Implications for the Advertising
IndustryThis page to be editted
XXXX UPDATE XXXXX
Micro Advertising: Digital TV, with it's
100's of channels, means the end to blanket mass advertising. Advertisers
will need to match the buyer profile to the most suitable channel and specific
time of day or programme. Data Mining
by both the client (on existing customers) and by the channel provider (on
their customers) will identify matching micro segments that can then be
For example, an insurance company discovers from an analysis of its
customer database that those who invest in unit trusts are clustered in
particular postcodes. They talk to a number of channel providers and find
that a cable TV company has a high penetration in that area and that many
of their viewers watch the 10 pm business day round-up programme. Further,
the channel provider has other data showing that these customers have a high
disposable income, a varied portfolio of investments and good grasp of financial
matters. The result is an advert for Managed Unit Trusts targetted to cable
TV customers in those specific post codes.
One to One Advertising: Using the
next generation of intelligent set-top decoders, advertisers will be
able to specify an audience profile and have the adverts delivered, by the
channel provider, to specific households, even delivered to a particular
person and personalised with their name and shown when they next view - true
One to One Marketing. When working
at this level of granularity it will be essential to match style and mood
of adverts to individual behaviour.
For example, adverts for Tracker Unit Trusts would advertise low risk and
be targetted at clients with low or modest savings or with a natural propensity
to be cautious.
"The ultimate promise of the Internet is the ability to
audiences and to target a single individual.",
Joe Kraus, founder of Excite, one of the web's top portals and search
Portal Advertising: The WWW has seen the
huge rise in the power of the portal: Microsoft
Lycos are leading portals. For these players,
advertising is a significant revenue stream (e.g. Yahoo's $203m income vs
$92m expenses). The major Digital TV providers also intend to become portal,
in some cases only providing access to their selected suppliers. Similarly,
AOL plans to distribute via Web-TVs. Besides their mass pulling power, another
advantage of portals is their ability to better target adverts.
Visitors to the search engine Alta Vista are presented with adverts according
to the keywords they are searching on. Enter the word insurance and
the chances are you will see an advert for insurance. One life insurance
advert even presents a premium calculator.
However, portal advertising is expensive, with estimates of $20-$40 to acquire
a new customer. Some of this can be offset against lower distribution costs,
the ability to have a continuing dialogue with the customer and the resulting
increased life time value (LTV), and during the early stages of e-commerce,
referrals from customers who enthusiastically talk about their use of the
In the long term, there are likely to be only 3 or 4 major portals plus a
number of niche portals. This is same as the print world, where there are
a few general daily newspaper and numerous specialist publications. Marketers
need to decided whether to go for the mass audience portals (expensive) or
niche portals (risk). Customer profile matching is key.
Payment by Results: With targetted adverts,
the number of viewers will reduce per advert and the unit price per view
will increase but so will the quality - i.e. the response rate. In many instances
the channel provider will be handling the viewer's telephone calls, either
making the sale (see US Shopping Channel) or passing on warm leads to the
client. As the experience and knowledge base of the channel
provider increases, then they will increase their charges. To offset
the perceived risk to the client, channel providers will move to payment
by results. Clients will need to ensure persistency is taken into account.
Such business models are more likely where a high degree of trust has been
established over time.
Affiliate Advertising: Major e-commerce
companies like Amazon.com have affiliate
programmes. Other sites refer their visitors to Amazon and if they buy then
the referer receives commission. This is also a form of payment by results.
Alta Vista visitors are presented with a referral to Amazon according
to the keywords they are searching on. Enter the word law and you
will see an advert to click here to search Amazon for books on law.
Equally it could say click here for legal insurance.
Cross Marketing Alliances: Expect many players
to form cross marketing alliances to promote each other goods and services.
Whilst this is not a new technique, the interactive facilities allow each
party to drive viewers to the others channel. See the box for the Sega -
In Programme Promotion: With Digital TV
we may well see the return to the original Soap Opera with advertisers paying
to sponsor the programmes. Another option would be for the goods to be used
in the programme. Viewers could then press the appropriate remote button
to see more details and purchase the product.
