Opportunities and Thresholds for
Advertising on Interactive Digital TV:
A View from Advertising Professionals
Verolien Cauberghe, Patrick De Pelsmacker
University of Antwerp, Belgium
Abstract
This exploratory study investigates the knowledge, perceptions, and intentions of advertising professionals in Belgium toward the introduction and use of IDTV as a marketing communication tool. In the first wave, a total of 320 advertising professionals cooperated in a web-survey that was posted just before the commercial launch of IDTV. 437 advertising professionals participated in the second wave, just one year after the commercial launch. The results show that their knowledge about the possibilities of IDTV was still very limited one year after the launch, reflecting also a rather troublesome result in terms of intentions to adopt IDTV. The intention rates measured in the first wave were relatively promising, taking into account that IDTV was not available at that moment, and the lack of knowledge about its possibilities. These intentions did not appear to be increased one year after IDTV launch. The growing perception of the low effectiveness of advertising on IDTV in combination with technological concerns that are rising after the first real-life try-outs may be the reasons for this threshold to use IDTV.
Introduction
The convergence of three industries – namely content (entertainment, publishing, advertising, etc.), telecommunications, and computing, made possible by digitalization, goes hand in hand with a divergence of new media devices (Negroponte 1995). Interactive Digital TV (IDTV) is the most visible result of this convergence; offering new opportunities, but also implicating new threats for broadcasters, marketers, and advertisers because the existing TV business model becomes unstable. Broadcasters face the threat that the new entrants deliver content directly to the telecommunication provider; by-passing the packaging function of the broadcasters (Pagani 2000). To face the major business issues initiated by new digital technologies like VOD and the PVR, Wirtz and Schwartz (2001) recommend that broadcasters cooperate and embrace these new developments to hold steady. As a consequence of these technological changes, broadcasters are investigating strategies to ensure future revenue streams. “The economics of convergence will require people to pay for what they get” (Dennis, 2002, p. 10), through subscription fees for services and channels or pay per view; although advertising revenues can lower the entry barrier to adopt IDTV by the end user.
The adoption of the new associated applications of IDTV, e.g. Video On Demand (VOD), Personal Video Recorder (PVR) and the Electronic Program Guide (EPG), by the end user grows slowly, but consistently. In 2004, 14% of European households owned an IDTV (IPSOS 2004). In several countries this adoption rate is higher; for example in the United Kingdom, 63% of the households make use of the interactive services provided by TV broadcasters and telecom operators (OFCOM 2005). This growth trend makes IDTV attractive for advertisers in terms of reach (Ducoffe, Sandler, and Secunda 1996). In addition to the adoption of the technology by the end user, the success of a new medium, IDTV in this case, also depends upon the willingness of advertisers to invest in the new medium (Leckenby 2003).
In the following sections a framework for IDTV is presented and opportunities and threats of IDTV for advertisers are highlighted. The results of an exploratory study into the knowledge, perceptions, and intentions of Belgian advertising professionals with respect to IDTV advertising is then reported. The study was carried out in two waves; the first just before the launch of IDTV in Belgium (May 2005) and the second exactly one year later (May 2006). Because of the exploratory and descriptive nature of this study, no formal hypotheses are formulated. The adoption process of IDTV is situated within the Diffusion of Innovations Theory of Rogers (1995) that has been applied in various industries. For instance, Lawson-Borders (2003) used it to explain the adoption of new media by media companies. The model states that there are 4 phases preceding the actual adoption of an innovation: 1) awareness, 2) interest, 3) evaluation, and 4) trial. Consequently, we try to formulate an answer to the following research questions:
Knowledge: What is the knowledge of advertising professionals concerning IDTV and advertising on IDTV? Are they aware of the introduction and the possibilities of this new medium? (awareness)
Attitudes: How do advertising professionals perceive IDTV as a marketing communication tool? What are their attitudes toward IDTV? (interest and evaluation)
Behavioral intentions: Are advertisers willing to adopt IDTV in their marketing mix? Do they want to invest in IDTV? (trial)
For each of these research questions, the results of both waves will be compared.
