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Tune In and Pay Attention

  |  June 28, 2004   |  Comments

Why the new VOD generation will reshape the advertising landscape on TV and online.

I don't think I've watched more than an hour of MTV in the past couple of years. At 36, I know I've edged out of the demo, a painfully apparent fact when I do manage to land on the channel while surfing.

But that's really OK with me. Instead, I've become addicted to Havoc Television's VOD, offered via Comcast's OnDemand service. Not only does it have a very fresh set of videos (way better than the MTV garbage), but they are all nicely organized into categories, are individually accessible, and come with all the wonderful VCR-like controls built into the Comcast system.

As an avid music consumer, it's exactly what I want. It doesn't bother me at all that each video starts (and ends) with a short, 10-second promo for Havoc. In fact, the tags have driven me to its Web site numerous times to learn more about the artists, peruse the online store, and find out about upcoming events.

The system is very entertaining, and, from a marketing perspective, it's a very tightly wrapped package. Each media element in the chain entertains and drives commerce in a closed loop. Watch the videos, go to the site, buy the music. No competing clutter from other advertisers. When you're in the Havoc loop, you stay there until you're ready to move on.

But this isn't a column about music television. What prompted all this was reading about the Association of National Advertisers' Enhanced TV group. There's some speculation in advertising circles that cable and satellite TV operators might eventually not need advertising as a component of their business model.

Whoa! Pretty provocative thought. Cable and satellite not need advertising? Unheard of! But if you look at Havoc (and all the other VOD purveyors out there), it may actually prove to be a pretty prophetic statement.

Cable and satellite folks are the gatekeepers. Their primary concern is making money. They don't care where it comes from. If they can pay their operating costs and bandwidth from monies coming directly from companies such as Havoc (who pays to make its VOD offerings available), do they need all the headaches of selling media?

It's far more efficient to strike a limited number of lucrative deals with content providers than invest in an infrastructure to sell media to a large number of agencies and advertisers. VOD gives them unprecedented control over their inventory. Like so many other industries, consolidation starts to make a lot more sense from an efficiency standpoint.

It's a really good deal for the advertiser, too. The on-demand nature of the medium means you attract more highly motivated consumers to begin with. The fact you're watched in isolation means total brand immersion during the viewing experience. The ability to tie that in with a Web site (and other offerings) means you're naturally able to make a link so many of us spend so much money trying to get otherwise. As VOD and enhanced TV services integrate more tightly with the Internet and become more interactive, it will become a seamless experience: Watch the video, click the remote, buy the album.

Cable providers are already in a great position. They have a captive audience about whom they know everything and a rapidly expanding digital infrastructure that, over time, will tie in evermore Internet-like services.

If you look at where trends are going, it's reasonable to expect over the next 5 to 10 years barriers between the Web and the TV will disappear completely. Neither will disappear, as each serves a unique and valuable purpose. But consumers will seamlessly traverse the path between each.

As consumers gain more control over their media consumption in all formats, including VOD, PVRs, and online channels, reaching them will become increasingly difficult. Big advertisers know this. Larry Light, CMO of McDonald's, was quoted last week at AdWatch 2004 as saying what McDonald's is looking for isn't "one big execution of a big idea" but rather "one big idea that can be used in a multidimensional, multilayered, and multifaceted way."

If you don't pay attention to enhanced TV now, you're making a mistake. Sure, if you look at the numbers today, ad spend in the medium is relatively miniscule. And I don't blame those of you with long memories who turn up your nose at the whole thing because of past "interactive TV" experiments gone bust. That's natural.

But remember: Never before have all the pieces necessary to make this work been in such perfect alignment. It won't change your world by this time next year, but it is going to happen. Tune in and pay attention.

Nominations are open for the 2004 ClickZ Marketing Excellence Awards.

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Sean Carton

Sean Carton has recently been appointed to develop the Center for Digital Communication, Commerce, and Culture at the University of Baltimore and is chief creative officer at idfive in Baltimore. He was formerly the dean of Philadelphia University's School of Design + Media and chief experience officer at Carton Donofrio Partners, Inc.

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