The holy grail for media and marketing honchos seeking to circumvent ad-skipping technology is not product placement.
Weaving products into content may be a first step, but marketers looking to move beyond the traditional reliance on 30-second TV commercials could be better served by harnessing the plethora of emerging technology and software platforms.
"Product placement is silly and overblown," said Mitch Oscar, senior vice president and director of media futures for Interpublic Group of Cos.' Universal McCann Futures. "I know that's all people are talking about, but it's like anything [else] -- you're talking about what you're familiar with." Product placement works, he believes, if it's integral to a story line, "but just to have a can of Coke on a table. ... I think we're going back to retro thinking."
Marketers, instead, should be examining all their options in the realm of branded content -- programs akin to BMW's BMW Films and Best Buy Co.'s participation in TiVo's "advertainment" showcases.
"There will increasingly be more places for branded content to live specifically beyond 30-second-long content," said Tim Hanlon, vice president and director of emerging contacts for Bcom3 Group's Starcom MediaVest Group. "What that is, frankly, is going to be as different as the [marketers] themselves."
Oscar is already urging his clients, which include Coca-Cola Co., Microsoft Corp. and Sony Music Entertainment, to experiment with nascent branding techniques like long-form video, episodic vignettes and video-on-demand.
The need for creative thinking and execution among agencies and marketers has never been more pressing. On any given day, the average consumer is bombarded by a blizzard of news and entertainment options. And there is the proliferation of increasingly sophisticated tools to help consumers tailor their choices: Internet, video-on-demand, satellite radio and personal video recorders are just the tip of the iceberg.
But marketers are trying. Enhanced TV platforms such as the one from Wink Communications, now in 5 million homes, enable marketers to go well beyond a 30-second TV spot. Consumers can click to request more information on a product or service, participate in polls, sweepstakes and promotions. Marketers such as Barnes & Noble, Walt Disney Co.'s ESPN and Music Choice have created virtual channel -- yet another emerging media -- which use Wink technology and are available on the DirecTV satellite system.
Addressable advertising, currently in trial with AT&T Broadband in Aurora, Colo., using ACTV's SpotOn software, allows marketers to target appropriate ads to consumers based on demographic data provided by the cable company. Consumers opt-in to receive more information on products and services.
Only three years ago, the TiVo personal video recording service had marketers and their agencies losing sleep, worried that ad skipping would become epidemic and the 30-second spot extinct. Those advertisers without their heads in the sand mounted trials involving long-form advertising and creative packaging of content to combat PVRs. Best Buy, Universal Music and AOL Time Warner's New Line Cinema have all run "advertainment" showcases on the service.
Best Buy, the national consumer electronics chain, ran a branded showcase on TiVo in a three-week flight in May. The retailer offered TiVo subscribers the chance to access two exclusive Sheryl Crow videos, did a CD giveaway through an opt-in opportunity and ran six product vignettes.
The showcase is where "you can find something that you can't find elsewhere because it's an opt-in environment. The content has to be relevant and entertaining," said Mollie Weston, manager of production services at Best Buy. "The purpose for us right now is more about loyalty than it is necessarily about putting product placement in here."
Best Buy will begin another showcase with TiVo this week and hopes to examine the relationship between interaction with the showcases and sales. Best Buy's showcase received a cumulative impression rate equivalent to 63% of TiVo subscribers. Viewers spent an average of 3.36 minutes in the showcase and a maximum of 9 minutes.
TiVo currently has 500,000 subscribers and expects to hit 630,000 by the end of its fiscal year ending Jan. 31, 2003, said Brodie Keast, senior vice president and general manager of TiVo. Cable and satellite TV providers' deployments of TiVo through licensing deals will be key drivers of subscriber numbers. TiVo hopes its partnership with DirecTV will help boost subscriber numbers. TiVo claims it will make its numbers and break even on a cash-flow basis on Jan. 31. Said Keast: "We all have to accept that with or without TiVo, the balance of power has shifted toward the consumer."
TiVo's new alliance with The Standard Film Trust, a Los Angeles-based producer of short films, will offer subscribers exclusive access to short films directed by celebrities. "We could package a message from a sponsor that a viewer could opt in to or [find] the right level of product placement in the film," Keast said. Whether directors will take exception to the idea of product or plot placement in their films remains to be seen.
Apart from marketers creating their own product showcases by repurposing ad footage, TiVo's showcases enable them to break out of the constraints of the traditional 30- or 60-second formats. Set-top boxes that run the TiVo service enable consumers to digitally store 40-, 60- and 80-hours of programming. This year most advertisers were offered four-minute increments for showcases, but they can run up to 30 minutes.
