NEW MEDIA: SPOTLIGHT ON INTERACTIVE ADVERTISING - Interactive advertising moves on after slow and shaky start

Innovations from Sky have streamlined and simplified the medium.

When Unilever's Chicken Tonight became the first advertiser to use interactive television nearly three years ago, there were those who thought that it could be as significant as when Gibbs SR became the first brand to use the new medium of commercial TV back in 1956.

But while it was pioneering, Chicken Tonight can hardly claim to have blazed a trail in interactive advertising. In 2000, just 16 other advertisers jumped on to Sky's interactive bandwagon, leaving a distinct impression of anti-climax.

However, Sky Digital has just attracted its 100th interactive advertiser, so the momentum may still be building after a slow start.

"The whole interactive industry was, perhaps understandably, over-ambitious when it was launched," Andrew Howells, the managing director of Zip TV, says.

One of the key problems was that advertisers were confused as to how to use the new medium to its best advantage. The onset of the advertising recession only increased caution among advertisers, who reacted by cutting back on any ambitious interactive advertising plans. Yet again, those who had predicted the death of the 30-second TV spot were proved wrong.

However, Sky transmits one in four of its ad breaks (and 29 per cent of its adult impacts) with an interactive ad and the number of interactive campaigns has grown from 56 in 2001 to 149 in 2002. This January, Sky celebrated running 28 concurrent interactive ad campaigns, the highest number ever, and Tesco credit card signed as the aforementioned 100th advertiser. Other current interactive advertisers include Center Parcs.

But why have initially hesitant advertisers begun to invest in interactive advertising? The continued growth in the penetration of multi-channel TV plays a part but there has also been a significant degree of technical improvement to the service.

And, according to PHDiQ's managing director, Howard Nead, the early communications problems between the Sky sales team in Victoria and the Sky Active team in Osterley have been resolved. Nead says that the early days saw a degree of conservatism at Sky Sales. "Sky was always very sensitive of trying anything that could freeze the system," he claims.

Howells agrees, and says initially the offering was too restrictive and too clunky. "Sky launched its interactive service offering advertisers just one product - the dedicated advertising location, which was bespoke to each advertiser. With DAL, you had to leave the broadcast stream and it was a relatively expensive entry point," he says.

Rob Leach, the interactive advertising controller at Sky, agrees that this reliance on just one interactive TV product may have hindered the medium's growth. "DAL may have been all-singing and all-dancing but it was not suitable for all advertisers," he says. Advertisers quickly realised that DAL, for which interactive spots could take up to eight weeks to create, was best for building brands rather than generating responses.

However, with the introduction of new services, mini-DAL and impulse response, there has been greater flexibility and advertisers have been allowed to deviate from the DAL template. When Sky installed a new system in the spring of last year, it allowed for a greater degree of creativity in a fraction of the time taken to produce a traditional DAL spot.

Mini-DAL does not use video and therefore is much faster. It is also less expensive and is quicker for agencies to turn around as it uses a programme code that is tested and has already run.

Another step forward came with the advent of impulse response, which allows viewers to remain in the broadcast stream, but request information.

This is the cheapest entry point for advertisers and, according to Nead, will become a natural point of any TV schedule.

Leach says that advertisers and agencies have worked out that interactive advertising, used well, can engage and entertain people.

He says that Procter & Gamble used entertainment to great effect with a recent Lilo & Stitch promotion. The interactive ad, which was via a DAL, jumped from the broadcast stream and into a site that was visually creative and showed a trailer and a competition.

According to Howells, this ad was a milestone and is as important as the Rimmel interactive spot that was also strikingly creative and offered a free sample of lipstick to respondents. Research showed that this ad had a response rate of 3.2 per cent. It is used as an illustration that people will respond to interactive advertising and leave the broadcast stream if they perceive a benefit, such as a free gift or entertainment.

While these new products have shown that interactive TV can be flexible to advertisers, the next big development will come when ITV finally signs up to the platform, a move that is expected imminently.

According to Nead, the number of interactive impacts delivered could increase four-fold. "Instead of interactive ads generating response in the high hundreds or low thousands, they will be much higher," he says.

Nead also thinks that Sky will gain from this as it will take more bookings.

Leach agrees and wants all the broadcasters to collaborate on pushing interactive forward. "As long as we pull together, then it's a good thing. There's a fantastic opportunity for TV, via interactive advertising, to get back some of the revenue lost to below-the-line and press advertising," he says.

With the number of interactive impacts increasing following the ITV/Sky deal, the industry will establish how valuable the interactive respondent is. This will finally determine whether the premium of running an interactive ad, which may have dissuaded some advertisers, is justifiable.