iTV Report: Views from the bridge

Marcus Vinton, the man behind the first interactive TV ad, talks to Sky Interactive's managing director, Ian Shepherd, to find out how the medium has progressed.

TV is changing. Five years after the first interactive ad, the box in the corner has morphed into the flat thing on the wall. A new generation of TV viewers are pressing with confidence through enhanced programming, interactive ads and games.

Consequently, marketers are looking seriously at advertising as content, arguably the most liberating and engaging area for brands.

Interactive advertising has delivered impressive figures. With around 600 campaigns on Sky to date, lower entry costs and greater compatibility between broadcasters have moved the medium on commercially. But it still has a way to go to reach its creative potential.

Interactive advertising is an immersive, broadcast-centric medium, not a TV web browser. It's a theatre for creative thinking. Sadly, creative teams still don't see interactive TV as a career-enhancing opportunity - yet. They need to start scripting bigger TV ideas. Brand owners and producers need to start shooting bespoke footage, instead of running rushes or cannibalised ads. As soon as an ag-ency creates a "gong- worthy" ad that sits beyond the commercial broadcast stream, the medium will change overnight. But will we have to wait another five years?

Five years ago, as the executive creative director at Ogilvy & Mather, Marcus Vinton produced the world's first interactive TV commercial, for Unilever's Chicken Tonight. These days, he spends his time producing branded entertainment for the big screen. Campaign persuaded him to revisit his digital days and interview Sky Interactive's managing director, Ian Shepherd, to find out how inter-active TV ads have progressed and what the future holds for the medium.

Marcus Vinton: How would you evaluate interactive TV's value/cost effectiveness compared with traditional TV media spend?

Ian Shepherd: We know there have been TV campaigns with an interactive element where the client has reported response rates in excess of those delivered by other media.

But the key differentiator between interactive TV and linear spots is the value of engaging with consumers who actively choose to interact with your brand.

KitKat, for example, when it ran an interactive commercial, got 13 minutes of brand exposure, compared with the 30 seconds that it got from the linear ad. On one level, it would be possible to price that up to compare media costs but the most telling measurement of interactive TV's ability to engage consumers is that almost three-quarters of clients return for repeat campaigns.

MV: Personal video recorder technology was once regarded as advertising's nemesis. In the US, 6 per cent of the population watch 60 per cent of their programmes through a personal video recorder. It's estimated they skip 92 per cent of ads in the recorded programmes. The converse argument is that personal video recorders, such as Sky+, have liberated and advanced the medium, encouraging us to watch more TV more often. Although it is still an immature market, do you see interactivity changing as personal video recorder uptake increases?

IS: Advertisers' first reaction to personal video recorders was: "My God, you can fast-forward past my ad - that's a bad thing." As if consumers don't have more than enough ways of ignoring ads if we don't like them!

I think people are beginning to realise that a personal video recorder is a fantastically powerful piece of technology that can fast-forward, rewind, store things, play them later, record every episode of something, record something in the middle of the night when you're asleep and so on.

The exciting opportunity for Sky and the advertising industry is to find out how we can exploit that power to make brand relationships more powerful rather than less powerful.

MV: Premium-rate phone lines, short message service (SMS) and modem- activated red-button response all deliver healthy margins. What advantages does red button interactivity offer as the return path of choice?

IS: The difference between the red button as a return path and the other two technologies you mention is that the red button is completely integrated into what you are watching on television. Choosing an alternative video feed, changing your camera angle, playing along with a synchronised quiz, betting and gaming on a large sports event - all are applications that work more naturally with a red button than they do through any other medium. So our job at Sky is to try to make interactive TV as big and strong as we possibly can. We're not really concerned about competing with SMS and mobile return paths.

Instead, we're saying, if you want to control your interactive television experience, then the red button is the perfect way to do that.

MV: The set-top box "second slot" was hailed by many as the second coming.

I understand you have recently announced a strategic venture that will result in the first-ever practical application. Will this be the first of many?

IS: Sky has just launched, in partnership with Barclaycard, a Sky credit card that delivers a range of benefits to customers and will also be the first card to offer genuine interactivity, through the second card slot.

There's potential for other applications using the second card slot, although the reality, as many big retailers have found, is that it's tough work making a loyalty card "pay". So I suspect that we might not see as many card applications as you'd think, because of pure economics. But I'm certain we'll see at least some. Sky, like everyone else, will obviously be looking at this area closely.

MV: Five years in, the medium is really starting to prove itself commercially.

