If ever there was a time to scrap the concepts of above- and below-the-line advertising, it is now. The distinction between the two has blurred to such an extent that TV, the traditional medium of mass marketing, has developed into a medium that allows consumers and brand owners to talk to each other.
Interactive digital television has finally arrived, and as a marketing channel, it is targeted, data-driven and accountable. Strategically, it has more in common with direct marketing than conventional TV advertising - even down to potential data protection issues.
In March, viewers saw the first ever interactive commercial in the UK, for Van den Bergh Foods' Chicken Tonight. Described by James Ackerman, then chief executive of Open, as 'a turning point in TV and advertising history', the 'Click on the Chick-en' ad was shown on SkyDigital and Open, and launched the 'Stir It Up!' range.
An icon in the top right hand corner of the screen prompted viewers to press the red button on their remote controls to receive more information.
This brought up a number of options on screen, including the chance to order a coupon and recipe book. Viewers could also connect to the 'Creative Kitchen' service on Open to access recipe suggestions.
But interactive advertising is not just restricted to FMCG companies that want to offer money-off vouchers. Car-makers, for instance, could give viewers the chance to book a test drive,and insurance companies could help viewers calculate their premiums. Or viewers could watch an ad for a CD and then click through to order it. And subscribers to digital services have already discovered the joys of ordering pizzas from Domino's without rising from their sofas.
Digital television is now available from Sky via satellite, from cable operators NTL and Telewest and from ONdigital, the terrestrial player.
All these broadcasters offer a range of interactive services, including e-mail, games and special branded sites where viewers can gather information, shop and even do their banking.
Nick Bryant, Open's sales and ad-vertising director, says: 'Interactive advertising works by taking people out of a 30-second ad into a branded environment, or dedicated advertiser location. With Domino's Pizza's ads on Sky, you press a red button and jump straight to the point of ordering.'
Domino's is enjoying a fantastic response to its interactive service, which is available on Open, Telewest and NTL. Indeed, it is selling three times as many pizzas via interactive television as it is on the internet.
'The whole process of ordering via television is about leisure time, whereas the PC is a business tool,' says Domino's spokesperson Bernadette Eddisford.
'Interactive television is more experiential - it is about sharing with your family and friends.'
For marketers, interactive advertising offers the chance to reach digital subscribers in increasing numbers. SkyDigital, which launched in October 1999, already has over 3.8 million subscribers. ONdigital has 896,000 subscribers. Between them, Telewest and NTL have over 500,000 digital subscribers. And these figures are rising rapidly. Mintel predicts that 20% of the population will have digital interactive television by the end of the year. And Datamonitor forecasts that the number of digital viewers will be closer to ten million by 2005.
Advertisers who want to reach this audience must create special interactive sites to provide a destination for viewers when they want to interact with an ad. For Open, that means building a site from scratch, although the cable and terrestrial services say that existing web sites can be reconfigured to work on their platforms.
Label of convenience
High street brands that have developed such sites include Argos, Dixons, Going Places, Interflora and WH Smith. Another, Woolworths, is enjoying brisk business already. 'The Open service is doing an average of 3000 purchases a week,' says Woolworths spokesman Mike McGann. 'It is convenience shopping. Things like CDs are fantastically easy to post. On Open it takes four clicks to make a purchase and it is done through a mechanism that people know - television.'
It is the ultimate shopping trip for the couch potato. Instead of walking to the shops, logging on to a computer or even picking up a phone, they can press a button on the remote they already have in their hands. 'There is no delay in the response,' adds Shaun Doyle, chairman of CRM agency Intrinsic. 'The set-top box can store your credit card details, so it could take just one click to buy something.'
And, says Doyle, that set-top box is a powerful source of data for marketers, paving the way for targeted advertising on television. 'It allows the possibility of mass personalisation. You could take the information you collect on TV usage patterns to classify that household and then send individual households a multi-media e-mail featuring the commercial.'
Digital TV advertising will also increase agency accountability . 'Digital TV is going to sort out those agencies that can't justify their existence on results because of the levels of measurability,' says Russell Abbott, managing director of WDA.
Ogilvy & Mather made both the Chicken Tonight ad and Dove's interactive campaign (see box, above right). Marcus Vinton, executive creative director of digital communications, says: 'Interactive is the most sincere form of one-to-one marketing. There will be sophisticated consumer profiling - and television will become niche communication en masse.'
As any direct marketer knows, data is the key to a well-targeted campaign.
In this case, the data will come from the consumer's living room via the set-top box. But there is a real danger that consumers will object to this 'big brother' scenario and voice concerns about how the data will be used.
'Platforms such as cable and ADSL will be able to track every move of their users, by virtue of the technology,' says Joy Taylor, head of e-business at Lowe Direct. 'But if this wealth of customer knowledge is exploited, consumers - and probably government - will push for a ban. It will become the responsibility of the service providers and marketers to use the customer data to the benefit of the end-users.'
But the technology also puts more power into the consumer's hands. Software such as Freedom, which currently works on the internet to mask the identification of the visitor to a web site, is likely to be developed for other channels.
'We will undoubtedly get Freedom for digital television and radio,' says Taylor. 'That makes our job as marketers much more difficult. It means the only way to truly foster a relationship with the customer is to somehow incite the customer to want a direct relationship.'
'That said, if we do our jobs correctly, and customers decide they do want a direct relationship with our brands, we now have an awesome opportunity to cultivate strong, direct relationships and deliver meaningful dialogue, products and offers to our customers,' she adds.
