How long have I been talking about this? Too long. But here’s the reality of the situation: iTV is, well, technically here.
According to our projections, by 2007, the iTV commerce and advertising markets will grow to $2.1 and $2.3 billion, respectively. The U.S. iTV platform now allows merchants and advertisers to deliver iTV services across cable and satellite. So, the question for advertisers is: Is it time?
The answer most definitely is yes, depending, of course, on who you are and what you want from the experience. Consumer packaged goods companies will find this medium of value today, because it can deliver a targeted audience. Car manufacturers can reduce direct marketing costs. Health and pharmaceuticals companies can use the interactivity for direct response campaigns. And product advertisers can leverage broadcast assets in a cached, on-demand world.
Cast aside your 1995 notion of iTV: email, IM, banner ads and walled gardens. Embrace the new iTV definition, one in which VoD and DVRs (digital video recorders) dominate the landscape. Some trends to ponder:
- Time Warner Cable publicly stated the company has approximately 100,000 DVR-integrated set-top boxes in its cable markets. This is an opportunity waiting to be leveraged. Forget about whether or not DVRs decimate the current ad-based TV model. Start thinking how to capitalize on the opportunity: movie trailers, sponsorships, promotions and the like.
- VoD is currently available to five million U.S. homes. So what? I’ll restate the obvious: that’s X number of content servers with cached premium content waiting for ads to “bumper” them. As cable operators move more aggressively toward offering customers free VOD, advertisers should beat on their doors to help fund the effort.
- Scientific Atlanta, the set-top box and head-end software manufacturer, is working with cable networks to develop new software to deliver dynamic insertion for local advertisers.
- Programmers are jumping onboard. They’re deploying imbedded interactivity:
- TechTV has interactive applications that will accompany “Spy School,” “Wired for Sex,” and “Future Fighting Machines.” They allow audience members to answer quizzes, take tests, and access additional information.
- ABC’s Enhanced TV Group recently aired a primetime “The View” special that included one and two screen (PC, TV and cell phone) interactive applications. Johnson & Johnson was the sponsor.
I submit the following from a conversation that I recently had with a cable programmer who built and deployed an interactive application, Music Choice. This private partnership is comprised of Comcast, AOL Time Warner, Adelphia, Cox, Sony Music, EMI, Warner Music, Motorola and Microsoft. The group’s goal was to build an interactive music-buying medium to differentiate the company from other digital broadcasters.
The application has been available since November 2001 to 4.5 million people in DirecTV households, via Wink. A promotion with DTV last year resulted in a jump from 30,000 to 80,000 registered users. The venture utilizes very little manpower on an ongoing basis, as virtually the entire process is automated. Inventory is kept at a fulfillment house and electronically run. Credit cards are checked automatically with information sent via IP. The only business unit Music Choice must manage is the customer service leg.
What does all this mean? Be the loss leader, differentiate and more importantly, take the risk. There’s a qualified interactive television audience in the U.S. These households are ready, willing and able to transact, and interact, with their TV sets. Today.
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