At a glance – Pros and cons for advertisers

IpTV presents many new opportunities for advertisers to engage their customers. However, they should be aware of its pros and cons before deciding how best to make use of it.

Pros

Targeting – ipTV advertising has the capability to be highly targeted. Advertisers will be able to pick out specific demographic and geographic groupings, or even existing customers.

Minimal wastage – The targeting capability that ipTV has means that, if used effectively, advertisers will be able to drastically reduce wastage, only exposing their messaging to the most relevant and receptive viewers.

Greater accountability – The internet, and therefore ipTV, is a highly accountable medium, allowing advertisers to get a far more accurate and comprehensive understanding of who is being exposed to and interacting with their adverts. This is extremely valuable to advertisers in evaluating the effectiveness of their campaigns and for planning future activity.

Great sponsorship opportunities – Existing TV sponsorships are limited to short ad break ‘bumpers’ that give limited exposure to the brand. The interactive capability of ipTV means that viewers will be able to get far more involved in the advertising proposition. Sponsorship of internet TV services, where the content could be shown within a branded web page, would mean that viewers are exposed to the sponsor throughout the programme.

Develop own programming – As well as sponsorship there is also the opportunity for brands to fund their own ipTV programming, presenting content that is of interest to their core audience as well as showcasing their products.

Data capture & sales – The return loop mechanism of ipTV means that advertisers will be able to capture important information about customers and prospects. It will also allow customers to easily click through from the content to make purchases.

Cons

Dealing with the unknown – ipTV advertising is largely untested and advertisers face a steep learning curve in understanding how to make it work. It is not just the advertisers who need more expertise; the newness of this technology means that agencies and media owners are also going through a learning process.

Not a mass reach medium – ipTV, at least in the near future, will have much smaller audiences than traditional TV. Advertisers will have to appreciate that it doesn’t function in the same way.

Unfamiliar to consumers – The first banner adverts to appear online had to have ‘click here’ written on them, otherwise people were unsure what to do. It may take a while for consumers to become familiar with some of the capabilities of ipTV advertising and how they can interact with them.

Quality of the advertising opportunity

IpTV offers the opportunity to unite the creative attractions of conventional broadcast TV advertising with the interactivity and personalisation achievable with online. This is an enormous prospect for advertisers.

One of online advertising’s great strengths is its ability to draw consumers into extended brand experiences. Combined with the video capability of ipTV, advertisers will be able to present both ‘sit-back’ and ‘lean-forward’ experiences within their advertising. As consumers view the TV quality visuals of ipTV advertising they can ‘sit-back’, absorbing the brand messaging or choose to ‘lean-forward’ and engage with the brand experience by interacting with the advertising, gaining further knowledge of the product on offer.

With a car advertisement for example, the consumer is able to interact with broadcast-quality content – examining different models, viewing the interior, altering specifications or checking prices. They can also view a commercial film of longer duration than could be afforded on broadcast TV. Interested customers can request further information or book a test drive, all of which can be done while the programme is frozen until they are ready to continue watching. In an era when advertising is becoming increasingly permission based and consumers more media-literate, the viewing experience may only be interrupted at the hand of the user themselves, engaging with the brand on their own terms.

‘Traditional’ TV and addressable advertising

One of online advertising’s biggest advantages is the ability to target audiences based on demographics, location and behaviour. Through the use of IP technology, this is now a real possibility for television advertising. Advertisers have the opportunity to move from a linear ad insertion model, where all TV sets receive the same advert, to one of targeted or addressable advertising. Whilst traditionally the first port of call for brand advertisers, TV has a number of deficiencies that can now be overcome through the use of ipTV.



IP technology allows advertisers to have much greater control over the exposure their advertising receives and to create far more engaging brand experiences.

Targeted advertising – Targeted or addressable advertising offers greater flexibility to advertisers, going beyond the scattergun approach of conventional terrestrial, cable and satellite broadcasts. Addressable advertising allows advertisers to target specific audiences based on various criteria. By doing so, advertisers can serve a range of creative to different households, highlighting particular product features or even promoting different products.

