The growth of digital cable—Comcast added another 1.1 million digital customers last quarter—has marketers praising an environment that is relatively clutter free and that deliver viewers more engaged in shows they've actively selected. Indeed, will long-form commercials that mimic TV shows and other marketer initiatives for VOD programming eclipse product integration as the branded entertainment strategy du jour?
GM's Lisa Grutta, interactive marketing manager for GMC, said her division is winding up its first VOD test with Comcast in Philadelphia. Comcast approached the company after filming GMC models at the Philadelphia auto show. According to Grutta, Comcast had a host detail the features of an Envoy, and then approached GMC to see if it wanted to air the show on a VOD shopping service called Marketplace.
Come September, Comcast will provide "take-rates," or the number of people who selected to watch the show. GMC is also preparing to work with Discovery Channel's On Demand service, launching in September, and is also working on VOD projects with A&E/History Channel. "Our target market are light TV viewers interested in technology. VOD is a perfect fit," she said.
Tim Hanlon, senior VP-emerging contacts at Publicis Groupe's Starcom MediaVest Group, is also working closely with Discovery's imminent On Demand offering. "We'll have a wide array of advertisers involved in that launch, around six to ten."
Agencies are ramping up their capabilities as interest grows. Within the last nine months, Hanlon created a video investment group that is currently part of an overall broadcast investment group. David Cohen, senior VP-interactive media director, Interpublic Group of Cos.' Universal McCann, has also recently expanded his department's skill set in VOD and wireless technologies. "The most interested advertisers are the ones that have most to lose," he said. "Over the past 12 months we've very much seen toe dipping, now there are trends starting to emerge. By the first quarter of 2005, we will see many iterations" of marketer involvement in VOD.
GM isn't alone in testing the market. BMW is also formulating its plan of attack in the On Demand universe. Bob Flood, exec VP-director of national electronic media at Publicis Groupe's Optimedia, said BMW's plans were in "development." Longer form commercials like the celebrated BMW Films series could be easily adapted for use on VOD platforms. Agency executives report Johnson & Johnson and Best Buy are also getting their feet wet.
PART OF UPFRONT
VOD sponsorship packages were part of this year's upfront discussions with cable programmers such as Knoxville-based Scripps Networks, which owns HGTV On Demand, DIY On Demand, Fine Living On Demand and Food Network On Demand. Jeff Meyer, Scripps senior VP-interactive sales, is working with GM, Kohler and real estate broker Coldwell Banker.
"Right now, there's a lot more talk than action," he said, but adds that advertisers are starting to develop new concepts for the VOD space. Kohler, for instance, has a treasure trove of footage related to its products that it is looking to translate for use in VOD platforms.
%%PULLQUOTE_LEFT%% One headache for marketers, however, is figuring out which model works best. Options include creating VOD programming from scratch (and potentially their own channels) or sponsoring a VOD movie so that it's free for viewers, or working on traditional ad insertion through companies such as nCube.
As ever there's a range of potential partners to do business with. Cable system operators are furthest along, though cable programmers and fledgling VOD content syndicators such as Ripe TV are making headway. Working with the Hollywood studios on VOD ad integration has been less successful, said one media agency executive who did not wish to be named.
"The jury is still out as to the success of the model, but we're actively testing for a number of clients to understand customer intent in a consumer controlled world," Cohen said. Cabletelevision Advertising Bureau's President Sean Cunningham, who is aggressively promoting all that cable has to offer to advertisers, said that interest in VOD had grown dramatically in the last few months. "It's a growth area, and a powerful selling instrument."