Definition of IDTV
Interactive TV is not new, but has existed since the 1950’s. Yet, no definition of this medium/new technology is widely accepted (Carey 1997; Steuer 1992; Stewart 1999) and even at present, the medium has received little academic attention (Kang 2002; Kim and Sawhney 2002). Besides the simple definition given by Jensen and Toscan (1999, p.16), that interactive digital TV is “two-way TV”, another description of IDTV that has been quoted by several authors, is “What is still a broadcast, passive, linear, entertainment viewing experience for millions of people around the world, television is now becoming an on-demand, participatory, non-linear, infotainment, advertising targeted and broadband two-way communication platform” (Swedlow 2000).
A lot of definitions emphasize the interactive services made possible by the digitalization of TV. Five important new services are referred to by several authors: the Interactive Program Guide, enhanced broadcasting, web browsing, Video On Demand and communication services (e.g., Chorianopoulos, Lekakos, and Pramataris 2001; Kim and Sawhney 2002; Marcus 2000). Van Dijk, Heuvelman and Peeters (2003) added digital TV (improved image and sound quality, more channels) and interactive, digital TV (two-way TV). Van Stelten (2004) extended this continuum to Personal TV (Set-top-box TV). Table 1 gives an overview of the different characteristics of traditional television and IDTV (Chorianopoulos, Lekakos, and Pramataris 2001; Godin 1999; Kim and Sawhney 2002; Lu 2005; Van Dijk and De Vos 2001).
Table
1. Characteristics of Traditional TV and IDTV
In this paper IDTV is defined as follows: “(1) IDTV is a group of technologies (2) that gives users (3) the possibility to take control (4) over their TV experience (5), enabling interactivity with the content.” (1) IDTV is a group of technologies which include the PVR, VOD, Interactive Program Guide (IPG) and Electronic Program Guide, rather than a medium on its own. (2) The viewer is replaced by the user, who can use their TV for all kinds of activities, e.g., banking, emailing, gaming, watching TV, and playing along in a game. (3) The user is not obligated to take control over their TV; they can still use the TV in the traditional way. However they can choose what they want to see, whenever they want to see it by employing technologies such as PVR and VOD. (4) Using TV will become an experience that extends the traditional TV viewing. (5) Interactivity consists of three constructs (McMillan and Hwang 2002): User control: the user can search for additional information, for programs, etc.; Two-way communication: the user can use IDTV to send emails, play along in a game, chat on-screen, etc.; and Synchronization: the interaction and feedback is not necessarily simultaneous in all cases; when playing along, or gaming the interaction has to be synchronic, while other activities, such as emailing are less sensitive to time delays.
Some authors use this interactivity to make a classification of different media. Steuer (1992) defines IDTV as a moderately interactive medium compared to internet as highly interactive and TV as low interactive. However, in this paper, the perspective of Fortin and Dholakia (2005) is followed, placing not the medium on an interactivity continuum, but the specific activities/uses of each medium. As a consequence, some activities of IDTV will be classified as high interactivity, while others will be classified as low interactivity. Since in this empirical study, attitudes, perceptions, and intentions will be explored (besides knowledge of IDTV-advertising by advertising professionals), in the next subsections the potential advantages and disadvantages of IDTV-advertising and the possible reactions of advertising professionals will be highlighted.
IDTV Threats for Advertisers
First, the digitalization of TV entails the introduction of a great amount of new TV channels, which gives the TV viewer a much wider choice. For advertisers this implies a decrease in terms of reach per channel (O’Connor and Galvin 2001). Van Den Broeck, Pierson, and Pauwels (2004) touch on this by stressing that the majority of the population only watches a limited number of channels.
A second threat comes with the introduction of associated technologies, such as PVR and VOD, which redefine the linearity of the program. Fortunato and Windels (2005, p. 141) describe the functionality of the PVR as follows: “The PVR allows users to record and store programming digitally, skip commercials with a touch on a button, pause live TV at any time, record programming through a digital menu…” VOD, on the other hand, permits the user to choose their favorite program or movie from the broadcaster offerings, enabling them to schedule their own TV-evening. Both the PVR and VOD give more control to the viewer (Van Den Broeck 2005). Time-shifting, the ability to pause, stop and watch the program whenever it is convenient for the viewer, is an important feature of the PVR and VOD. Media planning based on television viewing figures and scheduling of programs are threatened by these new viewing patterns.
