Riding the Whirlwind

Strategic Interactive Marketing for the Insurance Industry

Key Points:

Many interviewees are enthusiastic about Interactive-TV (I-TV).

5.7 Interactive TV

5.7.1 Despite being a technology that is still primarily in the R&D phase, many interviewees are enthusiastic about the possibilities of Interactive TV (I-TV).

- Some predict I-TV will be really big -

5.7.2 I-TVs are advanced televisions that incorporate two-way communications. They receive information by terrestrial broadcast links, satellite, cable and telephone. They respond with consumer requests and other information via cable and telephone (and eventually by satellite up-links). By adding an additional TV-top "black box" existing TVs become interactive.

Cable and satellite expansion will bring hundreds of new channels.

Using digital technology the new channels allow more choice and 2-way interaction. Home shopping is likely to be a popular service.

- Entertainment and Home Shopping Popular -

5.7.3 What is driving I-TV is the spread of cable and the imminent launch of digital terrestrial and satellite broadcasting that will provide hundreds of channels. I-TV offers:

• choice within broadcast programmes (e.g. viewing positions in sport; additional facts; audience voting).
• video on demand from a central library.
• video on near demand (where for example a film begins broadcasting every 15 minutes).
• home shopping including home banking, Within home shopping consumers are able to select and see promotional videos and text information about the products.
• participation (e.g.. in game shows and discussion groups).

DirectTV gives access to 175 channels and include pay per view movies at $3 a go.

Adverts and in-programme promotions will allow consumers to request more information and speak to an agent.

• interactive adverts (individuals will be able to respond to a general broadcast advert and select to see more details and then order the goods or services or receive more information, by post say).
• in another variation, companies will sponsor the use of their products within programmes. Consumers will highlight a product and then see an advert or receive more details by other means (post, Internet, fax, etc.).

Adverts will be targeted to individual households.

Some viewers will pay a fee to view without adverts.

Television will shift from broadcasting to narrow casting.

I-TV is seen as a mass market device to further enhance a very popular activity.

- TV Adverts Targeted to Individuals -

• advertisers will present viewer profiles to the channel providers who will then match these against a database of viewers to select who will see particular adverts. The more detailed the profiles the closer the match.
• viewers will pay a premium to view a programme without adverts.
• customers will telephone a company and then see the representative on the TV screen. They will be given additional information in a visual form and be able to discuss the finer detail.

Many of the above facilities will be accessible through a standard TV remote control. More information intensive services may require a keyboard and a cable up-link.

.... home shopping channel QVC is attracting 30,000 new customers every month .... Busy professionals are a prime target ....

5.7.4 With these new technologies, television is making a significant shift from broadcasting to narrowcasting. This has serious implications for media advertising. With so much choice, viewers are likely to move from watching one or few channels, to selecting specific programmes. They find these by searching electronic program guides using keywords of topics. The question becomes: Which programmes to advertise in or sponsor? or even: Which individual profile to target this advert to? The latter question is especially valid if the expansion in programme quantity leads to a sharp deterioration in programme quality, and thus to viewer ad-hoc selection of programmes (is this microcasting?).

Many interviewees were enthusiastic with the mass market appeal of I-TV.

- Companies Enthusiastic Over I-TV -

5.7.5 Why are companies enthusiastic about I-TV?

• every home has a television and it's a familiar non-threatening device. Many homes have 2 or more TVs and people spend many hours per week watching.
• consumers will love the opportunity to easily undertake chores like food shopping. Once they have taken this on-board, then home banking and other financial services will quickly follow (some interviewees thought home banking will be the lead application).
• TV attracts the same market segment that uses home catalogue shopping, so they will find I-TV very attractive.
• at home people have more time and are relaxed and are more inclined to make decisions than in, say, public kiosks.

Some interviewees are more cautious. Content not technology will determine the take-up.

Is there a killer application?

- Some More Cautious -

5.7.6 Some interviewees are naturally more cautious, even sceptical:

• television is often a family activity whereas many buying transactions are not (family holidays may be an exception).
• television is usually viewed at a distance whereas activities like home banking required someone to sit close to the screen in order to see the detail.
• the low take-up of cable shows that there is consumer resistance to pay TV. Consumers buy programmes not the opportunity to shop. Therefore, home shopping, etc., needs to ride on the back of good programme content.
• what is the killer application? Without the benefit of value-added services, consumers will buy standard digital TVs and then suppliers will not offer value-added services - a catch 22 situation.
• not all cable systems are using high bandwidth optical cables.
• the concerns over Internet security will equally apply to I-TV and this will inhibit financial services at a transaction level

Nether-the-less, a number of financial service companies have, or are, participating in the various trials.

- BT and BSkyB Fight It Out -

5.7.7 Pilot systems in the UK include:

• Cambridge Cable with 250 households via cable. Participants include NatWest, BBC, ITC, Tesco and NOP.
• BT in Ipswich & Colchester with 2,500 households via telephone. Started mid-95 it ran for a year. Services include movies on demand (see screen-shot below). NatWest is again involved along with over other 150 information providers.
• BT: video-on-demand trials in Bishop's Stortford
• BSkyB using satellite and touch-tone telephone near video on demand using some 100 of its new digital channels.

The BT Interactive TV service provides movies, entertainment, information, education, games and adverts in Adland.

Companies hope to learn about consumer attitudes and behaviour.

But some initial disappointment is expressed.

Cable companies are consolidating to fight BSkyB.

- Consumer Attitudes and Behaviour -

By participating in these trials the companies are learning about consumer attitudes as well as technology and the human-interface considerations.

5.7.8 Some of the interviewees are participants of the BT scheme, with one expressing disappointment at the low use of the financial services section. They felt the results of the trial were insufficient to draw any conclusions.

- Cable Fights Back -

5.7.9 Cable companies are merging, no doubt in response to Murdoch. By linking their networks together, both physically and in marketing terms, they could prove a considerable commercial force.

.... Cable networks fight back the satellite operators .... 3 major UK cable companies choose supplier for set-top boxes .... These to be rented by consumers .... Home shopping and banking expected in 1998 ....

5.7.10 While there are some major players behind all these initiatives: Telewest Communications, News International, Microsoft, Oracle, BT, to name a few; the jury still seems to be out.