Companies can even choose to share the ad placement with other advertisers, giving further control over the campaign. There are any number of reasons why this might be of use, such as to avoid certain audiences, help minimise wastage or control expenditure. Another application would be to cap exposure to direct response advertising in order to control response rates and match call centre capacities.

Time-sensitive advertising – PVR’s and ipTV give consumers the opportunity to watch programming at their own convenience. However, this can prove troublesome to advertisers with adverts being viewed days, weeks or even longer after they were intended to be. Viewers may see adverts detailing special offers that have expired or that are even from a campaign that is no longer running. Addressable advertising allows adverts to be served that are appropriate to the time the programme is being viewed.

Real-time modular ad building – Tailored adverts can be seamlessly stitched together to create personalised messaging. For instance, a 30 second car advert could be split into ten 3 second blocks with each element customizable to the audience. A young male might be shown a segment highlighting the manoeuvrability of the car, whilst those with children might be shown a clip demonstrating the vehicles capacity or safety features. The final 3 second clip could then direct viewers to their nearest dealership. This allows many highly targeted permutations of the same advert to be served at the same time.

New advertising formats – IP technology brings with it the opportunity to use many advertising formats that will be new to TV viewers. Interactivity will allow viewers to engage with advertising and, for example, find out more information about product features and pricing. Advertisers can make use of telescoping, allowing viewers to move seamlessly from a standard 30 second advert to a much longer segment to gain further information. It’s also possible to use sequential advertising where a narrative unfolds across a number of executions with IP technology ensuring that viewers see the adverts in the correct order, even when allowing for time-shifted viewing. Unlike conventional TV advertising, it is also possible to implement frequency capping so that individual viewers are not over exposed to an advert, thereby improving campaign efficiency.

Data capture – ipTV allows for very easy data capture. Viewers can request product samples, play games or enter competitions. All this can be done within an advert and can be used as mechanisms to capture personal information for the advertiser.

Pay per click – When viewers are looking at programme listings, banner type advertising can be served to the screen. Low cost pay per click advertising could be particularly useful to small local businesses.

Whilst these methods may be available to advertisers, the onus is still on them to make best use of them. The majority of online advertising still doesn’t make use of targeting even though the capability is there. Take-up for ipTV is likely to be a gradual process as advertisers test and learn how to best use the medium. Greater investment will be needed from both the advertiser and media owner communities, but whilst we are likely to see a great deal more experimentation in this area, until subscriptions to ipTV services increase dramatically, this is unlikely to account for a significant proportion of advertising budgets.

Additional creative applications

Many of the opportunities that addressable advertising offers to ipTV advertisers are transferable to internet TV. However, there are further creative applications that will work particularly well online, with existing formats and tactics complimenting new ipTV formats. Exhibit 5 demonstrates one example of how a page containing streamed content with accompanying online advertising could look in its simplest form.

Whilst the ipTV content is the main focus of the page, there are opportunities to serve conventional online ad formats around it. The two can be made to work in unison, for instance, a video ad can be shown as part of the broadcast and once this has run a related banner could be served to the page giving a call to action. To take this a step further, video adverts could have graphical elements that expand beyond the area of the broadcast window. These could either interact with other placements on the screen or, alternatively, minimise to an overlaid graphical ‘button’ that the user can then choose to click on at their own convenience. Internet ad technology companies like Tango Zebra and Eyeblaster are currently in the process of enhancing these opportunities and looking into ways in which online advertising can work best within internet TV services.

Funding ipTV – subscription or advertising?

The availability of an old Korean drama series, Winter Sonata, has been a major driver for the ipTV market in Japan and expatriate Sri Lankans living in Australia are paying US$45 a month to keep up to date with viewing from the country’s main TV channels.

The sales of TV programming in DVD format has proved to TV producers a paying market for comedy and drama shows that could easily be extended online. The DVD of the second series of the Office, for example, became the fastest selling TV programme in history, selling 142,782 copies in its first week of release.

However, as mentioned, the vast majority of respondents said they would be happy to view advertising if it meant not having to pay for content. It is likely that it will be only movies and very specialist or sought after content that would be able to command a premium and get take-up in any great numbers.