Even as PVRs and related devices remain a threat for advertisers, bullish projections for household penetration of PVRs have not panned out. Currently, approximately 1 million households in the country have some form of PVR capability.
Josh Bernoff, principal analyst of Forrester Research, in 1999 projected that there would be 14 million households with either stand-alone PVRs or PVR functions embedded in set-top cable and satellite boxes by end of 2004. Bernoff has revised his projection downward to 9.5 million PVR households by year-end 2004.
"In 1999, I looked at this product and said this seems to fit what people want. What I didn't anticipate at that point was just how challenging it was going to be to explain to people what this product is," said Bernoff, who added initial advertising by TiVo was "incomprehensible."
Forrester has renamed the interactive TV (iTV) segment "on-demand TV." The change in lingo reflects the unfulfilled potential of interactive TV software and a not-so-subtle shift away from all things interactive. Industry analysts say the frenzy over iTV dissipated when the Internet bubble burst. Delays in cable providers' engineering and deployment of advanced digital set-top boxes with PVR functions also are cited as reasons. Aggressive projections for PVRs were based, in part, on assumptions about cable company deployments.
Scientific-Atlanta, Motorola and other manufacturers are expected to roll out advanced digital set-tops by mid-2003.
"The issue for us and others [in the category] is getting past the inertia of how people watch TV. It hasn't changed ... our whole lives," Mr. Keast said. "What we've learned is that all of the advertisers we've worked with have accepted that sometime in the future, the consumer will be in charge. Once you see that, you see there are more opportunities than barriers."
At the Forrester TV Summit in September, the debate over the future of the 30-second spot raged on. "On-demand TV will shift, not destroy TV economics," Charlene Li, Forrester's research director, told a room full of jittery analysts, agency and cable executives. With $94 billion in ad revenue to TV networks at stake, according to Forrester's research in 2001, every bump in the shift to alternative forms of TV is under the microscope. The question is how much of that $94 billion bounty will migrate to alternative forms of advertising over time?
The growth rates for so-called on-demand TV services delivered via PVRs, VOD, subscription VOD and pay-per-view are being watched closely by advertisers. According to Forrester, revenue derived from consumers' access of VOD movies was $95 million in 2001; they're projected to hit $3.3 billion in 2007. Revenues from PVR services, the monthly fees collected by TiVo, ReplayTV, DirecTV and EchoStar, reached $20 million in 2001 and are forecast to hit $1.2 billion in 2007. If the projections bear out, the shifts will have implications for where marketers direct their ad dollars.
Cox Communications, the first cable operator to launch an ad-supported VOD service, recently lured marketers including Coca-Cola, Kraft Foods, Volvo North America and Best Buy to a trial in its San Diego market. While the FreeZone trial remains in the early stages, Cox expects to have preliminary results in early February, said Debby Mullin, vice president of marketing and new media advertising for Cox. Early results appear promising.
"People are using the response piece. ... They're choosing to view" the ads, she said. "If marketers use this as a creative extension to a 30-second spot, it can really start having an interesting relational effect with their potential customers," Mullin said.
Branded entertainment is not limited to TV-based applications. Electronic Arts this month debuts the Sims Online, the online version of its popular PC game with product placements from Intel Corp. and McDonald's Corp. Strategic interaction with the brands helps players advance in the game.
Wild Tangent, Seattle, has created games for a variety of marketers -- including Sony Electronics, Nike, AOL Time Warner's WB network, Toyota Motor Corp. and Verizon Online -- and is considered a leader in the space. Wild Tangent recently developed the online version of Electronic Arts' popular game "Need For Speed" on behalf of EA.com. The online game helped launch the Porsche Cayenne SUV.
The game ran on AOL Games' First Play, where gamers can get exclusive access to new games. To build buzz for the WB's new fall show Birds of Prey, Wild Tangent created a role-playing game tied into the show's theme. Games like these work well as part of an overall media buy, said Dave Madden, executive vice president of sales, marketing and business development for Wild Tangent.
Adversoft, a San Diego-based mobile-marketing company, sees interest building among movie studios looking to drive pre-release buzz. For this summer's release of Sony Pictures Entertainment's Vin Diesel-vehicle XXX, Adversoft created a "Mobile Agent Campaign" where 9,000 users registered to enter a chance to win ring tones and a spy package. Users answered questions on their handsets based on viewing the film's trailer online over the course of several days for a sustained interaction.
While this newly expanding menu of branding platforms has given rise to hope for marketers to leverage technology in their brands' favor, this optimism is tempered by the checkered history of two-way interactivity. While the "killer app" du jour is always good for a headline, TV and other media are still, by and large, passive mediums, havens for couch potatoes, who want to relax, even tune out. The Holy Grail is whatever it is that gets them to opt-in.