Additionally, both technologies make it easy for users to skip commercials (Boddy 2004; Thawani, Gopalan, and Sridhar 2004). Studies reveal that consumers who own a PVR skip up to 88% of all ads (Forrester 2005). When comparing these figures with a recent study in The Netherlands showing that 20% of the respondents zap commercials on analog TV and 43% sit before the TV but do not watch, the PVR represents a real threat (Dutch Council of Advertisers 2005). Mediaedge puts the skipping figures of the PVR in perspective (Fletcher 2005). Their calculations show that, in 2010 and under the assumption that 30% of the households will own a PVR, the total available audience will only decrease by about 9%.
A fourth threat for advertisers might be the limited adoption of IDTV by the end user that is very important in terms of reach. To convince people to make the switch from TV as a public good to pay-IDTV, marketers are trying to find out what could be the relative advantage (Li 2004) or the killer application of IDTV.
Napoli (2001) points out a fifth possible risk for advertisers not to adopt IDTV. He claims that advertisers are shifting communication budgets away from advertising supported media to other marketing venues such as direct response mail or event sponsoring, as a result of the declining quality of the audience measurement induced by the enlarged inter- and intra-media choice and the declining willingness of respondents to participate in audience panels. As a result of these threats and risks, the following questions arise: Will advertisers hesitate to invest in TV advertising in the future? Will the traditional TV business model based on advertising budgets fall apart?
IDTV Opportunities for Advertisers
IDTV has been conceptualized often as the convergence of traditional TV and the Internet. This implies that IDTV can build on the strengths of both media as an advertising channel as demonstrated in Table 2.
Table 2. Characteristics of Traditional TV, Internet and IDTV as an Advertising Medium
When comparing the characteristics of advertising on IDTV with traditional commercials, the opportunities for advertisers boil down to two categories, i.e. the development of personalized TV and the development of new formats.
Through the increase of the number of channels via digitalization of TV, most channels will offer more specific content, which leads advertisers to believe that they can target their viewers more specifically. Contrary to what is often claimed, Deighton and Barwise (2000) assume that viewers of these new channels will not be as segmented as the readers of magazines. Although the content of the channels will be specific, this does not imply that the public will be. Yet, IDTV offers the unique possibility to contact the target group very narrowly. In line with this, the concept of addressability (Deighton and Blattberg 1991), by which you can target the individual consumer very precisely, can be used in the context of IDTV.
The PVR automatically saves all the programs the family watches, making it possible through data mining techniques to draft a viewer profile of each family unit, enabling narrowcasting of personal commercials to the individual set-top box (Chorianopoulos, Lekakos, and Pramataris 2001; Gal-Or and Gal-Or 2005; Lekakos and Giaglis 2004). This IDTV application is called Personalized TV: “Personalization in interactive and future TV aims at targeting content to individual users by adapting the content based on user’s likes and circumstances” (Thawani, Gopalan, and Sridhar 2004, p.1). The commercial is transmitted and saved on the set-top box, decreasing the transmission cost. This data collecting set-top box is also very attractive from an overall customer relationship management perspective (Peltier, Schibrowsky, and Schultz 2003). An important issue with Personalized TV is the debate concerning consumer privacy, in which the regulatory authority will play a significant role.
The development of digital television also brings along the possibility to develop new advertising formats. Looking at the uses and gratifications of traditional TV, internet, and IDTV by consumers (Livaditi et al. 2003; Morrison and Krugman 2001) it appears that TV and internet will not entirely converge (Coffey and Stipp 1997). Concluding from earlier empirical consumer research, traditional TV will still be best suited to relaxing and passing time (Lee and Lee 1995), whereas the internet is still best suited for the acquisition of information, certainly in a business environment (Ferguson and Perse 2000, 2004). Practical evidence is provided by Forrester Research (2005) which states that people who own a PVR, still watch real life (traditional, linear) TV about 40% of their time. As a result of the fact that traditional viewing will not disappear in the near future, the 30-second commercial will also stay on screen, but maybe not in its current form. Interactive advertising will no longer be a concept only usable on the internet, but will become applicable on television as well.
Stewart (2004, p.10) defines interactive advertising as “…the presentation of information through mediated means, whether a computer or a mobile phone, and mutual, relative immediately interaction between consumers and marketers,” implying a control shift from the advertiser to the consumer (Kitchen 2003), who can decide to gather and process information of any kind. In this case then, TV advertising shifts from a push to a pull philosophy. The consumer’s motivation to interact with commercials becomes a key variable to comprehend the effects of this kind of marketing communication (Stewart 2004). From this control shift arises the advertiser’s opportunity to build a dialogue with his consumers (Godin 1999). Table 3 gives an overview of the new IDTV ad formats that are developed.
