Ad Outlay in Hundreds of Millions to Preach and Pitch Convergence Wares

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NEW YORK ( -- It’s the ultimate irony. To explain and sell new media to consumers, marketers will rely on “old” media and “outdated” tools such as TV commercials. And that will put hundreds of millions of dollars in the pockets of traditional TV networks and other media sellers.
Intel alone is likely to spend $300 million on TV, the Internet and mobile phones to promote its Viiv chip, which enables Internet content to be shown on TV.

The likes of Intel and Microsoft will use ads on TV, the Internet and mobile phones to market their wares to consumers, and they’re poised to spend big money to do so. Intel alone is likely to spend $300 million to promote its Viiv chip, which enables Internet content to be shown on TV.

Convergence revolution
Convergence content -- a fancy phrase that simply means the ability to access news and entertainment anytime, anywhere -- is the most revolutionary concept to hit American culture since the Internet became a consumer utility. The dozens of deals announced at the Consumer Electronics Show in Las Vegas among traditional media stalwarts such as CBS and MTV, high-tech leaders like Microsoft and Intel and new-media mavericks such as Google and Yahoo, demonstrate how 2006 is destined to be the year of convergence.

“There’s ... 100 times more content today than 10 days ago,” said Richard Doherty, research director of technology and market-research firm Envisioneering Group. “It’s like going from four networks to 104.”

Suddenly, Google is renting episodes of “CSI” and classic TV from CBS and selling National Basketball Association games 24 hours after they air; Yahoo is pushing all its Web site content for download on handheld devices and TV; and AOL is serving up entertainment from parent Time Warner’s libraries on Intel’s Viiv-enabled living room computers.

TV networks are already using their own airtime to promote convergence. “They have a platform, so with little incremental investment they can promote new products and make money,” said Tracey Scheppach, VP-video innovations director, Starcom USA. During the Rose Bowl, Walt Disney Co.’s ABC Sports and ESPN ran promotional spots and had game announcers mention that football highlights could be downloaded from iTunes. NBC has started running “swipes” -- text messages that appear on the lower-left corner of the TV screen promoting “Saturday Night Live” and “The Office” on iTunes.

As more of these promotional spots appear, the networks will also take care to be conservative about not cannibalizing the first showing of the content, Michael Goodman, senior analyst, Yankee Group, said. “I don’t think they will try to drive you to VOD directly after the program airs . ... [because] affiliates will get upset,” Mr. Goodman said. Instead, they will emphasize the idea of downloading if you missed previous episodes.

Turning to TV
Many media companies will rely largely on their own properties to promote new services, with Yahoo placing ads on its site and Verizon running messaging on its cellphone network. But the purveyors of the technology that make convergence possible will turn to TV.

Intel has set aside $300 million just for marketing of its Viiv chip, according to analysts. Intel said it will launch a mass-market Viiv branding campaign after a narrower initial push targeted to affluent early adopters.

Microsoft is expected to spend at least as much to market its new operating system, Vista, which focuses on hooking up the digital home, as it did to market the XP, its existing operating system. In 2004, Microsoft dished out nearly $1 billion in advertising, according to TNS Media Intelligence, and the heftiest slice of that was for XP, analysts said.

Vista is going to be a huge marketing chore. “XP is a very good operating system and for many people it’s probably good enough,” said Joe Wilcox, senior analyst, Jupiter Media.

Bigger challenge
The bigger challenge across the universe of convergence offerings is to explain to consumers what this new category of entertainment is and why they should care.

The poster child for success at that is Apple’s iTunes and iPod. “Apple didn’t market a new technology -- they talked about how you could take your music with you,” Mr. Wilcox said. “That’s a benefit.” And did Apple do that with banner ads on the Internet? No. “Apple did that through mass marketing.”

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