Electronic Programme Guides (EPG) Promotion:
With Digital TV and its hundreds of channels, viewers will become reliant
on the EPGs. Just like the Radio and TV Times, there will be opportunity
to advertise within the EPG but the real advantage is that adverts can be
pre-programmed to only display when certain criteria programmes are displayed
For example, viewers who select the BBC 2 Money Programme could see an ad
for the Standard Life Bank High Interest Savings Account.
Sega - BSkyB Alliance around Dreamcast
Sega will advertise its Dreamcast console on BSkyB including a 90 second
"infomercial" and also promote BSkyB on its Dreamcast internet portal site.
BSkyB will promote the Dreamcast console on its internet portal
www.skynow.co.uk as well as provide
editorial content for the Dreamcast portal and links to Sega's online shop.
Together they will offer a combined Dreamcast + BSkyB Set Top Box.
Choice of Mediums: With busy and
unpredictable lifestyles, consumers are demanding companies be available
on any day and at any time of day - the 7/24 society. In the near future
customers will extend this choice to the mediums used. Use and familiarity
with interactive TV will encourage consumers to use other
new interactive mediums: PCs, kiosk systems,
and the more sophisticated mobile 'phones, pagers, and PDAs. Companies in
turn will need to be able to receive and consolidate and integrate customer
messages from all these mediums.
A consumer may make see an advert in their morning newspaper, make an initial
enquiry via their PDA, and later in the day get a query back by mobile phone.
Then, on returning home in the evening, find a personalised proposal sent
by email to their PC or Internet-TV.
A challenge for advertisers is to deliver the same message over a range of
mediums which have different physical characteristics. In many cases the
format and length of the message will have to be amended and the customer
directed to another devise (e.g. their home PC) for more in-depth information.
Mobile phones now come in different types: speech only, short text messages,
long text messages, and internet text pages. The next generation will support
graphics, video and sound. Digital TVs will also be in different formats:
standard TV using a set-top decoder, wide-screen TVs, and eventually
high-definition TV. The decoders themselves conform to
different hardware and
Integrated Mediums: Many devices will support
multiple mediums and the challenge will be to transparently switch the customer
from one to the other.
A Digital TV advert may have a press the blue button for more
information. Pressing this button would connect the TV to the internet
for more information. Because the decoders will have a smart card the supplier's
web site will be able to identify the customer and produce a tailored advert.
And it almost goes without saying that all this information, including what
the customer has just been viewing, should be to hand when they make that
telephone call to the Call Centre - then it's time to close
the sale - not irritate the customer by asking lots of questions.
Similarly, telephones are now on the market with built in keyboards and screens
allowing data to be accessed and displayed without having to boot-up a PC.
Instant information includes railway timetables, interest rates, share prices,
theatre seats, hairdressing appointments, etc..
Interactive Mediums: A new generation
of rich interactive adverts will really engage the recipient thus increasing
the propensity to buy.
A recent @Home Network
study found recall of rich media ads is 34% higher than regular banner ads,
and of those who clicked on rich media ads, more than half spent 30 seconds
to five minutes engaged with ad information and the brand.
Media companies will need to master digital authoring and recording of adverts
using a more modular approach. Much of the material will be re-used in different
adverts and in many cases the assembly will be dynamic, driven by the responses
of the recipient - see Enterprise
In a financial advert for an ISA, pressing the blue button on the TV remote
would explain the various forms of ISA using video and animation; the yellow
button the range of investments (and then the numbered buttons specific
investment history with graphs with user defined parameters); the red button
the terms; the green button access to an advisor, and so on.
Responses: Each of the different mediums has a perceived response
time. People often expect e-mail responses within the day but a telephone
response within 3 rings. Digital TV is even more responsive demanding because
in many cases viewers will be responding to a advertisement, and not just
in ones or twos, but in their thousands. These are hot
leads and every effort needs to be made to convert them into a sale.
The US Home Shopping Network has 1,000s
of operators to take the orders, with each operator backed up by a product
knowledge base to answer any customer queries.
Digital TV decoders require a smart-card, programmed to give access to the
various channels according to the subscription paid. In the future these
cards will also hold personal data such as name, address, credit card number.
At the touch of a button a viewer could release this information saving valuable
time and eliminating errors. Remember, the viewer probably wants to get back
to watching their TV programme!
Customer Tastes: The new class of Web analysis
software is equally applicable to Digital TV. Analysis will encompass not
just programme preferences but also customer's responses to adverts, the
goods and services they purchase, and any additional information they request.