Table 3. IDTV Advertising Formats
In the broadcast stream. One of the new IDTV advertising formats is the Dedicated Advertising Location (DAL, mini-DAL). This format consists of a “30 second TV ad embedded with clickable content ‘micro sites’ featuring individual still screen providing additional information” (Bellman 2004, p.2). The viewer can navigate through the extra information, thereby increasing the actively-involved time, enlarging the cognitive processing of the advertising message, and as a result extending the advertising effectiveness. For instance, a study by Bellman (2004) demonstrated that the effects of three exposures to a traditional analog commercial were equivalent to one exposure to a DAL, assuming the consumer interacted with this DAL. The development of this new format also looked promising according to a study of the effectiveness of the inclusion of URLs in TV advertising messages by Maddox and Metha (1997).
In the impulse response format, the extra information is placed on top of the screen like an internet banner (Boddy 2004) and is mostly used for direct marketing purposes (to order coupons, samples or brochures) (IDS 2005). It focuses on the impulse behavior that, according to Deighton and Barwise (2000), new media try to provoke.
An important difference between the impulse response format and the DAL is that, in the former, the viewer stays in the linear broadcast stream. With the DAL, on the other hand, if the viewer presses the red button that appears in the commercial in the linear broadcast stream, he enters a second (broadband) stream, where the extra information is shown, similar to an internet site. As a result, he will miss part of the program. With this problem in mind, Lekakos, Papakiriakopoulos, and Chorianopoulos (2001) introduced the micro site. A picture-in-picture or split screen divides the television screen in two parts, and allows the user to navigate through the advertising content without missing part of the linear broadcasting stream. Yet, because the attention of the viewer is divided in two simultaneous streams, this format may lead to less effective advertising. Another solution for the user is to save the program or advertisement on the PVR through a quick push on the ‘bookmark’ button, allowing the viewer to navigate through the information at their convenience (Lekakos, Papakiriakopoulos, and Chorianopoulos 2001).
Another new format, not resulting in content overlap, is the ‘contact me’ function that appears during the commercial. With a press on the red button, the user can choose to be contacted by the advertiser.
Besides using the new formats, advertisers also have to cope with the higher skipping rates of commercials through the introduction of the PVR and VOD. Advertising messages that are skip-proof, in other words embedded in the television content, e.g. product placement, sponsorship, virtual advertising, on-screen banner advertisement during programs, and advertainment (a program totally made by an advertiser) (Boddy 2004), will gain importance. Sponsoring programs/channels and product placement, in its different gradations, from product insertion in game shows to advertainment, are not new, but are expected to become more popular among advertisers (Saatchi & Saatchi Quattro 2005). Digimedia uses the figures of MediaPost to demonstrate that the American investments in ‘branded entertainment’ increased by 50% last year (The Media Center at the American Press 2004). New variants of product placement, like interactive product placement, where the user clicks on a button appearing in the program bringing him to the DAL of the advertiser, are likely to emerge.
Virtual advertising and sponsorships use image manipulation, made possible by the digitalization of television (Boddy 2004), e.g. virtual billboards at live sports events or in news items. This format enables advertisers to promote global products locally (Boddy 2004). Another format of product placement are plugs, where celebrities speak on-camera about the branded product (Roehm, Roehm, and Boone 2004). The use of logos and banners, adopted from the internet, will also become visible on television.
Alongside the broadcast stream. Alongside the broadcasting stream, IDTV allows advertisers to reach their target audiences through banners and logos on the Electronic Program Guide (EPG), permitting the viewer to choose their favorite program from a schedule overview. Besides this, the broadcaster’s portal can also be used for advertising messages. In the “walled garden”, a limited broadband space comparable with the internet, advertisers can become visible through sites, games, gambling, chatting, etc. Consumers owning the IDTV technology can receive emails on their television, opening up new opportunities for email marketing. Finally, Video On Demand allows the user to choose a movie, soap opera, or other content. It provides the opportunity for commercials or advertainments to be pulled by the user; a challenge for advertising professionals to make their commercials as attractive as possible.
