After years of hype, major advertisers are finally starting to invest in interactive TV, which lets viewers shop, e-mail and play games but has yet to take hold commercially, experts said Tuesday.
"People are putting money into interactive advertising, and it's a new phenomenon we've been seeing in the past six months," said Scott Newman, president of GoldPocket Interactive, which provides software to companies such as Turner Broadcasting and HBO to create and deliver interactive TV programming.
Interactive TV, which is designed to allow viewers to take more control of how they watch television and offer services similar to those found on the Internet, has been slow to gain a mass audience and remains fragmented by competing technical standards among cable providers.
Last month, the Academy of Television Arts and Sciences announced a new Emmy award for interactive TV programming, but even the medium's boosters see the real growth in the market still five years in the future.
Even so, Newman said some sponsors are starting to invest now, concerned that more people are simply switching channels during commercials on traditional television--diminishing the effect of blanket advertising.
"Advertisers are very focused on reaching the consumers and how to get their message across. In the past six months, we've seen a lot of sponsors like Volvo, Audi and Domino's Pizza," Newman said.
By sponsoring an interactive game that is synchronized to a show being broadcast, advertisers can lure viewers into staying tuned through the commercial, he said.
For example, viewers of Comedy Central's "Win Ben Stein's Money," show during a two-month trial period could score extra points in the interactive game if they answered questions following a commercial such as: "How many cheesy breadsticks were featured?"
Comedy Central is a joint venture of CBS owner Viacom and media giant AOL Time Warner.
Interactive TV, which remains in its commercial infancy, enables audiences to interact with the programs either through their PCs or on their TV screens through digital set-top boxes.
Jack Myers, an analyst who tracks interactive TV, said he expects the industry's advertising revenues to rise from $37 million in 2001 to $60 million in 2002 and about $3.8 billion by the end of the decade.
Most of the growth will occur after cable TV operators release next-generation set-top boxes that incorporate personal video recorder and interactive capabilities, which are not expected to gain broad market acceptance until 2006 and 2007, he said.
One big stumbling block is the absence of a common TV industry standard. While cable and satellite operators have installed millions of set-top boxes capable of delivering interactive TV, the potential audience remains fragmented.
Also, several efforts have already been scaled back or abandoned because of high costs and the perception of limited interest, experts said.
"I think, from an advertiser's point of view, there's a strong appetite, but there are a series of barriers to entry in a lot of key markets where there are various technologies being deployed," said Jasper Smith, who runs the content arm for OpenTV, an interactive TV software provider, whose investors include AOL Time Warner, EchoStar Communications and Sun Microsystems.
If those barriers can be overcome, the appeal of interactive advertising is clear, analysts said. In addition to the medium's promise of getting viewers to watch commercials more closely, it could also provide information on potential consumers by tracking their preferences and activities.
"The opportunity for advertisers is going to be enormous," said Keith Reinhard, chairman of DDB Worldwide, an advertising agency.
unknown, Reuters. May 7, 2002
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