Advertising-on-Demand

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In the 21st century, new technologies will drive a new type of marketing.

Peter Duckler, a Chicago public relations executive, has a personal video recorder that can hold up to 30 hours of recorded television programming. "I watch way too much TV," he admits. That would seem to qualify him as a marketer's dream - except for one factor: The 34-year-old uses the video recorder to skip most of the advertising delivered on his tube. Faster than you can say "mute," Duckler simply presses a button on his remote control and watches most programs go by, commercial free. That's not to say that marketing messages don't reach him, however. Duckler loves getting advertisements on his own terms - from the Internet and applications he downloads onto his personal digital assistant (PDA). "It's the coolest thing!" he says.

The personal video recorder (PVR) is only one of several new gadgets giving marketers nightmares these days. New products and services, with names such as TiVo, ReplayTV, and Vindigo, now allow viewers to determine how and when they view marketing messages - whether through the TV, the Internet, or even handheld devices like Duckler's PDA. Call it "advertising-on-demand," this new genre threatens to turn the traditional notion of advertising via television on its head - a reality that has marketers scrambling to rethink their business strategies. Says Tim Hanlon, director of emerging contacts for Chicago-based media buying agency Starcom Worldwide: "[The new technologies] will fundamentally change the way advertisers get their message across, and none of us have the answers, yet."

Advertising-on-demand equipment is hardly a fixture in every American home. Research shows that, to date, only about 100,000 homes in the U.S. today have PVRs. But an upturn is expected, as early - some say - as this holiday season. A report by Forrester Research predicts that PVR's will find their way into 53 million U.S. homes by 2005. PVRs may be the first to gain widespread acceptance. "Even if [PVR] distribution is less than 1 percent today," says Jack Myers, of New York-based Myers Reports, Inc., "it will be the hottest consumer home electronics product in 2001. Advertisers, agencies, and programmers should be paying attention right now."

Those who have already forked over the $450 that such equipment costs, on average, appear to be enthusiastic about eliminating unwanted advertising. The New York Times magazine recently reported that 88 percent of all ads went unwatched when viewers recorded programs using TiVo and ReplayTV, a figure that has marketers quaking. "The idea that some 60 percent to 70 percent of the money spent on television - one of the most effective mediums created - could be ineffectual in the future, is a sobering thought, indeed," says Hanlon.

Marketers predict that the new world of advertising-on-demand will be marked by several key shifts. For starters, some industry observers see an end to the 30-second spot - or at least a decline in its importance. Taking its place will be longer cinema-like commercials resembling mini-programs, and spots that last about 10 seconds. At that length, experts calculate, viewers won't waste the energy skipping through.

Product placement on popular television shows will also become more crucial, a strategy advertisers are already adopting. CBS's Survivor had 10 corporate sponsors, including Reebok, which found its way onto the top-rated show by outfitting the cast with hats and shirts featuring the company's logo. And who can forget Regis Philbin's repeated plug for "our friends at AT&T"? By embedding a brand into the fabric of a show, the advertising cannot be avoided.

In the future, however, product placement won't necessarily be focused on exposing logos or company names. Sam Baldoni, chairman and chief executive officer of Los Angeles-based AsSeenIn.com is working with a growing list of television shows to identify everything on their sets - from wardrobe, to props, to appliances - so that viewers can purchase the same pieces themselves. For instance, if you like the wicker furniture in Mary and Lucy's bedroom on 7th Heaven, you can log on to AsSeenIn.com, select 7th Heaven, then set decoration, then Mary and Lucy's bedroom, and discover that all the pieces come from Pier 1 Imports. Want the items for your own bedroom? Click on the link to Pier 1 Imports and you're well on your way to having your own little piece of heaven.

Marketers will have even more to think about when televisions of the future learn to watch back. In some cases, the proverbial boob tube will actually know more about viewers than they know about themselves. It may, for example, be able to determine which joke on Friends made you switch to 48 Hours. It will recognize when you're watching Baywatch, even though you claimed to be watching the Discovery Channel. And it will remember which music videos keep you tuned in and which ones make you turn off. In anticipation, TiVo, together with ASI Entertainment, and Nielsen Media Research, is in the process of creating the "National In-Home TV Lab" to help those in the television and advertising industry understand PVR owners and their use of the technology. "[PVRs] will open the doors to a number of new ways to analyze the viewing population," says Roland Yamamoto, vice president of Wirestone ad agency, based in Emeryville, California.

Innovative marketers will use the information they gather to better target consumers. Some predict that, years from now, filters for demographic, psychographic, and geographic data within PVRs will deliver one ad to a middle-aged man in San Francisco and an entirely different one to an 18-year-old woman in Toledo. There may also be an option for viewers to request less of one type of ad and more of another. For example, males could opt to skip ads for feminine hygiene products and see those for pharmaceuticals treating male pattern baldness instead.

Advertising will not only become more targeted with the new devices, it will become more portable. Last March, for example, the New York-based Vindigo, Inc. launched Vindigo - a wireless electronic guide to urban living, available in 11 cities around the U.S. The goal: To provide insightful news and reviews of things to do in and around town, that could be loaded directly into a PDA.

Will such devices come into widespread use? Modo, a service almost identical to Vindigo, was closed down by its owners, San Francisco-based Scout Electromedia, after being in business for less than two months. Unlike Vindigo, however, Modo required consumers to carry a separate, egg-shaped receiving device. Experts say it may have been more successful had it worked in tandem with cell phones or PDAs. "Eventually, you have to ask yourself, `how many devices are people going to carry around?'" says Hanlon.

The folks at A.T. Cross are certain that consumers will find their new Cross :Convergence pen to be anything but cumbersome. While the device may look like any other executive's pen, it's actually a bar code scanner that directs users to a Web site with material relevant to the item they scanned. For instance, a Campbell's soup can might direct scanners to the company Web site, which in turn, could offer recipes using Campbell's mushroom soup. While the technology behind such devices is still evolving, according to Starcom's Hanlon, "they're onto something. Right now, there's more interest from the marketing side than from the consumer side."

One of the interested marketers is Coby Low, senior vice president and director of media resources at Santa Monica-based ad agency Rubin Postaer and Associates. Low recently took advantage of an offer from Forbes magazine to accommodate a "scannable" bar code in advertising which her agency ran for the Honda Civic Coupe. By swiping the code that appears at the bottom of the ad, consumers were taken directly to the Web site for that specific model - rather than the Honda homepage. "As advertisers, we want to learn more now about how we can help our clients in the future. With Forbes' free offer, why not take it and learn from it?" says Low.

It's this kind of knowledge that will eventually help marketers get a leg up in understanding a new generation of consumers. In the meantime, however, they may do well to consider historical precedent. Just as television didn't kill radio, new types of technology will ultimately not destroy advertising. In fact, say the experts, it's likely to make it more efficient. As Yamamoto puts it, "What's to come is not the harbinger of doom and gloom. It's the dawning of a new opportunity."

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