The arrival of digital television next year is eagerly anticipated
and much discussed, but how many people actually understand what it is
all about? Beneath the jargon and hype, how many marketers have a
thorough understanding of what digital TV can do for them and their
Observers are still struggling to come to terms with the enormity of the
changes which are about to burst upon us. All too often, digital TV is
described as a technology-driven phenomenon, rather than
Dave Brennan, Flextech’s vice-president of research, sums up some of the
confusion surrounding digital television: ’Every step-change in
broadcasting so far - the foundation of the BBC, the launch of colour,
commercial television and the introduction of VCRs - has been easily
understood and has a single benefit. What is happening now is not easily
understood and has more than one benefit. It’s like the advent of
There is no doubt that digital television brings new opportunities and
dangers for both clients and consumers, but there is disagreement as to
the measures involved. As John Blakemore, advertising director at
SmithKline Beecham, says: ’It is inevitable that it will happen, but
there are still a lot of questions without definite answers.’
At its most basic, digital is simply a means of transmitting a
Currently, we receive analogue television and radio signals. From next
year, we will begin to receive digital signals. In ten, perhaps five
years’ time, it will be the only way we receive TV pictures.
The fun starts next spring, when BSkyB becomes the first broadcaster to
introduce digital satellite television (DST) to the UK, launching around
200 mainly subscription channels.
It will offer near video on demand - the same film playing every 30
minutes - pay-per-view and interactive opportunities through British
Interactive Broadcasting (BIB), in which BSkyB has a stake (see
A pounds 200 set-top box (subsidised by BIB) will be needed to receive
the signal and DST will initially reach all six million Sky
Next autumn should see the arrival of digital terrestrial television
(DTT), although the timetable is subject to almost daily changes. DTT
will offer a mixture of 30 free and subscription channels. Viewers will
need another set-top box in order to receive the service, which will be
compatible with DST when upgraded.
The BBC, ITV, Channel 4, Channel 5 and S4C will between them offer 15
channels, including a 24-hour BBC news channel and ITV2. Most of the
successful satellite and cable services will also transfer. The other
channels are due to show programmes from British Digital Broadcasting
(BDB), the consortium made up of Carlton and Granada which was awarded
the licence by the Independent Television Commission last June.
However, as this feature went to press, BDB was facing a legal challenge
from its rival, Digital Television Network, for the UK licence. The case
is currently being considered by the European Union.
Assuming BDB shrugs off the challenge, BSkyB will be its main programme
supplier. There will also be programming supplied by UKTV, the BBC
Worldwide/ Flextech joint venture.
Twelve BDB channels will be on basic subscription, including Carlton
Select, Granada Plus and Carlton Films. There will be three premium
channels, Sky Movies, The Movie Channel and Sky Sports, as well as
A predicted 3.3 million viewers will be subscribing to DTT in ten
Digital cable television is scheduled to launch next autumn. It will
offer free public service, subscription, pay-per-view, near video on
demand and video on demand. It is not clear at this stage how much the
set-top decoder will cost.
Pundits are agreed on a few basic facts, one of which is that digital
means consumers will have to acquire new reception equipment. This will
enable them to receive wide-screen, razor sharp images with crystal
clear sound. It will also serve as the catalyst for interactive TV
services and, of course, more viewing choice.
This, in turn, will lead to greater audience fragmentation, better
targeting opportunities, enormous changes to how media is planned and
bought and, quite probably, increased costs to clients and media
agencies. Needless to say, there is likely to be confusion on both
Chris Boothby, broadcast director at BBJ Media Services, says: ’Much of
the confusion centres on the fact that there are three different forms -
digital terrestrial, digital satellite and digital cable - and when
exactly the analogue signal will be switched off. The other aspect
people have tended to gloss over is that getting viewers to pay for
their TV involves a serious step change.’
It will be a brave new world, eventually, but as is clear from other
so-called media revolutions, the full impact is likely to be slower than
The switch to satellite, the penetration of video recorders and the
introduction of PCs were all gradual. Satellite penetration is 25% of
all homes, still only half the figure predicted in 1987, while cable
penetration is a quarter of the figure forecast in 1990.
Into the unknown
Estimates vary on the likely uptake of digital, but all of them put DTT
behind DST. The Henley Centre believes total UK digital homes will
number eight million by 2001, while Goldman Sachs estimates 23% of homes
will have digital TV by 2003 (see graph. The truth is, no one really
The challenge for marketers today is to prepare themselves as thoroughly
as possible for the digital age.