The long-term challenge facing marketers is to persuade consumers to come to them. As new television services such as TiVo are developed, allowing viewers to choose what they watch and when, the possibility of avoiding all ads draws closer.
The result is likely to be an increase in sponsorship and product placement - you may even see interactive buttons popping up during a film to let viewers find out more about the make of anything from a car to a bed in a particular scene.
'Brands will have to build a real dialogue,' says Ogilvy & Mather's Vinton. 'Instead of spending half a million on a 30-second car ad, they will make four or five infomercials.
Bigger brands could even establish their own channels. A breakfast cereal, for instance, could have its own breakfast TV channel with games, cartoons, fitness and recipes.'
But the more immediate challenge for interactive advertisers is to stand out from the crowd. 'As more companies create content and functionality within interactive TV, it will become more like the internet, with everyone competing via banners,' says Rob Mettler, production director at Ogilvy Interactive.
However, Andrew Marre, a spokesman for ONdigital, says: 'We are not going to make every ad interactive.' At present, the digital broadcasters are reserving the last slot in the break for interactive commercials, so that viewers don't miss any commercials when they click on to an advertiser's site. 'You wouldn't want to be an advertiser after an interactive ad,' explains Bryant of Open.
This issue could be resolved by a split screen, says Marre, allowing viewers to continue watching ads or programmes while they check out the interactive site. 'You could also use this device to support programming by giving biographies of sports players during a game,' he adds.
Alternatively, says Bryant, an ad could introduce a quick brochure request button or a button that takes note of the viewers' interest and allows them to return to the site later.
But will brochure requests become a thing of the past when there are sites on the internet and on digital TV that provide the same information?
According to Adam Novak, managing director of Royal Mail Media Markets, electronic media will dram-atically reduce paper's share of the communications mix. 'Estimates indicate that paper's share will decline from 90% share to just 30% over the next ten years. But during the same period, the overall amount of communications is set to increase by 600%, fuelled by new media and improvements to existing media. Paper-based communications will see a doubling on today's base,' he argues.
Where DM stands
And direct marketers believe they are well-placed to drive the interactive advertising revolution. 'Direct marketers understand how to begin and build a long-term consumer relationship,' says Lowe Direct's Taylor.
'They understand how to provide the services that keep customers loyal. The challenge is to translate those skills onto new platforms while remembering that in some cases we must still communicate with customers offline. The e-CRM concept should be replaced by t-CRM - total customer relationship management.
'The key for consumers is content - they don't care which channel they use,' she adds. 'All these platforms must complement each other. CRM is going to have to embrace digital TV and merge it with e-commerce. Companies are going to have to make sure their databases are robust enough - especially those that have been struggling to incorporate the internet into their offline systems.'
MBO's head of planning, Spencer McHugh, agrees. 'Direct marketers are in the best position to take advantage of this boom because they are geared up to handle calls and fulfil orders. But they need to think more about the role each medium has to play in a campaign. There are multiple channels now and they all have to integrate with the back-end.'
Marketers must certainly face the challenges of multi-channel marketing.
But it looks as though television, which has won our hearts as an entertainment medium, will become the preferred channel for shopping and other services.
A recent survey by set-top box manufacturer Pace Micro revealed that most people prefer to use interactive television as a channel for e-commerce, rather than the PC.
And the Henley Centre predicts that by 2005, more people will access the internet via their televisions than their computers. The fact is that we love our televisions more than we love our computers or our telephones.
Interactive television presents marketers with an amazing opportunity to reach consumers. But the question remains, will they use it wisely?
DOVE'S INTERACTIVE PUSH
Elida Faberge has tested the power of interactive TV with a ground-breaking campaign for toiletries brand Dove. Working with Ogilvy & Mather, it created a site which was available on Open from May 24 to July 22.
SkyDigital viewers were able to access the Dove site through banners, inter-active icon advertising and listings. The site offered information and free samples as well as the chance to see a pay-per-view movie free of charge.
'The campaign allowed the viewer to engage more fully with the Dove brand,' says Amita Sharma, brand manager at Unilever. 'It was a landmark in pushing the brand's development to further build a relationship with our consumers.'
The objectives of the campaign were to increase penetration, develop a one-to-one relationship with consumers and build the Dove consumer database.
Elida Faberge also wanted to learn as much as possible about interactive television as a marketing medium.
The response to the campaign was high. More than 100,000 households - 3.6% of all SkyDigital homes - requested samples, while 22,000 households responded to the free movie promotion.
Viewers could access the site at a number of points. One of the most popular was via the icons featured in the ads. Sharma reports that 13,396 people clicked on the icon and then went to the site and requested a sample, the largest ever response to an icon ad.
'All consumers were added to the Dove database and treated as prospective high-worth consumers,' says Sharma.
'Interactive TV has been an exciting opportunity for Dove since it supports the key thrust of consumer relationship marketing. It has allowed consumers to respond to the brand instantly.'
THE DIGITAL INVASION
- There are 34 million households in the UK with a television.
- About 20% of the population will have access to digital TV by 2001.
- Datamonitor predicts that ten million homes will have access to digital TV by 2005.
- The government plans to turn off the analogue signal by 2010 and take Britain into the digital TV age.
- This day could be pushed forward if the government decides to speed introduction by giving out millions of free digital set-top boxes, something that is currently being considered.
- The introduction of digital television, coupled with the internet, is set to drive a huge increase in TV and online sales, according to Mintel.
- Online and interactive television sales are forecast to grow from pounds 500m a year now to pounds 5.4bn by 2004, according to Mintel.