Reactions of Advertisers
In terms of behavior, advertisers have two options to react to the development of IDTV. They can either reallocate their advertising budget to media other than television to avoid the threats posed by IDTV, or they can invest in the new advertising formats to take advantage of the opportunities IDTV has to offer (AAF 2004). In general, the trend of withdrawing advertising budgets from TV is not new (Kim, Han, and Schultz 2004). The customization of products has changed marketing from mass marketing to a one on one approach, where direct personalized marketing has become more and more important (Korgaonkar, Karson, and Akaah 1997). Besides the growing attention for personalized communication at the expense of mass marketing, TV advertising has other problems; namely increasing ad clutter that makes the effectiveness of TV commercials doubtful (Lowrey, Shrum, and McCarty forthcoming).
On the other hand, IDTV can make TV advertising more appealing, for the consumer as well as for the advertiser. The consumer will only receive commercials and additional information that are of interest to them, decreasing irritation and increasing attention to the commercials; resulting in increased advertising effectiveness. From a historical perspective, Galbi (2001) pointed out that new media technology will probably not generate rapid growth in advertising revenues for media industries as a whole. Shifts in advertising budgets are more likely to appear. In the United States, the advent of radio and TV shifted about half of print advertising’s share to these new media.
Research Method and Data Collection
The main objective of the present study was to explore the knowledge, the attitudes and perceptions, and the behavioral intentions towards IDTV as a marketing communication tool, of Belgian advertising professionals and to look how they evolved over time. A questionnaire was developed based on previous studies (AAF 2004; Bush, Bush, and Harris 1998; Hsu, Murphy, and Purchase 2001; Katz 2004; Lace 2004; Rodgers and Chen 2002), and in-depth interviews with experts in the field of IDTV (Ogilvy, I-merge, Zappware, GfK, VMMa). The questionnaire was pre-tested with advertisers and staff of advertising agencies in Belgium. The final questionnaire was organized around three topics: knowledge of IDTV, perceptions of IDTV, and intentions to invest in IDTV advertising.
With respect to the knowledge of IDTV, general and specific questions concerning IDTV and the advertising possibilities on IDTV were asked. The perceptions of IDTV were measured through questions concerning the perceived advantages and disadvantages in using IDTV. Questions regarding behavioral intentions focused on intentions to adopt IDTV in the marketing communication mix. Because Dutch and French are Belgium’s most common official languages, the questionnaire was offered in both languages.
The URL of the web survey was mailed twice to each member of the sampling frame. The first wave went online a few weeks before the commercial launch of IDTV in Belgium (May 2005); the second wave one year later (May 2006). The sampling frame for both studies consisted of a database of marketing professionals, all staff of advertising companies or communication consultancy agencies (Insites Consultancy, Pub Magazine, and VMMa). The response rate for both studies was about 5%. Although some authors argue that this low response rate is normal for online questionnaires (Sheehan 2002), one should keep a possible non-response bias in mind when interpreting the results. Table 4 gives some general characteristics of the two samples.
Table 4. IDTV Sample Characteristics
The two samples are relatively comparable, although in the second sample relatively more highly-experienced professionals were represented. Because of the possible non-response bias and of small differences in the sample characteristics, and because of the exploratory nature of the study, the differences between the results of Wave 1 and Wave 2 were not formally statistically tested, but only descriptively represented.
Results
The general knowledge of advertising professionals about the possibilities of IDTV’s new applications, like the PVR, EPG, etc. is very weak (Figure 1). Even a year after the introduction of IDTV, only 19% of the respondents declared they had a good to very good knowledge of these IDTV possibilities, compared to 60% stating they had a weak to very weak knowledge of IDTV. This level of knowledge is no better than before the launch of IDTV. Although Roger’s (1995) Diffusion of Innovation theory postulates that knowledge of an innovation increases over time, this rise can only marginally be noticed in Belgium.
Figure 1. General Knowledge of IDTV
Knowledge of the advertising possibilities on IDTV is even lower than the general knowledge as pointed out in Figure 2. Merely 13% of the professionals maintained to have a good to very good knowledge about the advertising possibilities of IDTV. The rise of awareness is even lower for these advertising possibilities then for the general knowledge of IDTV. The only positive evolution is that in the second wave, fewer respondents stated having a very weak knowledge of the advertising promise that IDTV has to offer, than in the first wave.
