Targetted ads driven by viewer profiling poised to invade

Web, iTV, wireless hold new promise for advertisers
There's a plethora of ingenious new marketing apps evolving on various interactive platforms. Advertisers have never before had such an amazing arsenal of toys to measure, understand and cater to viewers' personal preferences. Below, Strategy D+I explores who is at the vanguard of harnessing this slew of new tech tools to create innovative, targeted advertising in interactive media.

Web, iTV, wireless hold new promise for advertisers

There’s a plethora of ingenious new marketing apps evolving on various interactive platforms. Advertisers have never before had such an amazing arsenal of toys to measure, understand and cater to viewers’ personal preferences. Below, Strategy D+I explores who is at the vanguard of harnessing this slew of new tech tools to create innovative, targeted advertising in interactive media.

Hampered by the slow deployment of broadband services, the emergence of iTV applications and advertising has been a long haul. But proponents of the technology say it’s a force that will reshape advertising as we know it, leading to the personalization of entertainment and communications that’s well worth waiting for.

Upgrades to the infrastructures, and the need to seek out new sources of revenue, have encouraged cable and satellite operators to beef up their investment in iTV hardware and software. But the category’s overall potential is still hinged on the ability of broadcasters, cable operators and networks to attract consumers and advertisers.

‘The first step has been for cable companies to introduce their digital set-top boxes and try to get that widely deployed. The set-top boxes will provide the platform for more and more services,’ says Chris Potter, an analyst with Toronto-based The Convergence Group, adding that manufacturers and distributors of the set-top boxes have been testing the technology for years. The challenge has always been figuring out what kind of services consumers want.

For advertisers, it’s a radical shift from the medium of television, devoted to reaching the masses: iTV promises one-to-one relationships via permission-based, opt-in and two-way interactions.

Viewers with iTV set-top boxes connected to their cable systems can play games, vote in polls, ask for more info about subjects/products and eventually buy video-on-demand and t-commerce (shopping via your television).

Moxi Digital recently unveiled an all-in-one set-top box, featuring broadband and Personal Video Recorder (PVR) capabilities – a device that, among other things, serves as a central home media server, storing songs and TV programs that can be sent wirelessly to TVs, stereos and computers around the home.

‘If the ’90s were all about managing information on your PC, then this decade is going to be all about managing your entertainment content on your entertainment computer. We see the television as an entertainment computer,’ says Ian MacLean, VP of Media Experts’ iTV Lab (www.iTVlab.tv), in Montreal.

The two main drivers of iTV, he says, will be video-on-demand (VOD) and PVRs. Personal video recorder (PVRs), like those marketed by Philips Electronics and Sony with TiVo Personal TV service, allow consumers to store hours of programming – they are connected to a server via a phone line – and basically time-shift their TV viewing.

Curiously enough, PVRs, often credited with being a driver of interactive advertising, were originally touted for their ad-avoidance tech capabilities – consumers can skip commercials altogether. But the category is now experimenting with numerous ways to get marketers’ messages under the noses of the same consumers to whom they promised zapping power.

TiVo, for example, is trying a picture-in-picture format to deliver ads that are reduced in size, but reside in a larger frame when consumers fast-forward. Text-over-video, where the marketers’ brand or logo is placed over the fast-forwarding image is also being tested, as are telescoping ads, which enable viewers to click onto a longer form of video, similar to an infomercial.

Jovio, a provider of iTV software, is developing a solution to overcome ad skipping by hitting consumers with a minute of advertising for every 30 minutes of TV programming digitally stored.

In Canada today there is only one PVR on the market, the Bell 5100 PVR. The device, from satellite TV company Bell ExpressVu, holds about 30 hours of programming. By comparison, new models by companies like Replay, give you upwards of 300 hours, MacLean says. This spring, Bell is expected to roll out its ComboBox, which pairs satellite television with a high speed Internet connection to provide interactivity.

Other Canadian MSOs (multiple service operators) such as Rogers, Shaw, and Videotron have also been rolling out enhanced digital television and VOD services all the time.

