The search is on to find applications for advertising within the new media landscape that combines digital recording, preselected programming, interactivity, the Internet and a TV screen.
A technology that allows consumers to obtain more information about a product or customized spots to reach specific demographics seems to hold great promise.
However, Bill Croasdale, office of the president at Initiative Media, Los Angeles, says, "People can skip through commercials with these systems, and it's a concern that has to be overcome. It's one of the features the personal TV industry is not addressing."
David Verklin, CEO of New York-based Carat North America, is more optimistic. He believes that within five years, time-shifted TV programming via devices such as OpenTV, ReplayTV, TiVo, UltimateTV and WebTV will produce a new experience for viewers and new advertising opportunities for marketers. He sees it taking on different dimensions within blocks integrated into the middle of TV shows.
Advertising via devices "will have degrees of interactivity and length. It could be 15-or-60 seconds; in some cases you [will] click on the ad and it'll evolve into different branches with different options."
P&G PANEL TESTING
Procter & Gamble Co., seeking to learn more about how consumers use time-shifted programming devices, put together a consumer panel to test the TiVo system last year. The panel watched one-third of the regular TV feed off the hard drive, which means panel members seem to prefer to record programs and watch them later.
"This is important because consumers were skipping about half of the commercials," says a P&G spokeswoman. "While not necessarily good news, on the other hand, they're watching 50% of the commercials. Our challenge is to understand what makes that 50% meaningful."
At the same time, Nielsen Media Research is readying specific data for the personalized TV field to measure the medium's reach.
"We've developed software applications to track and report usage through TiVo, Replay and WebTV," says Jack Loftus, senior VP-communications, Nielsen Media Research.
WHICH DATA ARE BEST?
While Mr. Loftus says the software is close to being ready, "that's not the biggest challenge, which is getting an industry agreement concerning what to report. Do we break out the data separately or include it in the overall estimates? How should data from a show taped last night or last week or two hours ago be included?"
Research into personal TV products is also under way at Optimum Media Direction USA, says Steve Grubbs, managing partner-CEO.
"We are in discussions with the vendors of these personal TV devices to test their systems this year," Mr. Grubbs says. "The bigger question is, will consumers embrace the technology. If they do, then we need to find a way to make them work for advertisers."
A significant concern for advertisers and their agencies is obviously the viewer's ability to zap the commercial.
Mr. Verklin's view is that this ability will force agencies and their clients to change the basic nature of the 30-second commercial.
That belief is shared by Tim Hanlon, director of emerging contacts for Starcom IP, Chicago, a division of Starcom MediaVest Worldwide. He says the personal video recorder will inexorably alter the way advertising is presented on TV.
"We need to think of how to integrate the message more, perhaps in real time," Mr. Hanlon says. "The issue of commercial zapping also needs to be figured out. We need to reintegrate the message, and I think you'll see more in-programming experiences. It's almost the '50s all over again with sponsored shows, star performer/spokespersons [like Arthur Godfrey], product placement and more signage scenarios."
Mr. Hanlon says he's got three unnamed consumer marketing clients planning to test these opportunities this year.
"It will force people to create commercials that are more compelling, useful, interesting and informative. It'll change what a 30 looks like," says Mr. Verklin. "You'll see fewer $600,000 commercials shot with expensive directors, and that's a huge change for the advertising business."
Mr. Verklin foresees the interactive aspect of personal TV making commercials more compelling.
"If you have the opportunity to click on a commercial that says, `If you want more information, click here,' and this information is stored . . . you may be able to get people to come back and look at commercial content later. The days of lousy, uncompelling commercials are dated," he says.
RUN-IN WITH CBS
Still, how such technology will ultimately affect network and cable programmers remains to be seen, particularly after TiVo had a run-in with CBS, one of its investors. A commercial was pulled from the network and KCBS-TV in Los Angeles, although local stations have the option to run it. The commercial, by Goodby, Silverstein & Partners, San Francisco, pokes fun at network programming executives and encourages consumers to be their own programming executive.
"We are surprised and disappointed with the decision at CBS," says Brodie Keast, TiVo's VP-marketing and sales.
Consumer advertisers, including TV networks, are curious about how the medium will work for them. Replay TV has signed CNN, NBC and TBS to have their own content-sponsored zones, says Michael Teicher, senior VP-advertising sales for ReplayTV.
"These are zones in which content providers promote their own programs," he says.
Advertisers can buy time on theme-based zones such as sports, travel and film. They can also have their own zone and choose to drive viewers to their Web sites or to TV shows they sponsor.
General Motors Corp. signed on last year as a TiVo charter advertiser. TiVo will have a dozen advertisers participating in its sponsorship program by the end of the summer, says Stacy Jolna, chief programming officer and VP-media partnerships for TiVo.
TiVo allows preloading of 30 minutes of content on a hard drive, says Mr. Jolna. Charter sponsors' branded content information and entertainment will first appear on the TV screen when a new unit is turned on.
NEW PERMISSION TECHNIQUES
The next step, which Mr. Jolna calls "permission marketing techniques," will allow consumers to select the kind of content they wish to view and receive it on a weekly basis. For example, a viewer could program the device to provide cooking shows.
"We've turned passive promotions into a more efficient marketing vehicle. It creates a new kind of on-demand advertising through some call to action or icon," Mr. Jolna says.
OpenTV, through a joint venture with EchoStar Communications Corp. called OpenStar, this fall will begin marketing a digital box providing personal TV recording, TV interactivity and pay TV capabilities, says Mitch Berman, senior VP for OpenTV, which is also the software provider for the Dish Network set-top box.
Time Warner has signed a pact with OpenTV to make some of its networks and programs interactive. OpenTV Studios will produce features for the personal video recorder, Mr. Berman says individual broadcast, cable or satellite networks will handle program advertising that appears on OpenTV, whose U.S. platform is the Dish Network.
The key sales pitch for WebTV Personal Service "is it's the first step in the convergence of bringing the TV and Internet experiences together along with the direct response functionality to an advertiser. It allows the consumer to initiate a request for more information or purchase the item after viewing the commercial," says Joe Poletto, VP-network media group, Microsoft Corp.'s WebTV Networks.
WebTV claims 100 national Internet advertisers, including Ford Motor Co., GM, and Johnson & Johnson. Marketers can buy banner ads and "flash video," which are full screen ads that play while the viewer is booting up. E! Entertainment and Barnes & Noble have used flash video.
Microsoft's UltimateTV will debut sometime during the pre-Christmas retail season. Its standout feature is its two tuners, which allow subscribers to watch two programs simultaneously (with picture in picture), record two shows at the same time or watch one and record one.
UltimateTV will also permit viewers to bypass a commercial, but the company is "looking for ways to make advertising messages more impactful," says Mr. Poletto. "We have to provide advertisers with better information so they can send consumers the appropriate message based on researching their tastes."
That point is seconded by the P&G spokeswoman, who notes, "When consumers have total control. . .we have to learn how to communicate in that environment."