The idea of interactive TV has teased us all for years. If the bold
new interactive future that is Open appears, at the moment, to resemble
little more than an updated Teletext service, that’s because our
expectations have become too lavish. More sophisticated interactivity,
however, will arrive in the spring. And, although Open is already
pulling in up to pounds 1 million worth of sales a week, there will be
much more to get excited about.
The new-media research company, Fletcher Research, estimates that almost
13 million UK households will have access to interactive TV services by
2004. And already one in ten UK households have signed up to digital TV
- the gateway to interactive services.
Out of the 2.2 million total (at the last count), 1.8 million have opted
for the Sky Digital satellite option, which gives access to the Open
service. ONdigital has signed up 411,000 subscribers, but it’s
interactive services are so far hampered by bandwidth restrictions.
As for digital cable, which will potentially offer the most
sophisticated interactivity, Cable & Wireless, now owned by NTL, is
already trialling interactive services, while NTL itself is planning the
long-awaited launch of its interactive TV offering in the spring.
Telewest is launching its Digital Active service without interactive
services, but aims to have these up and running in the autumn.
Meanwhile, BT’s ADSL technology - based on telephone lines - is waiting
in the wings, while Yes TV is trialling video on demand to handfuls of
people in Cardiff, as is KITV in Hull, both using ADSL.
Early adopters of digital know that this is the platform for the next
generation of TV viewers. The culture minister, Chris Smith, has
confirmed that the analogue television signal will be turned off some
time between 2006 and 2010, providing that digital TV is available to
99.4 per cent of the population and 95 per cent of homes by that
How quickly that sort of penetration will occur depends on a number of
factors. The advent of e-mail facilities - compiled with the help of a
natty iMac-style console - was supposed to familiarise consumers with TV
interactivity. Open has its version of the system running, as does C&W.
Unfortunately, although the system works well for communication between
Open consumers, the interface for sending e-mail to a wider world is
still complicated. Yet results from Microsoft’s six-month,
internet-based WebTV trials in London and Liverpool suggested that of
the one in three households willing to try the TV service, more than 90
per cent of them highlighted e-mail and internet access as the major
benefits the new technology would bring. Seventy per cent said they
would consider shopping online, but rather more said that games and even
education were more attractive inducements.
The challenge for advertisers, who have seldom wavered in their
enthusiasm for the prospect of interactivity, is to work out how they
should make best use of the options available and, more importantly, to
be in pole position come spring, when cable and satellite services will
be moving into interactive big time.
’If you look at the Gibbs SR ad that launched TV advertising in this
country in 1955, it was nothing but a print ad in a new medium. There’s
a danger this will happen with interactivity,’ Chris Harrison, managing
director of Grey Interactive TV, says. ’In France it’s been quite easy
to trace the evolution of interactive commercials. It moved from a
fairly pedestrian Renault execution to much more advanced offerings from
advertisers such as Buitoni. I’m sure we will see the same sort of
process over here when we get full interactivity. Hopefully we can
proceed a bit faster.’
The digital interactive services have to convince advertisers that they
shouldn’t wait for the holy grail of full interactivity. Open is using
an in-house sales force. For NTL, C&W and Telewest, the job of
convincing advertisers and their agencies what they want from
interactive TV is being left to the sales house, Real Media.
Meanwhile, the range of interactive advertising opportunities that will
be available to advertisers is emerging.
One legacy of the internet model that has infected the design of
interactive TV is that banner ads have become the vehicle of choice for
companies to test the waters on Open. Manchester United, Scottish Power
and Persil were among the first advertisers to try this route. They
lured viewers on to their site with special offers on a banner ad or, in
Persil’s case, the chance to win a weekend break in Rome.
Early research suggests competitions are one of the strongest traffic
drivers. Saatchi & Saatchi commissioned NDS to explore consumers’
attitudes towards interactive advertising. It showed that competitions
helped minimise consumer confusion, helped reassure those worried about
transmission costs and billing processes, and even about the dangers of
unsupervised purchases by children.
Open’s trial period also generated high response rates using the bait of
competition. It offered two games, but no advertising - not even
directional - to alert digital consumers to their presence. But the
prospect of a weekend away for the lucky winners ensured that these
competitions drew an incredible 61,000 responses a week.
Other advertisers are less enamoured of banner advertising. ’Any
advertiser interested in interactivity, whether it’s direct response TV
or the internet or digital shopping channels, must understand the nature
of the medium they are dealing with,’ explains James Stewart, the
interactive services manager, marketing at HSBC, one of the shareholders
in the Open platform.
’We have to remember that the internet is a lean-to medium and the TV is
a sit-back one, and the design of the content and the ads should reflect
that. You have to be much more simple and, at the same time, much more
dynamic on TV. People want to be entertained. The internet is more for
people looking things up. That’s why we have always said that we will be
available on TV and the internet, because they do such different
There is now evidence that consumers are happy to interact with ads, and
not just for a reward. Certainly that’s the case in product categories
such as insurance and financial services, which already use direct
Interactivity could have far-reaching effects on conventional TV ads,
signalling at its most radical the end of scheduled TV and a
comprehensive rethink of the 30-second ad break.
