Adam Gerber is SVP and group director of strategy and innovation for MediaVest. David Hutchinson works as VP of TV integration for the Phelps Group. Allan McLennan serves as managing partner for Puremac Digital/IP-DTV. And Kimber Sterling works as director of advertising and research sales for TiVo. During their panel discussion at Ad:Tech 2003 this afternoon, the group talked about the role and relevance of television in marketing, as well as the possible impact of developing interactive TV capabilities. Here is a rough transcript of their conversation:
Dave Hutchinson: Welcome to MyTV. If this is not your flight, now’s a good time to get off. I have more than 10 years in the iTV space and have produced several interactive — and profitable — interactive TV shows for CityTV and MuchMusic. As we all know, things are changing all the time. For me, this is a bigger story than technology and marketing. Consumer spending represents two thirds of the US economy. While that’s an impressive figure, it doesn’t give me any sense of empowerment or control. I live by the rules laid down by Washington. But in the attention economy, things are different.
In that landscape, marketers need to leverage as many media channels as possible to get our attention and convert that attention to sales and, if they’re doing their job right, our loyalty. In that context, television is just another channel, another plank in the platform of media loyalty. Yet there’s something about television that gets into our hearts, our minds, and our souls in a way that no other media can. How else can you explain increasing ad spending in the face of decreasing media share?
But even television isn’t immune by these changes. In the attention economy, the consumer is king. It used to be that content was king. Even television will end up bending to the will of consumer demand to some degree or another over the next few years. According to Forrester, over the next four years 25% of US homes will have some sort of TiVo or PVR capabilty. Where are we on that transitional path from old TV to new TV?
Allan McLennan: Who’s visiting from the EU, UK, or Asia? Suffice it to say, we’re going to be going through a lot of activities in iTV where in Europe it’s already real. I’ve been involved in iTV since the ’80s. I was one of the founders of Worlds Inc. I built a company called MediaStation. For the last couple of years, I’ve been working internationally with two of the largest cable companies.
Everything’s on a simplified platform. Models are pretty straightforward. I’ve been tasked with giving a definition of what interactive television is. The bottom line is that they have very accelerated and simple economic models. There’s iTV. There’s ETV. There’s VOD. There’s DVR. There’s DVD/TVP, IPTV, HTPC, and RMC. Basically, on-demand services is what interactive television is.
What’s on globally? I want to jump to this slide. This is just half of what was announced in interactive television in the last month. Today, right now, there are two aggressive programs afoot in major companies in iTV. Let’s jump to some of the activity around the world.
In Spain, they’re integrating media so you can recharge your cell phone. Prepaid roaming on mobile phones country to country with an on-TV environment. Operacion Triunfo in Spain enables the viewer to participate in the casting process for reality television programs. Star Academy in France was the original American Idol. Live response drives direct viewership numbers on a grand scale.
Let’s go to the US, to something that’s live. ABC put on a live, interactiive program to find All My Children’s sexiest guy. 41% voted more than three times a week. You’ve got to ask a question about the viewers that voted 60 times, but the attachment they had with their television and their phone is interesting.
In closing, one of the elements that comes into play is that this is rapidly becoming a remote control. We’d like to see it all.
Kimber Sterling: My background is ad agency and media planning for 15 years, but this has by far been my most exciting job. I’d like to talk a little about what’s going on in our space right now. Today, we announced our millionth subscription. The industry is trying to figure that out right now: Is that something to cheer about or hiss at?
In terms of a reality check, there’s massive DVR penetration. If DVRs are in 20 million homes in a few years, it will equate to 40% of upscale brands’ target audience. Satellite is eating their lunch right now. Once DVR’s get in the household, resistance is futile. That’s not a cocky, “TiVo’s going to rule the world,” but it’s definitive that DVR is going to be out there.
Will DVR’s kill commercial television? Commercial television is already a little bit wounded. The threat is real: DVR users do skip ads. DVRs make it easy. In recorded viewing, 75-80% of primetime commercials are skipped. And the entire pod is skipped, with little selectivity by commercial.
Now the good news: Enhanced DVR advertising could and should make commercial TV more valuable rather than kill the model. The opportunity is to blend brand advertising and direct response. More on the upside front, more eyeballs is something that’s not talked about. We don’t have a ratings agency today, but we are seeing that the household numbers are much higher than non-DVR households. If we can harness those eyeballs and step back 30-40 years to some really big ratings number, obviously, that would be huge.
More good news: People will choose to watch advertising if it’s advertising that’s interesting to them — or if it’s content that’s branded. More engagement: Folks are spending three or four minutes on average to our advertisers’ long-form content. And unlike VOD, the programming pauses while the viewer engages the enhanced content.
The way it works today is that we’re able to put a tag in the DVR that shows up only in a TiVo household. And TV can now make an ROI case. TiVo subscribers are quick to raise their hands to request more information. The results are very possible.
Just a couple of words about the future: DVR will enable targeting ads by viewing habits, time and date, geography, and viewer request. Similarly, it’ll bring in true interactivity. If you want to learn more about a couch on a program, just click on it. Ultimately, it’s couch commerce. There’s no reason this can’t be an Amazon one-click purchase.
We’ve got some of America’s best brands engaged to better understand this space. The question is advertiser-friendly DVR’s. TiVo is the only DVR focusing on advertisers’ needs right now. Over the next six months, the MSOs will decide the functionality of their DVRs. Will advertising be considered? This is the chance for the industry to stand up and say this is important to us. We don’t want 60 million boxes in homes that just skip ads. Speak your mind on this subject if it’s important to you.
Adam Gerber: I’m the traditional guy who’s gone digital in the last five years. I just recently joined MediaVest in the TV buying unit, and I focus on innovation. What is TV going to be? I’m not going to be as well versed on some of these issues, but I’ll focus specifically on how interactive television is affecting direct response.
I’d like to step back 10 years ago to Orlando. A lot of what we’re dealing with in this space was addressed then. Unfortunately, those trials failed. Now we’ve got key companies focusing on the interactive space. We’re moving from late night and overnight tonnage to primetime. The types of clients that are leveraging this today are Fortune 100 and 500 companies figuring out how to leverage two-way communication through the TV. It’s not about the 800 number any more. It’s not about the URL. Today, everything is all about the remote. Consumers understand the remote. They use it. It’s easy.
We’re also moving from sales-oriented messaging to information-oriented messaging. You can choose to interact with additional content and stop the rest of the world while you’re doing that. It’s about response. Long term, we’re talking about an addressable world. We’ll be able to serve distinct messaging into the home just as we can on the Web.
Cable bought QVC and HSC, but now we’re seeing multi-layered environments, what we called “walled gardens.” Commercial units will be enhanced and extended. You’ve got in-program integration and prompts. And in the digital world, we’re not confined to networks and channels. There can be virtual channels through which we can sell.
The beauty of all of this is that the MSO, having already had a relationship with you, already has all of your information. How that gets translated and transferred to the fulfillment group is another issue.
Are consumers going to interact with this stuff? The degree to which they interact is the question. The key things we have to focus on are ease of use, habituation of users so they understand how to use this kind of technology, relevant and useful offers, and standards, safeguards, and privacy concerns.
Hutchinson: In the 1950’s, people said that Milton Berle sold more TV’s than RCA. In the ’80s, “I Want My MTV” really drove the success of cable. Today, do things like American Idol drive iTV? Does new content drive new technology?
McLennan: There’s no question that entertainment drives interactivity. You have an avid viewer wanting to watch this and wanting to contribute their content.