVR is more akin to VCR recording.
The lifespan of the PVR itself may well be short-lived. It is
likely that most if not all of the functions of the machine will
eventually end up in the TV set itself, using the digital set-top
box to perform the tasks that the PVR now handles. Indeed, Replay
is already working with Panasonic to have its software incorporated
into that company’s high-end TV sets.
Key Issues for Advertisers
Even as the interactive landscape changes and develops, there are three key -and related – issues for advertisers to tackle: regulation, privacy, and consumer control.
Regulation
There are several areas in the interactive arena that Congress
and/or the FCC may choose to regulate. The issue of who is deploying
what technology, and to whom, is likely to grow. Already, the
government has noted its dissatisfaction with the rate at which
DSL is being deployed. The phone companies are reluctant to accept
competition, but cannot force users to use them as their Internet
Service Provider (ISP). Before AOL merged with Time Warner, it
was a very vocal advocate for opening up the cable wires to allow
other companies access to the home through those wires. Once AOL
became part of the second-largest cable operator (Time Warner)
there was some concern that the newly combined entity would backtrack,
but so far at least, AOL Time Warner says it remains committed
to a fully competitive landscape. At risk here are the 7,000 independent
Internet access providers whose business is threatened as the
phone companies and cable companies carve out that territory in
their new digital offerings.
Additional Internet-related activity is likely in regulation.
One imminent piece of legislation is the authorization of digital
signatures, giving those the same legal status as a written one.
This will allow consumers to “sign” for purchases on the Internet
in the same way that they sign their name on a credit card receipt
in a store. Undoubtedly, this will benefit and boost e-commerce.
Copyrights
are also going to have to be dealt with in a world where digitization
of material could make it far easier to make copies of protected
works. Questions arise on how to handle the distribution of video
materials in numerous venues – multiple cable channels and Internet
sites, for example. It is likely that a copyright will in future
be cleared en masse via a blanket fee covering all venues, rather
than linked to each provider.
Last but not least, it is possible that Congress could feel pressured
to take action on the digital divide that is developing. Computer
ownership and Internet access remain linked to level of affluence,
with 84% of homes that have a household income of $75,000+ owning
a PC, compared to the 36% of households with less than $50,000
annual income. Similarly, 67% of the affluent households have
online access, versus just 21% of the less affluent.[vi]
Privacy
This has
become the hot-button issue as far as interactivity is concerned.
Articles in both consumer and trade press argue back and forth
on what consumers should expect and know about their usage of
these new media forms. There are also discussions on what companies
need to do to ensure that they are not going to get into trouble
in the way they use the data they gathering for the first time.
The issue was brought to a head in February 2000. Doubleclick,
a Web advertising rep firm that tracks consumer usage on the Web
within its network of 1,500 sites, announced that it was going
to merge that Web tracking information with purchase information
available from Abacus Direct, a database company it bought last
year. The latter tracks information on what people are buying
at retailers, in catalogs, or from publishers. In order for these
two sources to be linked, the computer user would simply have
to register his or her name on the Web site, thereby removing
the anonymity associated with Web tracking software[vii].
While Doubleclick had been aggregating the data for advertising
purposes, the link-up at the individual level caused consternation
in the industry[viii].
There were anxious questions from legislators and attorneys-general
as well as murmurs that the Federal Trade Commission would get
involved.[ix] Doubleclick
backtracked, and said it would not take such steps. But the issue
remains. How much do or should consumers know about what and who
is monitoring them? And who should own the data?
One answer might be to look at traditional media to see how the
issue is handled, but even there, things can get murky. Privacy
laws, for example, restrict the collection and use of customer
data by cable companies. But on the Web, the question turns into
who owns that customer data? When someone goes to the Web via
[email protected], goes to the NBC web site and clicks on a Microsoft
ad, then is that person a “customer” of Microsoft, or NBC, or
the cable modem service? Other countries that have wrestled with
this same issue have come down firmly on the consumers’ side.
In the European Union, for example, data on an individual collected
for one reason cannot be sold or revealed for another unless the
person gives permission to do so. Senator Robert Torricelli recently
introduced a similar kind of “opt in” bill into Congress that
would prevent Web sites from collecting or selling personal information
unless the user had agreed to it. The Web sites themselves would
prefer an “opt out” feature rather than an opt-in, safe in the
knowledge that most users simply skim the content of a site to
find what they are really looking for and interested in.[x]
Currently, the U.S. has tried to use self-regulation to protect
consumer privacy, encouraging sites to post their privacy procedures
for users to look at. But any excursion on the Web quickly reveals
how poorly sites are complying with that notion. Even among those
that do actually post their policies, they are usually buried
in the 10th page of the site in an obscure place where very few
people would ever bother to look.
