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WHEN THE HYPER-HYPED INFOR-mation highway is finally up and running, will a nation of couch potatoes, suddenly transformed into console cowboys, be spending hours on end in front of their digital supersets interacting with commercials? Not likely. As Kelly Anthony Rodriques, CEO at Nova Communications, Palo Alto, Calif., a company that is readying a suite of lifestyle CD-ROM publications that carry advertising and sponsorships, asks somewhat rhetorically, "Why the hell would anyone want to interact with an ad?"

Why indeed? According to Robert Brueckner, CD at Boston agency Duval Brueckner Woglom Partners, which has handled several high-tech clients, this question is the No. 1 creative challenge of the 90's. Says Brueckner, "You'll have to seduce the viewer into getting involved," and staying involved. While consumers may initially find clicking on buttons and asking for more information to be an interesting novelty, unlike the Energizer bunny they probably won't keep going and going and going.

Yet when viewers are involved, they may really be involved. Agencies that have been at this game for many years, like New York's Einstein & Sandom, an interactive shop that was recently acquired by DMB&B, claim that when viewers get interactive they're just plain too engrossed to change the channel-and, let's be frank, we're all zappers. So overcoming the urge to sit back and snack instead of interact will be Madison Avenue's principal challenge, and that should be enough to fire up the creative juices of the many agencies that are closely watching as the interactive business unfolds. But at this point there are still clouds hanging over the technology, and even those big agencies that can envision the possibilities are hedging their bets. At DDB Needham/Chicago, where Mike White heads up new media, they've put together a new media "mutual fund" where advertisers can buy into a group approach to testing the waters. And at J. Walter Thompson Online in Detroit, VP Roland Sharette, who monitors new media intently and gets clients online, says that while viewers say they want interactive, until the new media makes a widespread appearance, "their actions may say otherwise."

Leo Burnett's VP-new media, David Olson, says hopefully, "We have a commitment for a number of years to an integrated plan recognizing that the world of the future is not television, it's direct marketing, CD-ROM, interactive television and kiosks. Our view is [one of] pragmatic enthusiasm; combining the interactivity of online systems and the rich digital content of CD-ROM is our ultimate goal."

Good goal, but exactly what is the new media, and when does it get started? Ever since the TCI-Bell Atlantic merger collapsed, the industry's Holy Entertainment Grail-interactive TV and services like video on demand-has receded into a nebulous technological haze. What is real, say veterans, is where the new-media leaders already are: online and sitting in front of their 60 million plus computers. Agencies like Ogilvy & Mather call these people "techthusiasts"-people who know and understand the technology, are generally upscale and willing to spend the money to get in on the latest hardware advances. The key is not bringing the masses to interactive media, but bringing interactive media to the technological elite, who already support it; hence the betting among insiders is that the onliners will comprise the new media core audience, which means the online companies will carry the ball before the big cable companies can make any major moves.

In fact, at one pioneering new media marketing organization, Redgate Communications, Vero Beach, Fla., which is involved in CD-ROM catalogs and other interactive services for the technology world, interactive TV is not even a consideration. "People investing in interactive TV are going to bleed to death waiting for it," says Redgate chairman Ted Leonsis, who sold his agency to America Online for a reported $40 million. At Redgate the future is already here in the form of online services and CD-ROM shopping. Redgate is involved with the soon to be renamed En Passant, a collection of name brand catalogs like L.L. Bean, Land's End and Tiffany. In his view, interactive TV will come to the computer screen before it comes to the television.

Whoever wins this debate, one thing about Leonsis' initial approach remains reassuring for advertisers: Brand names are very important in cyberspace. Redgate's CD-ROM catalog is not only loaded with familiar names but it is fashioned with very high production values. "When Patagonia brings its catalog to disc, they send five art directors to Alaska to catch just the right sunset," he says. And if users are interested in Patagonia's wind chime, they have only to push a button to see it move and hear it in CD quality.

To understand why the pioneers recognize that the future is in online-oriented services, one only has to dig into CD-ROMs and quickly discover that too much information actually isn't enough. After getting used to the idea that En Passant conveniently holds 50 catalogs, users soon find they can search through all 50 for specific products only to discover one of the critical problems of interactivity: if they ask for a specific product, say neckties, from the disc's assortment of catalogs, it comes up with just six different ties. Even a small outfitter would have dozens more ties in stock.

In other words, once viewers have access to the information highway they have to be provided with more off-ramps and rest stops than you'd find on the New Jersey Turnpike. Which can raise a problem for the traditional limited-access approach of mass market advertising. "Ad people," says Leonsis, "used to be in the business of holding on to ads." Agencies profited by making one ad, possibly with minor variations, that they ran as many times as possible. Now they will be in the business of producing more ads-many, many more. And with interactive ads, they must contain exponentially more information.

That raises another creative challenge: How much information do you introduce and how much control do you give the viewers. "This is advertising jujitsu," says Brueckner. "The paradox is that the more control you give the viewer, the more control you can have. The genius is in arranging the information."

