Marketing Focus: D-Day for digital TV - As the media and advertising industries struggle to predict the impact of digital TV, Anne-Marie Crawford sharpens up a fuzzy picture

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 customers?

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

pay-per-view options.

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.

Extra hardware

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

and personnel.

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

increase considerably.



- 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

holiday services.

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

recognisable brands.

- 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

the service.

- 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

with consumers.

Advertising will become much more measurable and accountable.

Advertiser programming

- 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

and interests.

- 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

watching commercials.

- 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.

Consumer confusion

- 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.

Listings magazines

- 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.


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