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BATES USA SURVEY IS BULLISH ON INTERACTIVE PREDICTS $7.2 BILLION MARKET WITHIN 10 YEARS;ADS WILL SUBSIDIZE COSTS

By Published on .

The total dollar volume of interactive TV transactions could equal the amount spent on magazine advertising within 10 years, if a new study from Bates USA is on target.

In its Projections: 2003 report, Bates estimates that annual transactions from interactive TV could reach as high as $7.2 billion in the next decade, equal to total magazine ad expenditures in 1992.

That would be an amazing feat for an industry that is in its nascent stages.

Advertisers will have a clear role in that equation, if only to subsidize the cost to consumers. Some 73% of respondents identified as "technology enthusiasts"-or Techthusiasts-said they would consider using interactive services an average of 4.1 times each month if the service was ad-supported and free. By comparison, 60% of the total sample said they would use an ad-supported service 3.9 times per month.

"The percentage of people who said they would be inclined to use one of these services declined when the cost of the service increased," said Craig Gugel, senior VP-executive director of interactive media and research at Bates USA, New York. "Advertising is going to play a significant part in order to help reduce the cost of transactions and subscribing to the service."

The report was based largely on the results of a telephone survey of 1,002 adults conducted last October by Bruskin/Goldring Research.

In a similar study last year, Bates identified 20% of the U.S. adult population, or 37 million people, as Techthusiasts. This time, the agency went a step further to pinpoint Techthusiast kids and teens.

Nearly 20% of 12-to-17-year-olds-some 4 million people-and 16% of 6-to-11-year-olds-or 3.4 million kids-are part of the Techthusiast market.

These groups are likely to have an even greater impact on traditional media and marketing than their predecessors.

"They will be the generation that will help in leading the interactive revolution into the year 2000 and beyond," said Mr. Gugel. "They've already been interacting with the TV set through videogames."

On the surface, consumers seem less than enthusiastic about interactive advertising. Just 20% of all adults and 23% of Techthusiast adults had an interest in the general concept of advertising on demand. Offered the more specific option of being able to retrieve only the advertising information they wanted, 67% of Techthusiasts and half of all adults expressed interest.

"It changes when they understand what [information] they're going to be calling up" Mr. Gugel said. "Once they understand what interactivity is all about, the inclination tends to be, `Yeah, this could be a good thing to have in the home."'

Bates has been conducting its Projections study for four years, but the focus is increasingly on interactive media as interest in that area grows. In addition to interactive TV, the current study includes sections on virtual reality, home shopping and CD-ROMs.

Advertising may not be as welcome on other platforms, though. Just under one-third of Techthusiasts and 25% of adults were receptive to ads on personal digital assistants, while just 25% of Techthusiasts and 20% of adults would accept a limited amount of CD-ROM advertising.

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