Already, the new environment is leading to the creation of more senior
media positions within client companies as advertisers strive to keep
pace with the changing landscape. Kellogg recently appointed former
Ogilvy & Mather executive Adam Swann as its European media coordinator.
More astute clients will seek to lead from the front on new media
There is no doubt that the way in which media is bought and sold will
have to change, and it is likely to become more difficult. As
traditional viewing patterns mutate, agencies will have to devise new
trading mechanisms to deal with new realities. For example, should
advertisers trade on guaranteed levels of coverage rather than ratings?
Should they aggregate spots, or buy spots individually?
In the new environment, cost per thousand is likely to come down, but
cost per coverage point is likely to increase.
James Walker, joint managing director of WPP’s Advanced Techniques
Group, says: ’There will have to be greater use of mixed media
To keep pace with the explosion of channel choice, agencies will have to
invest in better planning tools, hardware, modelling systems, research
Inevitably, many of the cost implications may have to be passed on to
clients, as agencies seek funds above and beyond their traditional 2% to
As Walker says: ’We are getting funding from key clients to co-fund the
development of strategic media planning. There will have to be
additional pots of money direct from clients as they recognise media’s
increasing complexity. For one of our clients, media is its second
largest expenditure after payroll.’
Creative agencies will also have to reassess how they make ads. In a
mixed media landscape, the creative messages will have to be tailored to
a particular environment. This means production costs are likely to
- One of the most important consumer benefits to derive from digital
television. It will be available through British Interactive
Broadcasting from autumn of next year.
- BIB, jointly owned by BSkyB, BT and HSBC Midland, will provide an
interactive TV platform, offering home shopping, banking, travel and
It will initially offer 25 interactive channels, rising to 300 in five
years. BIB is drawing up a shortlist of 25 companies who will be its
first ’content providers’. BIB commercial director Chris Townsend is
talking to leading brands in different market sectors. Eventually, BIB
will carry the top four supermarket chains, major banks and other
- Interactive TV works through a set-top box which receives information
from the satellite on all the interactive services offered. The box is
linked to the viewer’s telephone line to provide the interactive part of
- Viewers can browse through a retailer’s store guide looking at the
goods on offer. If they want to buy an item, they simply place an order
using the buttons on the remote control, guided by instructions on the
TV. The modem in the set-top box, connected to the phone line, dials the
interactive shopping service to confirm the order, payment and delivery
- In time, consumers will be able to use a search engine which will help
them to find the deals they want.
- Digital will offer a greater opportunity for dialogue with viewers
through interactivity. Transactional services can be linked with
advertising and there’s a real opportunity to build direct relationships
Advertising will become much more measurable and accountable.
- DST also offers advertisers the chance to broadcast their own
For example, a car advertiser such as General Motors could rent
transponder capacity and run a dealer network TV station. Viewers could
tune in to a telephone return loop and click on areas of text to order
brochures and information.
- Digital TV provides a platform for better targeting through an
increasing number of niche channels, for different hobbies, lifestyles
- Niche programming will make a move away from straight spot advertising
into areas such as programme sponsorship, informercials, product
placement and masthead programming more effective.
- Programme loyalties will count for much more in a multi-channel
environment and advertisers will need to focus on ’owning’ the correct
- Digital is also likely to attract light TV viewers, who are often
affluent and up-market and are becoming increasingly difficult to
- Fragmentation Mass coverage opportunities will be diluted. Viewers
will be overloaded with messages and will undoubtedly spend less time
- Zapping will be a danger as viewers switch to subscription channels
without ads. Building coverage will be much harder and effective media
planning more difficult.
- This will inevitably delay the uptake of digital. According to BMRB,
awareness is high but understanding is low. Of the 68% of adults who
have heard of digital TV, half do not want any more TV channels.
- There is confusion over the final switch-off date for analogue. In a
bid to drive the digital transformation, the government may make the
switch in 2002, rather than in 2015 as planned. BIB is to run a consumer
ad campaign next year to help demystify digital.
- Risk becoming obsolete, as they will not be able to list all the new
channels. This is where electronic programme guides (EPGs), which help
viewers navigate their way through the services will come into play.
- Subsidy of set-top boxes, as planned by BIB, is crucial to consumer
take-up. Cost is also key for smaller advertisers and agencies.
Increasing choice and fragmentation need to be met with increased
- As audiences fragment, ITV’s cost inflation will spiral. Measuring
audiences will be a major headache and the Broadcasters’ Audience
Research Board’s Peoplemeter methodology won’t be able to cope.