Whatever happens, advertisers will have to work out how the viewer will
interact. ’Think of it in terms of ’lazy interactivity’,’ explains
Motive’s head of digital media, John Owen. ’An advertiser needs to
communicate with someone with a beer in one hand and a remote in the
At the heart of all the interactive offerings will be the question of
how and when viewers are returned from the interactive walled garden,
back to the programming or, indeed, to the rest of the commercial
Bruce Lynn, WebTV’s managing director, refers to what he calls
’interactive ad protocols’, meaning, in other words, that advertisers
should remember why the audience is there in the first place and not
steal viewers away.
’What we are thinking of offering when we launch interactive services in
the next few months is what we call a ’data glove’, by which we mean
that when viewers click on the interactive icon they get a split screen
intranet on a portion of the screen, in any format they specify,
containing the information they asked for,’ Howard Hughes, NTL’s ad
manager, explains. ’We look upon interactivity as a way of adding extra
value to the 30-second spot. And for advertisers, while the numbers are
small, experimenting with interactivity will be very cheap.’ The price
comparison touted around by all the platforms is of a tenfold reduction
in costs per lead generated against a conventional direct response TV
NTL is confident of being first to market with full interactive
services, but C&W has already worked with two advertisers, MFI and
British Airways, to produce versions of what its own interactive
advertising might look like in its interactive TV trial in Manchester.
For other digital players, though, truly interactive advertising remains
a low priority.
So far the focus of the interactive market has been confined to
developing the straightforward e-commerce at the heart of the offering.
The format developed by Open is typical. Consumers access Sky’s
electronic programme guide to go into Open and then on to the shopping
site. Here it gets tricky.
In some categories, several company logos can appear on screen at
In others, it is already necessary to scroll through a succession of
screens to see everything. But purchasing is simple. You enter your
credit card details, and that’s it. The system knows where to send your
goods. And it has already found favour with advertisers bold enough to
have taken the plunge.
Woolworths conducted a trial of its interactive store, Woolworths
Entertainment, with Open for eight weeks last summer. Only 1,000
subscribers had access to the system. The trial store offered the top
ten CD albums, videos and books, plus the top 20 computer games.
A transaction took 90 seconds, from pressing the remote control to get
into the Open service and four button clicks to process the order
through to Woolworths’ distribution company, Entertainment UK, and then
to the customer.
Approximately 2 per cent of Open viewers used the facility in every week
of the trial, while the average price per transaction was more than
If Woolworths achieves the same response now that Open reaches a
potential 1.8 million households, the retailer could be dealing with
something like 31,000 transactions a week, generating a turnover of
pounds 24 million in the first year. And, of course, the trial response
figures were achieved without any promotion for the service, and with a
limited product offering. The Woolworths Entertainment range has now
been increased to more than 300.
One limit on the amount of products that retailers will want to offer is
the fact that Open has its own operating system. This means that stock
order codes have to be specially written for each product which, in
turn, increases the per unit cost on lower ticket items.
’We run a service called Car Choice, which offers finance deals on a
wide range of cars in the UK,’ James Stewart, HSBC’s interactive
services manager, explains. ’But it is a massive undertaking because it
means writing more than 3,000 codes. The more complicated the data, the
longer it takes to load the page, the longer your splash screen is up
there (on the TV) and the more chance viewers will lose patience and
It might seem elaborate now, but there’s no reason why an advertiser
might not buy and brand its own channel. The nearest thing so far is
probably QVC’s new interactive shopping channel, QVC Directory, which is
launching on Sky.
There are, broadly, two kinds of sponsorship, as with non-interactive
TV: sponsoring a programme which exists, or backing the production of a
programme. Both of which would benefit if the ITC relaxes its
There are already interactive opportunities. For example, Two Way TV,
which provides interactive programming, will work with sponsors for its
existing interactive game shows.
Wholesale backing of programme production is not a new approach to
securing the right audience for a product. Procter & Gamble was behind
the first TV soaps and also created the comedy series, Northern
Exposure. It may become more commonplace as the need for programming
The chief rule, with sponsorship as with all advertisers’ options, will
be not to underestimate the viewer’s antipathy to advertising. According
to Lowe Howard-Spink’s Ad Avoiders research, started in the 80s, the
number of people who agree with the statement, ’I enjoy the TV ads as
much as the programme’, increased to around 33 per cent in the UK in
1991, but it has since fallen.
A cautionary tale. When BT carried out its interactive TV trial in
Colchester, ads were confined to a channel called Adland. In the first
week, 55 per cent of households tuned in to the channel. But after that
it never got up to even 20 per cent in the next 25 weeks of the trial.