Figure 2. Knowledge of IDTV advertising possibilities
Looking at the specific knowledge of the advertising formats in Figure 3, the DAL, mini-DAL, and walled garden applications were known by only a small percentage of the professionals. Sponsoring, banners on EPG, and advertainment (content partners) were know by more advertising professionals. These results were stable over time.
The general lack of knowledge could be one of the major challenges for advertising professionals to invest in IDTV. The small differences in awareness between the two time phases point out that the influence of media and personal networks, two factors that have an important influence during the first phase in an adoption process according to Rogers (1995), has been negligible.
Figure 3. Knowledge of IDTV Ad formats
When asking the professionals to indicate three topics of which they would like to receive more information: the costs of advertising on IDTV, case studies, and the return on investment were in their top three in both waves (Figure 4). When comparing the figures of Wave 1 and Wave 2, one can notice a general decline in need for information. In Wave 2, 28% of the respondents stated that they did not need any more information about IDTV compared to 2% in Wave 1. From these results, the conclusion can be drawn that one subsection of marketing professionals were already well-informed about IDTV or were not interested in IDTV at all. On the other hand, the fact that there are no differences in the top three needs of information demonstrates that during the year after the launch of IDTV, broadcasters, telecommunication operators, and other stakeholders did not fulfill the information needs of marketing professionals.
Figure 4. Information Needs about IDTV Advertising
Attitudes towards IDTV Advertising
The respondents were asked to indicate the top three perceived advantages and disadvantages of IDTV advertising. The possibility providing more product information, more specific targeting, and two-way communication were the most frequently mentioned advantages, as pointed out in Figure 5.
Figure 5. Advantages of IDTV advertising
Other aspects such as the possibility to position the brand as innovative and increasing brand awareness were also perceived as strengths of advertising on IDTV. The belief that advertising on IDTV would generate more sales decreased in Wave 2 in comparison with Wave 1.
Figure 6 shows that the most important perceived disadvantage was that IDTV is not yet a mainstream medium. Too little experience, low adoption by the end user, and the high cost are still perceived as disadvantages by most respondents. Technical problems and the perception that IDTV advertising is not effective were disadvantages that were perceived as more important in the second wave. This reactance can be explained by the fact that marketing professionals are starting to evaluate the innovation; the next phase in Roger’s (1995) Theory, after awareness and interest.
Figure 6. Disadvantages of IDTV Advertising
Intentions to Use IDTV Advertising
The respondents were asked if they were planning to invest in IDTV and adopt IDTV in their marketing communication mix. Figure 7 points out that 55% had not yet decided if they would use IDTV advertising in the near future. This figure is slightly higher then one year before. Also, fewer professionals think they will certainly or probably use IDTV as a marketing tool. The low knowledge in combination with the rising perception that IDTV ads are not effective and that technological problems can occur, may represent antecedents of this finding. More information from case studies that emphasize the positive effects of interactive advertising on TV are needed, to lower the barrier for advertising professionals.
Figure 7. Intentions to Adopt IDTV
Discussion and Conclusion
The main objective of this paper was to focus on the development and evolution of the perceptions that advertising professionals hold about IDTV as a marketing communication tool. Although the IDTV technology is not a revolutionary new medium as often claimed by technological determinists (e.g., Negroponte 1995), it brings with it a lot of changes and shifts in the business model of traditional TV, making advertisers doubt the effectiveness of their TV commercials. The introduction of the Personal Video Recorder and Video on Demand technology represent the main concerns, allowing consumers to avoid commercials even easier than before, thus threatening the traditional advertising model.
However, IDTV also offers a lot of opportunities to advertisers. The specific targeting, the use of new formats, the possibilities to gain consumer data, etc. represent opportunities in the declining television advertising world. An evaluation of these threats and opportunities will influence the decision making process of advertisers to either invest in IDTV as a marketing communication tool, or reallocate their marketing budget to media other than TV.
As pointed out by Leckenby (2003), the success of the medium depends on the adoption by advertisers. From a network perspective, the adoption by advertisers can be viewed as an indirect externality (Markus 1990) to the total system, meaning that the investments of the advertising world will decrease the production costs, making the content more acceptable for end users adopting the medium.
