AD INDUSTRY LOOKS FOR INTERACTIVE DOLLARS

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Those who thought the bloom was off the rose of interactive TV had better think again.

Although the focus of last week's Conference on Interactive Marketing/East in Orlando was on the here and now, interactive TV generated by far the loudest buzz among the approximately 400 attendees.

But the buzz wasn't all good.

Mixed in with the oohs and aahs over movies on demand and virtual shopping malls was a larger question: money. As in not only will consumers pay, but when will marketers-and agencies-pull in revenues using interactive media?

"One of the questions is how are agencies going to make money at this," said Jean-Claude Kaufmann, senior VP-director of broadcast production at Bozell Worldwide, New York, during a session on interactive advertising. "It's an obvious question all the agencies are looking into, because a traditional media placement is not going to happen. You put [your ad] out and there it sits until somebody accesses it."

Amid talk that some agencies are spending as much as $1 million to develop interactive ads for Time Warner's Full Service Network, many conference attendees expressed concern over how marketers and agencies will recoup costs.

In truth, almost none will, initially. Spending will be written off as research and development costs, meaning the early arrivers to interactive media may well be the ones swallowing the most worms.

For agencies used to traditional media commissions and compensation agreements, the new world order of interactivity may be a tough one.

"The commission system is dead," said panelist Rishad Tobaccowala, VP at Leo Burnett USA, Chicago, and head of its interactive group. "How everybody gets paid will change."

Agency compensation for interactive media projects, he said, should eventually be based on accountability, and will likely vary significantly among clients and different interactive media systems.

The money spent by marketers on interactive projects must constantly be justified, said Avis Rent a Car System's Donna Cusano.

"We look at those price tags, and we look at the man-hours of

development and we look at our strapped budgets and our heavy workload," said Ms. Cusano, marketing manager for travel industry marketing at Avis. "There we are looking at the stars with our feet stuck in Silly Putty."

Avis is a participant in IT Network's Interactive Channel test in Denton, Texas, and Bell Atlantic Corp.'s InfoTravel, an in-room interactive information system being tested in a hotel in Santa Clara, Calif.

Ms. Cusano implored interactive service providers to "think of us advertisers as standing somewhat unsteadily on the bridge to the future. There's an amazing view from this bridge, except the view has been created in virtual reality. It keeps changing; all we can do is try to keep up with it."

Microsoft Corp.'s Karl Buhl confirmed that consumers will foot a large portion of the bill for interactivity in the form of higher cable TV bills.

"It could go up a range of $100, it could go beyond that," said Mr. Buhl, manager of strategic communications for Microsoft's Advanced Consumer Technology division.

And keynote speaker Tom Weigman, president of multimedia and strategic services at Sprint, said that when it comes to the complex world of new media, "first in is not a strategic necessity. Virtually everybody that you think is out ahead is behind."

Indeed, 1994 was supposed to be the year of the test, but it's fast becoming the year of the delay. ICTV Exec VP David Serlin admitted his company's interactive TV test with Cox Cable in Omahalikely won't start its market trial until first quarter 1995. He earlier had predicted the test would begin as soon as this summer.

"I'm not saying that the Cox Omaha trial will begin sooner than anyone else, but I will say it will be an operational system with paying consumers before any other paying consumers are actually using interactive television," Mr. Serlin said.

While interactive TV was the hot topic, there was still plenty of talk about existing interactive applications.

U S West is expected to announce soon an expansion of CityKey, its interactive in-room hotel information system testing in San Francisco, executives familiar with the company's plans said.

The Tampa Bay (Fla.) Tribune is targeting August for a launch of its online service with Prodigy Services Co., said Terry Taormina, advertising manager for Tampa Bay Online.

Apple Computer will offer the second edition of its En Passant CD-ROM catalog this fall, said Deborah Baker, VP-new media marketing and consulting at Redgate Communications Corp., Vero Beach, Fla. Redgate is Apple's partner in the test which is believed to be adding an online connection.

The conference was sponsored by Interactive Marketing Inc., Hermosa Beach, Calif.

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