In April 2006, Disney announced a 2-month trial, making programmes such as Desperate Housewives and Lost available online following their network premieres. These programmes contain streamed advertising that cannot be skipped, and have already seen interest from advertisers such as P&G, Unilever, Toyota and Universal Pictures. This was described by the president of the Disney-ABC television group, Anne Sweeney, as a test and opportunity for learning. “We have models that use subscription and models that provide the content for free. We need to figure out what works.”

Social networking site MySpace is to begin selling downloads of hit TV show 24 for $1.99 apiece, with two episodes available for free thanks to a sponsorship deal with Burger King. A US research survey conducted in November 2005 found that 62% of consumers would rather watch commercials than pay for programming.

In the US, AOL’s ‘In2TV’ features classic programmes such as Kung Fu. This product provides advertisers with in-stream broadband ads as well as offering sponsorship opportunities and accompanying banner promotions in similar style to the example described previously (exhibit 5). In-stream ads for the full programme are no longer than 2 minutes, compared with the average 8 minutes of advertising that a US TV show would contain.

Google has recently launched its video search application, which like its established search service is based on keyword entry and delivers the most relevant results. Users can find an
enormous amount of user generated content and purchase downloads of selected TV shows.

In the UK MSN has recently launched its own Video Player Service. Fulllength programmes or feature films are currently unavailable, however a number of exclusive general entertainment and comedy clips, news items and music videos are on offer to view for free and without any subscription or registering process. Adverts, like the one for Honda (exhibit 6), are streamed into the video player feed and have the option for interactivity linking to promotions and product purchases.

Sponsorship and ipTV

Traditional TV sponsorship is limited to a few seconds per ad-break, whereas ipTV sponsorships allow viewers to click-through and interact with brands without disrupting the viewing experience. Unlike interactive TV and ‘red button’ advertising, which are both associated with a slightly clunky user experience, the programme is frozen the instant a consumer registers interest in an advert or brand. Internet TV sponsorships also allow video content to be placed within a branded webpage, giving sustained exposure to messaging.

Advertisers are already taking advantage of the sponsorship opportunities available with ipTV. Stella Artois, for example, currently sponsors Movie Rush, a weekly online movie show from Channel 4.

Brand-funded ipTV content

Beyond sponsorship, ipTV presents the opportunity for brands to distribute their own programming, presenting content that is of interest to their core audience as well as showcasing products.

Companies such as Land Rover are finding their way in this new method for engaging with core audiences. ‘Go Beyond TV’ is a community-based internet TV site, delivering content that “celebrates the spirit of adventure”, as well as the opportunity to watch Land Rover TV adverts.

Conclusions

The mass broadcast model of conventional TV is weakening in the face of a rapidly growing array of channels and increasing desire from consumers for more personalised and relevant media, to be consumed on their terms. This presents a huge challenge to advertisers. Combining the ‘sit-back’ properties of TV advertising with the ‘lean forward’ interactivity and engagement of online, ipTV services are perfectly placed to cater to this new market.

IpTV is very new. Creative agencies, media agencies and media owners will benefit from close collaboration as they work to find the best solutions for advertisers. Undoubtedly some trial and error will occur while all parties build an understanding of how consumers relate to these new media vehicles. New payment mechanisms will evolve, reconciling consumers’ unwillingness to accept interruptive advertising with their preference for free content. The opportunity exists to create new advertising models with new creative approaches, rather than merely re-purposing conventional TV commercials. The creative applications of ipTV technology are very extensive and, with the TV without Frontiers initiative offering greater leniency in the wake of new technology and changing consumption habits, less forceful methods, such as brand-funded programming, will grow in importance.

IpTV is an extremely exciting proposition for those on all sides. Viewers will be offered far greater choice and control over their media consumption, whilst advertisers will have the opportunity to get much closer to the consumers they seek. Uncertainty remains about how big this market will be and which operators will ultimately prove successful. However, there is little doubt that, for those advertisers who use ipTV to its full potential, it will be an invaluable addition to their marketing strategies.