TECHNOLOGY MARKETING;COMPUTERS LEARNING USERS' PREFERENCES--AND ADVERTISING WILL GROW MORE SELECTIVE

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Twenty-five years ago, the microprocessor was invented. The first microprocessors were simple devices when compared to the advanced capabilities of today's products. At that time, it was impossible to imagine that these devices would evolve into the engines of the Information Age.

In 1965, Gordon Moore, the co-founder and chairman of Intel Corp., accurately predicted that the capabilities of semiconductor devices (of which the microprocessor is one) would double every 18 months.

MOORE'S LAW

Following that prediction, known as Moore's Law, this would mean that a microprocessor's capabilities would result in a tenfold increase over five years or a 100-fold increase in 10 years.

Since its inception, the microprocessor has had an amazing impact on many aspects of our lives. However, it is in its role as the brains of the personal computer where this has been most evident. Since the introduction of the PC in the early 1980s, we have witnessed an explosive growth in the use of computers, and have seen the computer expand from a central information facility to become the primary desktop tool of most business professionals.

In the last several years, we also have seen it become a major consumer product. About 40% of American homes now have purchased one or more PCs. While many industries have been completely transformed by the PC, its impact on the advertising industry has been mostly limited to a tool for production and business management. This is about to change in a fundamental way.

The personal computer is rapidly becoming a new medium for information, entertainment, education and commerce. The microprocessors now in development by Intel continue the pace of Moore's Law and will greatly enhance the PC.

Advanced video, audio and graphics capabilities will provide a powerful environment for media. Advances in communications technology over transports such as phone lines and satellites will greatly increase the access to media. The rapid growth of the Internet (itself fueled by the microprocessor) will combine with the PC to create one of the most powerful mediums for communications even known: the connected PC. And in becoming a new medium, it will have a profound impact on the ad industry, advertisers and their customers.

There is a lot of discussion about advertising on the Internet. Some believe the role of advertising will be limited. Reasons for this belief include the limited size of the consumer market for Internet-connected PCs, the lack of compelling content, poor measurement systems and privacy issues. Many believe the power in this new medium is its ability to target audiences even down to the individual-the promise of one-to-one marketing in the extreme.

NO OVERNIGHT ACTION

While we cannot expect to see a total restructuring overnight, the history of the PC teaches that its impact will happen faster and more powerfully than most expect. Hundreds of venture-capital-backed companies and most of the leading technology companies are working to make the PC a powerful vehicle for advertisers to reach customers.

Further, we are seeing the emergence of a new generation of consumers raised on intreactivity, which is one of the most compelling attributes of the PC. As several studies show, members of Generation X are voting with their eyeballs as they spend more and more time using their computers and less time watching television.

The relevance of advertising will be significantly enhanced as PCs learn about their users' preferences and select the most appropriate advertising. We will see a separation of advertising and programming so that customers may actually subscribe to advertising and use "coupons" to pay for programming (see www.cybergold.com for an example).

Ads will no longer be limited by time and space. Customers will choose to interact with advertising that truly assists them in making decisions. Not only will ads be more pertinent, customers will be able to order products while interacting with these ads, thereby increasing the value of the experience.

Currently, advertising on the connected PC suffers from poor production values. This results from the combination of limited communications bandwidth (the speed of sending information to the computer) and the inability to assemble the advertisement in advance of its use.

RANDOM BROWSERS

Consumers typically browse the World Wide Web on the Internet in a somewhat random fashion. When they reach a destination, small advertisements known as banners are displayed. In order not to introduce delays in a medium that currently is slow, (because of limitations of the communications links), the audio-visual quality of the ad is not compelling.

However, new techniques are about to be introduced that will allow rich audio-visual advertisements to be placed in advance on the consumer's PC and called up at the appropriate time. This means that in addition to a high degree of customer relevancy, ads can be exceptionally entertaining. These Internet commercials will take advantage of high-resolution video, high-fidelity audio and advanced 3D graphics to truly exploit the capabilities of the connected PC to deliver compelling advertising.

Avram Miller, VP of business development for Intel Corp., is charged with establishing strategic alliances for the advancement of PC technology and the growth of new media. Before joining Intel, he was president of Franklin Computer Corp. and a group manager at Digital Equipment Corp.

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