Consumer awareness of this issue has grown exponentially in recent
years, along with rising concerns about invasion of privacy. A
survey conducted by Harris Interactive on behalf of Business Week
reported that more than four out of 10 (41%) people were very
concerned that when they shop online the company they are doing
business with will use their personal information to send them
unwanted information. This is up from three out of 10 (31%) consumers
who felt strongly about this just two years ago. More than two
thirds (68%) of respondents said they were not at all comfortable
with the notion of a Web site linking browsing habits and shopping
patterns with their own name and identity. Fully 82% were very
concerned about linking all of that with additional personal information
such as driver’s license, credit history, and medical data.[xi]
Consumer Control
Advertisers
have traditionally divided media into two groups according to
the way that the advertising message is disseminated. Broadcast
media, such as TV and radio, are considered “passive” because
the consumer passively receives the message and does not choose
whether or not to view or to listen (other than by changing the
channel). Print media, including magazines, newspapers, and outdoor
billboards, are thought of as “active”, requiring a conscious
decision on the part of consumers to look at the message. In the
interactive arena, all advertising is potentially “active”. It
will be up to the viewer/user to decide which messages he or she
consumes, and at what level of detail. With Web-based applications,
such as Geocast or Worldgate, the user could select the first
screen of the ad, but then decide he isn’t really interested and
not go any further. Technologies such as PVRs permit users to
skip commercials altogether, whether or not they are relevant,
personalized, or entertaining.
This is clearly a significant shift in the way that advertisers
need to think in the future. For these new media forms, advertisers
will have to abandon the scatter-shot approach, trying to reach
as many people at one time with a fairly broad message. Instead,
they will have to work to provide interesting and finely targeted
ads that can engage consumers and entice them to continue reading
or listening or viewing. This is closer to the direct response
approach, where if the envelope is never opened or the infomercial
not viewed, then no action takes place and no sale can occur.
The analogy with direct marketing is critical in another way too.
For what interactive media offer advertisers is a fully measurable
method of communication. That is, once the message goes out, the
advertiser can track in great detail who is responding, and how.
If one kind of message doesn’t seem to be working, it can almost
instantly be changed to another one. And in an interactive world,
the advertiser will eventually be able to make more direct sales
to customers. Indeed, estimates for how much this “e-commerce”
will be worth provide some astounding figures. The FCC, a generally
conservative body, predicts that by 2004, e-commerce revenues
will be worth more than $1 trillion. The consumer retail portion
of that is expected to be over $100 billion by then, more than
triple the 2000 estimate of $37 billion.[xii]
So as more and more people sit down in front of their computers
and/or TV sets and actively select what they will watch or read
or buy, the future of advertising looks decidedly different from
the way things have been done up to now. There will be many bumps
along the way, but for advertisers willing to take the risks early
on, the rewards, in terms of learning and experience, are likely
to be worthwhile.
End Notes
i
“Do Viewers Even Want To Interact With TV?” Joel Brinkley, New
York Times, 2/7/00,
ii “Promise of interactivity,” Jon Lafayette,
Electronic Media, March 6, 2000.
iii Source: Forrester Research estimate, reported
in “Time Warner Dips its Toes into VOD Market,” by Karen Brown,
Cable World, August 23, 1999
iv”Picking the Right Data Superhighway,” Peter
H. Lewis, New York Times, 11/11/99, G1/10
v “Promise of interactivity,” Jon Lafayette, Electronic
Media, March 6, 2000
vi PC/Internet Update, Nielsen Media Research,
February 2000. Data based on October 1999 Nielsen People Meter
panel.
vii E-Commerce Report, Bob Tedeschi, New York
Times, March 6, 2000, C10.
viii “Critics Press Legal Assault on Tracking
of Web Users,” Bob Tedeschi, New York Times, February 7, 2000,
C1/10
ix Advertising, Bob Tedeschi, New York Times,
March 3, 2000, 6.
x “The Eroded Self,” Jeffrey Rosen, New York
Times Magazine, April 30, 2000, 46-63/129.
xi “It’s Time for Rules in Wonderland,” Business
Week, March 20, 2000, 83-96.
xiiRobert Pepper, Member FCC, at Myers Forum
on Interactive TV, New York City, February 1, 2000; e-Marketer
web site, 2000 Journal of Interactive Advertising Interactivity
in 2000: An Interactive Viewpoint 1
About the Authors
Helen Katz is the Senior Vice President/Director of Strategic Resources at Zenith Media. Helen joined Zenith in 1999, after spending 10 years at DDB in Chicago. Helen manages four researchers in the New York office, from where she services the strategic research needs of all Zenith’s clients. She also works with the international offices of the company on research-related issues, in particular, the proprietary suite of ZOOM media systems and tools.
