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Bates USA formed a dedicated interactive group in June, reflecting a corporate mission spearheaded by CEO Michael Bungey this year.

The group, led by Craig Gugel, Bates senior VP-interactive media and research, is charged with building on evaluations made by the media department over the past four years.

"We are competing against other agencies, but it's not clients that are driving us into this," said Mr. Gugel, who leads a group of six full-time staffers. "We feel we need to be there. Better to start dealing with it now and understanding it so that when most of these tests are operational, we are in the mainstream."

The agency already has an agreement with IT Network to begin testing on its Interactive Channel in 150 homes in suburban Dallas and possibly Denver. No clients have signed on yet.

One Montreal office client will participate in Canada's UBI interactive TV test, and the agency recently made an interactive Hyundai commercial for Mr. Bungey to use in presentations about the future of advertising.

"It's a slow process," Mr. Gugel said. Clients "have to understand more about what interactive is all about and what it takes."

Mr. Gugel noted that clients are likely to remain hesitant until several issues-namely cost and the use of full-motion video rather than still photos-are resolved.

"We're explaining that this is a test," he said, "an opportunity to explore rather than getting in five to 10 years down the road when interactivity is fully operational."

On the research front, Bates recently released a study on the potential for interactive media usage.

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