By Edwin L. Artzt
In May 1994, at the annual conference of the American Association of Advertising Agencies, virtually everyone was talking about the future of advertising.
We knew last spring the media environment was changing fast and the implications of those changes were disturbing. "From where we stand today," I said in my speech at that meeting, "we can't be sure that ad-supported programming will have a future in the world being created-a world of video-on-demand, pay-per-view and subscription television."
Yet, despite this serious threat to the future of our industry, we were not well positioned to respond to, much less to influence, the changes that were under way. There was no mechanism for a coordinated industry effort in this area.
A lot has happened since then. In fact, advertisers and advertising agencies are better prepared today than ever before to capitalize on the technologies that are changing the way consumers receive and use information and entertainment.
The most important step taken by the industry in the last nine months was the creation of the Coalition for Advertising Supported Information & Entertainment. CASIE is being led jointly by the Four A's and Association of National Advertisers. It is leading industry learning about new media and is coordinating the efforts of advertisers and agencies.
What's been accomplished so far?
First, this new organization has done a lot of homework. They've compiled a great deal of research on who is using new media and how they're using it.
This research is giving us a clearer picture of what we're up against, as we work to ensure the future of advertising-supported programming.
For example, one study, conducted by the research firm Odyssey, paints a disturbing picture for advertisers and the networks about the extent to which new media are penetrating American households. Eighty-six percent of U.S. households have VCRs and more than a quarter of those households rent movies very often-six a month, on average. A third of American households have TV videogames. Nearly a third have home computers; 7% subscribe to online services. In fact, the average household with a PC spends almost nine hours a week on the computer for non-business purposes.
As Nick Donatiello, president and CEO of Odyssey, said in his speech last fall to the Association of National Advertisers, "all of this means less time for television."
Clearly, we need a well-coordinated industry game plan to respond to these challenges. CASIE is leading that effort by promoting existing ad-supported programming and by encouraging providers of new services to rely on advertising as a key source of revenue.
Public policy game plan is in place
CASIE has also kicked off the industry's legislative/regulatory game plan.
Thanks to the coalition's leadership, members of the Clinton administration and Congress are listening to the advertising industry's position on a range of media issues. That was not happening a year ago.
This activity has been critical. Last year, for example, National Telecommunications Information Administration, an arm of the U.S. Department of Commerce, was exploring approaches to ensure universal service and open network access to the information superhighway. They appeared to believe that the best way to ensure universal access was a combination of traditional telecommunications regulation and a complex system of cross-subsidies and taxes.
Clearly, we had a different point of view-and, through CASIE, we were able to make our case that universal access will take care of itself if the government pursues effective competition and open access while avoiding taxes, cross-subsidies and other regulatory policies.
Standardizing new-media technologies
The third area in which CASIE is making important progress is the establishment of technical standards for new media.
This is fundamental to the future of advertising. One of the biggest barriers to advertiser participation in new media today is the lack of industry standards. Currently, applications developed for one interactive TV network-Time Warner's for example-cannot be used on another-say, Bell Atlantic's-without the advertiser incurring significant re-authoring costs.
CASIE is leading the way in this area, working closely with media providers, content suppliers and others to develop and implement technical standards. But we're just getting started. We still have a lot of work to do.
Content is king
The key challenge for the months ahead is to stay focused on what I consider to be the industry's most strategic opportunity-the production of quality, relevant content for both traditional TV and new media alike.
Content will always be king. It's easy to get distracted by new-media technologies, but once the novelty of interactive entertainment or pay-per-view services wears off-and it will wear off quickly as these technologies become pervasive-what will count with consumers is what the programming is.
Fortunately, this opportunity plays to our industry's greatest historic strength. Magazines, radio and TV all became mass media because advertisers and agencies helped supply the quality, relevant content that attracted audiences. We must play this same role in the evolution of new media, as well as the preservation of existing media.
As I said at the Greenbrier last May, "the advertising business may be heading for trouble-or it may be heading for a new age of glory. Believe it or not, the direction, up or down, is in our hands."
Our efforts so far indicate that the future of advertising is on its way up. That's progress we all should feel good about.