There are four iTV ‘steps,’ MacLean says. The first is digital TV with better picture and sound quality, and more channels. Next are enhanced TV services like Wink (distributed in Canada by Rogers), which can deliver enhanced commercials and enable customers to get more information, coupons or brochures by clicking an icon, as well as enjoy enhanced TV programming. The third evolution, which should start to become a reality later this year, is interactive TV where viewers navigate menus and electronic program guides to book or program their TV shows. The final step is truly personalized TV. ‘Watching what I want, when I want it,’ says MacLean.

While individual product or service rollouts, until now, have been slow – cable operators still have to convince consumers to buy into it – new developments are boosting the budding interactive television industry, thus advancing the personalization of TV. Developments include fragmented broadcasts, so viewers can navigate around the newscast according to their interest, and e-mail alerts to direct and/or link consumers to a particular Web site, movie, TV program or news report.

Amid these advancements, most importantly, cable operators will have the ability to gather extensive profiling or personal information to match consumers to programming, services and advertisers.

More targeted ads, even specific products and services, based on anonymous consumer profiles would thus be possible, says MacLean. Advertisers could extend the 30-second conversation with the consumer to make a more compelling and entertaining offer – what he calls the long-form ad (LFA), where ads could even appear in short film formats, created by the best creative directors.

‘Mass marketers produce products to an undifferentiated clientele, whereas the Internet, and soon television, allow for personalized marketing,’ he says, citing the following scenario: Advertisers could use direct-response television advertising with ads that invite viewers to interact simply by recognizing a button on the screen. Once pressed, the button prompts an interstitial to pop up, asking if the viewer is interested in learning more by being sent or e-mailed a brochure. If the viewer accepts, a thank-you note appears on the screen. Since the viewer has already set up a billing relationship with the satellite or cable provider, as well as his or her personal profile, the advertiser knows exactly where to send the information.

Says MacLean: ‘I can then begin to see who is interacting with my ad – in what geographic areas; which campaign is successful; how it compared to rival brands. Did it fare better or worse in a different program and network-type environment? What were the effects of various scheduling strategies? Secondly,’ continues MacLean, ‘you know the people responding to the ad are interested prospects – they’ve told you by taking the time to click. So I’m removing any waste from my campaign. This is a major shift in the model, which has remained basically unchanged since 1962.’

Some key hardware and software announcements:

* Last year, Bell ExpressVu introduced two new receivers – the Model 3100 and the Model 5100, Canada’s first PVR. Each receiver offers a platform for interactive TV, featuring among other things, a new electronic programming guide.

* In December, Rogers Cable launched its High Definition (HDTV) offering – the latest enhanced television product to be delivered through the Rogers two-way digital platform, which includes iTV, enhanced television, and high-speed Internet.

* In the U.S., satellite provider EchoStar announced it is buying rival satellite service provider DirectTV, resulting in roughly 16.7 million digital direct-to-home subscribers.

* AOL, Time Warner and Sony are collaborating on the development of networking devices for the home with high speed Internet access – they’re creating a new Internet browser that will universally run on everything from digital television to digital camcorders.

* Microsoft will integrate Xbox and its interactive television platform technology into one million of Charter Communications’ advanced set-top boxes. (Charter is backed by Microsoft co-founder Paul Allen.)

* Both Microsoft and rival iTV player, OpenTV Corp. are in talks with Cambridge, Mass.-based Predictive Networks, which has developed software that can profile people according to their viewing patterns.

* nCUBE and iMagicTV (which develops software to deploy VOD and other interactive television services) are creating an integrated personal video recorder solution to allow users to record programs in a service provider’s network and play them when it suits their schedule.

* Montreal-based ZAQ signed a licensing and distribution agreement late last year with enhanced television content provider Liberate Technologies to provide four games for global iTV distribution.

WEB ADVERTISING

As resistance to the ubiquitous banner ad continues to grow – demand has dropped considerably in recent times – advertisers have been forced to seek out more promising online marketing options.

And despite an overall expansion of Web presence by most companies, the use of online marketing efforts, for the most part, has been relegated to a small number of marketing tools and tactics. The most popular online practice – and also the simplest form of online outbound communications – was e-mail campaigns, according to the CMA’s annual Internet marketing survey 2001. Banners came in at number two, online collaborative tools at number three, followed in fourth place by online contests.