The adoption process of IDTV by advertisers can be placed within Rogers’ (1995) Theory of the Diffusion of Innovations. In the first phase, the awareness of and interest in the innovation has to be developed. The results of the present study reveal that one year after the commercial introduction of the technology in Belgium, advertisers’ knowledge has increased only marginally, and specific knowledge concerning the new advertising formats is still even lower than the general knowledge of IDTV. As could be expected when referring to Rogers’ theory, this knowledge would increase as a result of the influence of mass media and personal networks. When asking the advertising professionals which information they need most, the cost of advertising on IDTV, case studies, and Return on Investment remain in their top three. The fact that this top three remained stable over time is an indication that the media, broadcasters, telecommunication operators, and other stakeholders, did not succeed in their information provision task. Comparing the results of Wave 2 with Wave 1, more respondents stated that they do not need extra information about IDTV, indicating that there exist a group of marketing professionals who are already experts or who are not interested in IDTV at all.
The perceptions and attitudes towards IDTV can be placed in Rogers’ (1995) “phase of evaluation” of the innovation. Respondents perceive the possibility to provide more product information, two-way communication with the consumers, and specific targeting among the strengths of the medium. Perceived disadvantages are the low overall experience with IDTV, the low adoption of IDTV by the end user, and the high costs of advertising on IDTV. These perceived (dis)advantages were stable over time. In Belgium, tariff guides on interactive advertising are still not available for advertisers. Overall, there are two components in the cost of IDTV advertising; the media space and the production cost. Through the increase of channels, the media space for advertising becomes larger, thus potentially reducing the cost. However, the media space around events, e.g. sports and popular games, will increase in price, because of the large number of IDTV users they will attract. The production cost, consisting of the commercial itself and the interactive part, is still expensive, because of the small number of companies that have the technological expertise to develop the new formats. In the future this cost is expected to decrease.
Another perceived disadvantage is the low penetration of IDTV by the end user in Belgium. For the first wave this disadvantage was expected, because the measurement took place before the commercial introduction. However, one year later this adoption rate is still low, and therefore perceived as a disadvantage. The penetration of IDTV in Belgium is predicted to be very slow because of the high amount of television channels (33 on average) already currently available to the Belgian viewer through their cable. Also, there is no tradition of pay-TV in Belgium. To convince people to make the switch to (pay) IDTV, marketers are trying to find out what could be the relative advantage (Li 2004) or the killer application of IDTV for the Belgian users. The low experience with IDTV in general also remains a disadvantage for the medium, probably increasing the perceived risk of adopting IDTV.
The results of the first wave indicated that the intentions to invest in IDTV, taken the lack of knowledge into account, were promising. Only one quarter of the respondents stated that they did not intend to invest in IDTV in the future, while the majority of advertising professionals had not yet developed an opinion concerning their IDTV investments. This seemed like an enormous possibility to persuade advertisers to adopt IDTV. But one year after, the intention rate did not increase. Marketing professionals were even more skeptical about the adoption of IDTV as a marketing tool. The perceived low effectiveness of advertising on IDTV and the technological concerns may have an influence on this threshold, which may have developed after the first interactive advertising experiments went live on the Belgium broadcast channels. Another possible reason to explain the low intention to adopt IDTV can be the general reactance that advertising professionals hold against developments and financial shifts in the media environment.
Future research could further focus on the media investment behavior of advertisers. Will they actually invest extra monies in IDTV or will they reallocate their TV budgets to other media? For media, shifts in advertising budgets are important to foresee to be able to search for other, additional revenue streams. How does this trend evolve in other countries? This research question could be tackled by using the framework of Niche Theory (Dimmick 1997), assuming limited media resources and focusing on the uses and gratifications of consumers. Another relevant track for further research is the investigation of variables influencing the adoption process of IDTV by advertisers from a diffusion of innovation perspective. These research questions are important for broadcasters and other parties involved in the IDTV value chain to lower the thresholds for advertisers to adopt IDTV.
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About the Authors
Verolien Cauberghe is a Ph.D. student at the University of Antwerp (Belgium). Her research focuses on IDTV and advertising effectiveness.
Patrick De Pelsmacker is a Marketing Professor at the University of Antwerp (Belgium). His research interest focuses on branding, interactive advertising, and marketing communications.
