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LONDON-Although still in its infancy in Europe, advertising opportunities are emerging in the fledgling multimedia entertainment world.

But while interactive media companies and ad agencies believe interactive marketing could revolutionize the world of advertising, European advertisers are currently doing very little with it.

One reason is the technology's low penetration rate and high-tech aspects. "There are opportunities for advertisers because [interactive marketing] is a new way of dealing with the consumer," said Hans Merkle, president of the World Federation of Advertisers and director of external communications at Procter & Gamble in Schwalbach, Germany.

"But before this can happen some problems need to be solved. [Interactive] systems need to be established in the homes. They need to be as simple as possible so that people like to use them. Anything is only useful [to advertisers] if it reaches the mass market."

Nonetheless, the WFA, a group of international powerhouses such as Nestle and IBM, is taking interactive marketing seriously enough to discuss its implications for marketers at its next internal meeting in Weisbaden, Germany in May.

Interactive Network, the European licensee of the Silicon Valley company bearing the same name, has interested a major agency, Young & Rubicam, in using its system not just for advertising but for research. David Hughes, Y&R's London-based media planning director, said that typically advertising research is done in unnatural environments such as a public hall. By creating a viewing panel from Interactive Network's subscribers, Y&R can test people in their natural viewing environment-at home.

"We would use it for any form of market research we do," said Mr. Hughes. "We might test the importance of positioning [ads] in the break. [The research] would be linked to recall, using the day after or half hour recall."

Once Interactive Network has a high enough household penetration then Y&R will consider it for direct response and direct mail campaigns. But Mr. Hughes doesn't see that happening for another five years.

London-based Interactive Network is developing systems allowing home viewers to play along with televised game shows, sports, entertainment and education programs for fun and prizes. Simon Cornwell, managing director, said the company hopes to introduce in the U.K. by early 1995, followed by Germany and France. Costing consumers about $18 a month, Interactive Network will consist of a mix of interactive programs from game shows to talk shows to mysteries.

Andrew Curry, manager of the U.K. cable TV subsidiary of Montreal's Groupe Videotron, admits the reach-just 60,000 households in London-just isn't there yet for advertisers. Nevertheless, he is talking to several U.K. ad agencies about airing an interactive commercial as soon as June. The interested categories, he said, include drinks, beer and car companies.

"Some agencies realize [it represents a new commercial medium], but they are still trying to understand the way the marketplace will change."

Videotron offers a 30 channel cable TV service, including a four-channel package of interactive sports and news programs called Interactive Channel.

Ford ran two very basic interactive ads on Interactive Channel a year ago (AA, March 21, 1993). Created by Ogilvy & Mather, the first :60 spot was a corporate ad listing the various features available in Ford cars. Viewers used their TV clicker to name how many features were mentioned in the spot. The ad would then congratulate viewers on their correct response. If the viewer answered incorrectly, the ad would tell them so and supply the right answer.

The second Ford commercial let viewers find out more about the new Mondeo model. Again using the clicker, viewers could select one of four viewing options-including the conventional car commercial, an ad about the Mondeo's technical specifications; a spot listing the model's U.K. distributors and an ad showing various press comments on Mondeo.

"It was more of an educational experience for us," said David Baldwin, Euro pean media director of O&M. "It was very low key, on a small scale. We got some interest ing information on the useage of the medium, how people were not prepared to use it. You can't expect too much from the consumer."

A failed experiment was Interactive Television, Barcelona's TelePick service, Europe's first complete interactive system, which filed for protection under bankruptcy laws this month. The company couldn't repay $12 million in debts, blaming the failure of state broadcaster TelvisiĀ¢n Espanola for failing to capitalize on the system airing exclusively on TVE.

TVE, however, said the system, reaching 13,000 homes, was too limited for advertisers. "Interactive Techology didn't know how to commercialize its product, so there wasn't much interest among advertisers," said TVE Communications Director Carlos Minguez.

"Our products are directed at a mass audience," said a spokeswoman for Unilever's Elida Gibbs, which used TelePick to sponsor an afternoon show for Pond's cold cream. The spokeswoman said the audience of 2,500 viewers was too small to justify an investment, adding that the $215 cost for interactive hardware was too high for consumers.

Gillette had a similar experience as the first company to try interactive advertising on TelePick. The test, which ran in December 1992, didn't work, said Jorge Moscat, account executive for Gillette at Tiempo/ BBDO, Madrid, because the small upper income market reached by TelePick isn't worth the extra cost. TelePick charged between $8,000 and $26,000 depending on total spending, to add interactivity.

As hopeful as media watchers may be about interactive, experts agree it's still a gamble. "There is the technical question and the acceptance question," said Mr. Merkle. "There is an opportunity [with interactive], but whether it will work, I don't know."

Bruce Crumley, Dagmar Mussey and Deborah Klosky contributed to this story.

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