Such information can not only be used to build a relationship with particular
customers but also used to to develop marketing, pricing and other strategies
such as the direction of new product development.
One method that Lifetime Television
uses to evaluate the popularity of its cable TV programs is by gauging Web
site traffic patterns that follow the programs, said Carey Goldson, manager
of MIS for the cable network. That information helps Lifetime determine how
to spend marketing, programming and even IS dollars, he said.
- InternetWeek, March 29, 1999 / AdMedium Newsletter.
Customer Profiles: Internet visitors are
anonymous but Digital TV viewers have to subscribe. This immediately locates
them at a physical location from which other demographic information can
be derived. Then, over time, the provider gathers explicit information about
interests (e.g. those customers regularly watching a gardening programme).
But the real leap to customer knowledge comes when a relationship has developed
such that subscribers volunteer information about their lifestyle and interests.
In return, the TV provider can reduce the number of adverts (a current complaint
of satellite and cable is that there are too many ads) by restricting adverts
only to those of interest.
Customer Interactions: Besides web browsing
or shopping, Digital TV will give suppliers and manufactures a direct access
into the homes of millions of people. PCs are usually left off and take time
to start up. TV is instant, almost like a telephone. This should encourage
more feedback from customers, particularly when linked to a reward programme,
ideally one that grades feedback and rewards accordingly.
Netscape allows customers to
type a product name and then get connected to the supplier's site.
Acquisition Process: Customer's buy products
to meet their needs and to bring benefits. It's important, that whatever
medium customers chose, they should be taken smoothly through the
acquisition process. This means not
only supporting different mediums but also reflecting the capabilities of
the mediums, the varying capabilities of the customer, their
personal behaviour, and the frame of mind
of the customer at that instance.
For example, a customer may see a TV advert for a savings account and then
spend just 30 seconds interacting with the ad (before the TV programme resumes)
and then decides to hit the more information button - finished! He
or she doesn't want to be filling in financial questionnaires!
Life-long Processes: Whilst customers' expertise
will vary, they do all possess knowledge. Knowledge about how well or not
so well the company's products and services meet their current needs, and
knowledge about how they personally are impacted by life style changes. To
tap into this knowledge companies need to have processes in place to assist
customers in particular circumstances, or indeed
throughout their whole life. Processes
for helping people to question, interpret, simulate, and adapt to all that
life throws at them.
Cross Organisational Processes: These processes
transcend the whole organisation. The challenge is to make it seamless. It
may require changes to organisational
structures, the development of new
cultures, the orientation
to a knowledge organisation, the
creation of central knowledge
base, and the analysis of
this base. This is a long journey, defined by a vision and executed
incrementally. A methodology helps
to structure this journey. In short it needs
Strategic Interactive Marketing.
Integrated Marketing: These new electronic
mediums are seen as so radical that in most organisations they are given
a separate and almost god like existence. The argument goes that dynamic
technology needs young dynamic wiz-kids, unfettered by traditional ways of
marketing and selling, and able to seize the opportunities as each week brings
its bounty of new technology.
Whilst in the early days of the net, with its young, male and nerd audience,
this might of worked, it will no longer work. The internet
is changing to a broad church. Women now make almost 50% of the net
population. Older people, with time and money, are enthusiastically taking
to it. And Digital TV will really bring the masses to these electronic mediums.
These customers will see Digital TV as just another medium and will expect
it to be as easy to use and as convenient as the telephone.
It is imperative that organisations integrate these
new mediums into their other delivery channels.
Marketing programmes needs to embrace
all channels such that each provides synergy to the other, and then each
channel should be able to respond to whatever choice the customer makes -
including multiple choices by any one customer. Most
importantly, the new mediums need to be seen to be part of the overall
Cooper, Alan, 1999, Customer Knowledge
Management and Mass Customisation,
Internet Business, April 1999.
See the full list of resources for
this web site for other related resources.
[ Mobile Computing Introduction]
Customers] [US Scene]
[European Scene] [Delivery
Services] [New Services]
[SIM Report Mediums]
[Which to Use?]
[One to One Marketing]
[SIM Executive Summary]
[Key Information & Resources]
[List of Support Topics]
[Copyright Fair Use]
[For a Full list of Contents see the Site Map]
This page updated January 2000 © Managing Change