At Ogilvy & Mather, which is actively targeting the technologically sophisticated, the new mediaphiles have given serious thought to this problem from several points of view. One product they developed-for the client of another agency-is Absolut Museum, an interactive art gallery of ads for Absolut vodka that is distributed on floppy disc for computer users. Navigating through the gallery is simple and intuitive, yet the arrangement of information affords the user just enough of a sense of control. As a rule, providing the right level of interactive information is critical, and it is as much an art as a science. Consumers who request more information do not want to be inundated with data-they just want the right data. So it's important to know what people are really looking for when providing "drill-down" or branching segments of information to the interactive prospect.

Another important point to consider is that new media features that bring people together are more powerful than the technology itself. According to a focus group conducted by Craig Gugel, head of new media research at Bates/New York, viewers fear that interactive TV will lock them up into isolated worlds. In practice, though, interactive media enable people to communicate selectively with the kinds of people they want to reach-mothers of twins with transvestite uncles, or men who like Corvairs and pantyhose can chat exclusively with like-minded people. Whenever this kind of communication is facilitated, viewership rises dramatically.

Whatever approach is taken, it is clear that the short-term future of interactive advertising is online. At present, the only commercial online service that accepts ads as part of its basic service is Prodigy. However, its ads, rarely interactive, are mostly miniature billboards on users' screens. As other online services like America Online, Compuserve and the new Ziff Interchange prepare to carry ads, a new generation of genuinely interactive commercial messages will emerge.

At the simplest level these interactive ads will come with buttons to click on to ask for more information. But creative experimentation will inevitably make this a more interesting proposition. One approach, favored by agency president Norman Hajjar of Hajjar-Kaufman, a high-tech agency in Marina Del Ray, Calif., is the concept of "wormholes"-ads that offer the typical image advertising and the ability to peer into ever deeper pockets of information, depending on how close one is to the actual purchase. So a car ad to the average consumer is just image, but to those about to buy, clicking on the button gets them information on options and specs they need to make the purchase decision.

At SoftAd in Mill Valley, Calif., the company offers clients the ability to choose from five levels of interactivity in their ads-from level 1, which is a rolling demo, to level 5, which is a fully programmable database with a visual interface and custom effects. At the top level, techniques that include artificial intelligence, human-like interfaces and a highly developed ability to customize answers according to programmed knowledge of the user will become common.

An even more sophisticated approach will be "smart" ads: those that can respond to information from the viewer or respond to a viewer profile based on a pattern of usage that the clever set-top box of the future discerns. Like a continuous direct marketing sensor, it will know consumers' spending habits and help the online or interactive TV broadcaster target viewers with the appropriate appeals. These ads do not even have to be interactive; they'll just be launched according to information relayed by the interactive TV set-top controller (with software by Microsoft, perhaps) or online service.

To what ends that viewer profile is adapted is a tricky issue; online and interactive services offer the prospect of maintaining an electronic trail of all viewing and purchasing information, and that raises the specter of an Orwellian nightmare.

"If we get that information we will certainly use it," says Brueckner, although he prefers that such data be offered voluntarily by the viewer. While this is a growing social issue, most marketers agree that if they offer consumers something in return, most will gladly give up the bulk of the information that marketers need.

If a marketer doesn't want to give the viewers something in return for their vital statistics, there is always another road to consumer acceptance-offer a game. Many veterans in the field, like Paula George Tompkins of SoftAd, believe that games have a way of breaking down barriers, and the agency even uses them to help sell such serious products as insurance.

The question surrounding the interactive TV phenomenon is not just when but how. Since the big mergers fell apart earlier this year, the estimated price of wiring each

American household is running anywhere from $300 to $1,000, while the amount that consumers are willing to pay extra for the service has been estimated to be in the range of $2 to $10. So the smart money is beginning to view the emergence of this industry in a whole new light.

Instead of holding out for the real interactive TV, advertisers are looking at companies like Prodigy On Cable and E-ON that are offering incremental-and less expensive-forms of interactive TV. Prodigy is aligning cable programming with its Prodigy online service to allow viewers to talk back to the show producers, discuss the show with other viewers, get more specific information and order products. Other systems, like Interactive Network, a games-oriented service that enhances existing TVs, is dropping its prices radically as it edges towards a national rollout. E-ON offers a wireless-based overlay that, with the purchase of a set-top box, enables viewers to perform many of the above operations without having the computer on or running up phone bills. As the technology evolves, many expect to see the online, overlay and cable features converge.

Another good guess is that the sheer number of channels that will be available on cable will spawn a "navigator" business. Services like TV Guide on Screen and StarSight allow users to arrange shows by category and personal preference and offer previewing and lockout features. While these navigational or "gateway" services carry no ads at present, they might turn out to be the best vehicle for them; they will be customized for each user, which will make it easy for advertisers to target prospects. As the cable companies begin to introduce the wiring and the smart set-top boxes slated to come from vendors like General Instruments, Silicon Graphics and even Sega, helping the average viewer to orchestrate those vast programming options could become a major issue.

Video on demand is great, but not everyone is so sure that it will be as successful as the hype suggests. Part of TV is its sense of community, as tenuous as that may really be, and people like to watch a program knowing that millions of others are watching it with them, as it were. The fact that interactive TV may also add to the sensation of live TV could make "real time" viewing even more important than video on demand.

Well, we can be sure about one thing: "Two years from now there will be something in everyone's living room connecting them interactively," says Brueckner. At that time, "it will be obvious, but right now we just don't know

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