NEWS ANALYSIS: Interactive ads winning support - Has the time finally arrived for iTV to become an accepted marketing channel?

Despite a handful of high profile success stories, the reality of interactive TV has never quite matched expectations. But it could, after several attempts, finally be ready to take off. This is the optimistic tenor of a new DMA-commissioned report iTV - Coming of Age which shows that 30 per cent of advertisers have used the medium, with two thirds likely to do so again.

Carried out by iTV specialist Zip Television and linking with the launch last month of the DMA's new Interactive Council, the report shows a market with promise. Despite hard times, more advertisers than ever are using the medium - up ten per cent on last year, and its track record is improving.

Sky ran its 200th campaign in October 2002 and saw a 290 per cent increase in interactive advertising campaigns run on its platform last year. And while ITV Digital may have flopped, ITV is broadcasting its digital channels on Sky and is due to introduce interactive advertising capability this year, as is Telewest.

Established channel

"It's early days and there's a lot of learning to do but iTV can now be considered a medium in its own right," says Andrew Howells, founder of Zip TV. And what's even more remarkable is that while certain sectors are having a particularly tough time, iTV doesn't seem to be suffering quite as much. This is supported by the results of this year's agency league table (see page 13). Out of the DM agencies surveyed, 10 said business had grown in this area, and 29 reported no change, with only six saying it had shrunk.

Robert Dirskovski, head of the DMA's interactive media division, isn't surprised: "The DM industry has all the expertise needed to take advantage of this new channel," he says. "We understand how to quantify response, we have the data experience and understand media buying so there's every reason to grasp the nettle."

Of course, this leaves two-thirds of marketers still to try the medium. The over-riding reason for not doing so is a lack of belief in its efficacy. Other reasons given in the survey include not having discussed it with their agency, TV advertising not being a part of the marketing mix, and being unconvinced of iTV's business benefits. Interestingly, cost doesn't appear to be a major concern.

Penetration is unquestionably rising. And, in contrast to last year's iTV survey A Media In Waiting, this year's respondents are a lot savvier. Last year, 80 per cent of respondents believed digital TV penetration was below 20 per cent when it was nearer 30 per cent. This year, 42 per cent correctly put it at around 40 per cent.

Overall, 30 per cent of respondents strongly agree with the statement: "iTV is an important new medium for my business", with 40 per cent agreeing to some degree that iTV will become a significant part of their marketing mix.

The most important benefit to using iTV is considered to be increasing sales followed by the use of data for other marketing initiatives. This is a change from the last survey where increasing sales was seen as the least important benefit.

One big question facing marketers is where the money for iTV campaigns will come from. Twenty per cent state that their existing TV budget will be used and 36 per cent would use some other marketing budget. The majority would expect to allocate £25,000-£100,000.

But to help them progress in their use of iTV, marketers want access to more case studies. This has long been a problem as few advertisers are willing to come out and shout about their results and explain their methods.

"There still aren't many experts out there or people saying 'we're having a good time with this'," says Toby Hack, head of interactive TV at OMDtvi, which works with clients including Rimmel.

"Therefore it's a positive step for marketers to release case studies." There are increasingly some good ones available too: Rimmel recently released the results of its second iTV campaign run late last year through OMDtvi to promote Double Act foundation.

Following its first campaign which promoted its Exaggerate Hydra Colour lipstick range, this one saw 63 per cent of respondents opting for further communication. Rimmel cut cost per acquisition by 27 per cent and saw a 14 per cent volume improvement on the first campaign. Hack puts this down to experience. "This time we knew what we were doing, we understood the brand, the consumer, and had a better idea of how to make it work."

More brands are now coming on board and the DMAs Interactive Television Council aims to establish best practice and aid the medium's growth.

Experimentation

The potential is massive. Last year the De Paul Trust, a charity for homeless young people, took iTV advertising to new levels with the launch of the first VODKA (video on demand kind of advertising) ad. Developed by the agency Publicis, this ad gave subscribers to the Kingston Communications iTV service (the only platform to currently support this technology) the opportunity not just to request information but to choose how the storyline progressed via their remote controls.

The DMA report shows iTV is not yet pervasive as a marketing communications channel but it seems consumers and advertisers alike are keen to press the red button of interactivity.

iTV FACT BOX

- 30 per cent of marketers have already run an iTV campaign.

- Of these 77 per cent were pleased with the results and would consider running future campaigns.

- 58 per cent think iTV is important for their business.

- 40 per cent believe iTV will become a significant part of their marketing mix.

- Sky saw a 290 per cent increase in iTV advertising campaigns run on its platform during 2002.

- Sky currently has 6.2m subscribers to its digital platform.

- 40 per cent of UK households currently have a digital TV service.

Source: iTV - Coming of Age report.