Despite a delayed reaction on behalf of advertisers to unearth new online advertising methods, several creative online formats have emerged, such as customization. Kitchener-based Barbarian Rugby Wear, manufacturers of rugby clothing, recently went online with an initiative reminiscent of Nike’s highly touted ‘Customer Shoe Builder’ Web site. Marketing firm Brighthouse Branding Group (BBG) created a Flash site with a ‘custom design’ section, which allows users to create their own totally customized shirt, and a ‘dealer locator’ section, among other things.

Other formats gaining steam include: instant feedback banners; creative online sponsorships; Vokens; E-mail (viral and newsletter advertising, and opt-in list services); rich media (combining animated graphics, sound and video); superstitials (ads that take up an entire screen window, usually animated, that pop up when a certain site is visited); pop-ups and unders and new ad size units (based on voluntary guidelines by the Interactive Advertising Bureau).

WIRELESS

Always-on wireless interactive devices will soon become a dominant channel for retailers and service providers, according to Gartner Core Research. One of the main obstacles however will be identifying compelling applications.

The ability to reach consumers via wireless advertising on mobile phones, personal digital assistants and other wireless devices creates tremendous opportunities for advertisers, analysts say. But it’s not quite a mainstream ad medium just yet.

As technology advances, marketers can look forward to an increasing number of mobile e-commerce apps: from almost-standard fare like wireless banking and news or stock updates; to mobile ticketing, map and directory services; m-commerce; and location-based services that deliver targeted messages or coupons to consumers as they pass specific retail locations – all of which present sponsorship and branding opportunities. Some say this year may see the initial emergence of things like multimedia messaging services – services that extend beyond the present-day short message service – and could include graphics, video and animation, and even the ability to send a photograph, video or music clip or to enhance text.

In Canada, Rogers and Microcell have launched their 2 1/2 G networks, which offer faster speeds and always-on Internet connections, and Telus and Bell are expected to do the same this spring, says Chris Potter, analyst with The Convergence Consulting Group. This might actually spur some growth in the mobile Internet market, he says.

As for wireless advertising, Potter says there is still some reluctance on the part of customers to be hit by targeted location-based ads – the cell phone is such a personal device. Though this type of advertising is technically possible, he says no one is moving toward offering it in Canada just yet.

‘Last year, there was a lot of hype over wireless and what it could do. With their new networks, service providers are being fairly careful now not to create over-blown expectations. They’ll start by offering existing applications over higher speed, always-on connection, and improve applications and services incrementally,’ Potter suspects.

‘You won’t all of a sudden have streaming media and wireless ads on your phone, but there will be a steady progression in that direction.’

For now, added convenience features and customer-service oriented applications will have to do. In December, Rogers AT&T Wireless introduced a way for customers to order a taxi from their wireless phones by dialing (pound key) TAXI to be connected to the first available taxi company in their area or the taxi company of their choice. The service is the first of its kind in North America at $0.95 per call plus airtime.

In other mobile advertising news, talk-and-toss disposable cell phones are expected to be available later this year. California-based Hop-On Wireless plans to sell a US$30 basic cell phone that you can throw away when you’ve used its 60 minutes. The company plans to sell advertising space on the phones, and they also have been used as promotional items. Meanwhile Diceland Technologies, Cliffside Park, N.J. will market a phone made of paper for US$10.

KIOSKS

According to the Canadian Retail Technology Survey, from The Retail Council of Canada and the J.C. Williams Group, Canadian retailers increased their IT budgets in 2001 in reaction to competition at home and abroad. The study also pointed out that extra funding might be spent on kiosks and personal digital assistants (PDAs).

Kiosks can enhance onsite experience through online and e-commerce initiatives, games, contests, promotions, coupons and more, and, according to Toronto-based N5R, provide yet another channel to engage customers and build a permission-based database.

Toronto’s Mark’s Work Warehouse, for example, says it will invest in kiosks as multi-purpose tools for customers, as well as employees and the enterprise. They could be used for checking status of loyalty membership and points; employees could research the company’s health program; and they could also be used as an advertising vehicle, the company says. Other Canadian companies, such as PharmaPlus and HMV, have deployed kiosks to most of their Canadian locations, in an effort to improve customer service and loyalty.