Betting and gaming account for a high percentage of your revenue. Do you see interactive advertising becoming a bigger business for you in the long run?

IS: Yes. Betting and gaming, skill-based gameplay and a whole range of interactive entertainment services generate a lot of our revenue today, and I hope that they will all be growth sectors. Interactive advertising, though, has the potential to be one of our fastest-growing lines of business as more and more brands get involved and as we see the shift from "simple" direct response applications towards much bigger and richer brand enhancement vehicles.

MV: At one time, interactive advertising was viewed by some as suitable only for the direct response medium. Recent campaigns, such as Adidas', have proved it is a rich and immersive medium. Do you see a trend emerging for more televisual content than direct or transactional commerce?

IS: Yes. The fastest-growing part of interactive advertising is the creation of rich interactive environments where brands can really showcase their products and their brand values. We've seen a lot of big brands look to extend the core creative thought from their TV campaign into an interactive experience that customers can spend more time with. Some of these have had no response mechanism at all - they have simply been measured on how much they engage and inspire customers.

I think this trend is set to continue even further. We've recently begun to explore ways of showcasing brands interactively in our flagship Sky Active portal as well as behind their advertising. By building an interactive site that is equally comfortable in a 24/7 portal environment or behind an ad, you create a truly multimedia experience that connects with customers in new ways. An excellent example is our recent work with the new Chemical Brothers album, which was promoted heavily in our portal as well as behind the ads, and caught audience from both places.

MV: Enhanced interactive television applications built around event or appointment viewing have become a popular feature for UK viewers or "viewsers".

Are you intending to collaborate with channel controllers and commissioning editors to create new TV that integrates interactivity from conception, rather than retro-fitting it afterwards?

IS: We have spent a lot of time and effort over the past five years working with channel brands, not only the Sky channels but also third- party brands, helping to build or support interactivity for Big Brother, five, Disney, Cartoon Network and others.

We've also helped to foster the growth of other service providers, which provide content management software, software applications and interactive site build. The market has now reached the point where a channel that wants interactivity doesn't have to come to Sky Interactive. We regard this additional competition in the market as being good for the growth of the industry and the strength of our platform overall.

Of course, people do still come to us a lot of the time and I'd like to think that we still have capabilities and know-ledge of the technology and what it can do that's not really matched by anybody - yet!

But the fact is that the industry is becoming a more robust one and more players and more people are entering and innovating. And, of course, this is good for the whole of the interactive TV industry.

MV: Does anything need to be done about measurement to ensure that interactive TV has a healthy future and presents a more robust case to those advertisers or agencies still sceptical of the medium?

IS: I think there's always more you can do to measure the success of your marketing and we do that kind of research and analysis work all the time. We already obtain an accurate measurement of responses, and soon the launch of the Sky View panel will deliver robust measurement of how many viewers press red to interact with a dedicated advertiser location. With a panel of 20,000 households, Sky View will provide advertisers with a greater level of accountability and consumer insight than ever before.

MV: Do you feel it's the job of media planners to educate and encourage their agency teams to integrate interactive TV into their thinking?

IS: I don't think that has to be the case. I think that's a pretty accurate description of the way that some interactive campaigns are put together right now but others stem from creatives, media buyers and clients themselves.

I think a very important part of Sky's role is getting all parts of the chain more interested in the medium.

We spend a lot of time trying to engage directly with clients but it's more to say: "Let's talk about some ways in which interactive technology can help you get more out of your TV advertising, accomplish your CRM goals and your direct marketing goals."

It's got to involve the creative agencies and creative industry much more than it does now. We're seeing results in the past year, including what we've done with D&AD, because we want to get to a situation where the creative agencies are standing up and saying to their clients and to broadcasters: "We have a great idea for a campaign here that uses interactive technology in a way that hasn't been done before, please help us find a way to make it real."

There is some demand for inter-activity among creatives but we need to work to build that further. Part of Sky's job is to goad more creatives into exploring the possibilities of extending the creative from their 30-second ad into an immersive, three-minute experience. I think we as an industry haven't done enough about.

MV: What do you see as the main challenges for Sky moving forward?

IS: Our biggest challenge is to make the use of interactive content much easier and much more normal. Those goals also apply specifically to inter-active ads. We want to get creative communities to embrace this new medium, to get clients to want to view their marketing budgets in a different way, not to make the technology a barrier, but to make the technology invisible. We need to make creativity the focus of the industry.

- Marcus Vinton is the founder of BITE (Brand Integration Through Entertainment).