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In the United Kingdom, interactive television advertisements are regularly seen by millions of viewers.

A few years ago we might have been talking mainly about the opportunities for interactive television advertising on the Sky platform, which has had interactive television adverts since the start of the decade. Sky remains committed to interactive television and interactive television advertising as a differentiating feature of its platform.

In the past, the debate might have been about whether interactive advertising was best used for direct response transactional services or brand building. The issues might have been that it was too difficult or expensive to create campaigns, or that the results were simply not sufficiently sophisticated. That may be changing. It is easier than ever to create interactive television advertisements, but it remains something of a mystery to many.

The reason that there were a lot of direct response campaigns was that they provided some measure of interaction, as well as lead generation and they were relatively cost-effective.

Now, with its Sky View panel, Sky has data on the individual usage patterns of tens of thousands of viewers. Sky has the ability to combine the power of its personal video recorder with advertising in new ways.

While Sky used to be the main game in town for those of us in this industry, now the market is somewhat different and rather more competitive.

Cable is a strong competitor to satellite, but has never really taken advantage of its connected network to deliver sophisticated interactivity.

Freeview is now the leading digital television platform in the United Kingdom. While there are some interactive advertising opportunities, they are rather limited, mainly because there is no return path.

That could change with the introduction of hybrid broadcast and broadband enabled boxes. That includes services like BT Vision, which is now planning to provide transactional services on its platform, based on Microsoft Mediaroom.

In many ways, internet protocol television is the perfect medium for interactive television, and for interactive television advertising. It is based on a connected network that is inherently bidirectional, enabling true interactivity.

One way to think about it is as the next generation of cable television service. Digital cable already has some of these features, but they have generally been poorly exploited. Now, cable operators are finally embracing interactivity in the face of increasing competition.

New service providers have the opportunity to enhance the entire television experience, although in practice they appear to be struggling to emulate the traditional model of cable television.

In fact, interactive television needs to be seen as part of a much wider picture of interactive media services. The common factor of all these services is that they are digital and that they use the basic protocols of the internet as their common language.

The other main trend that we have seen is the tremendous growth in online video over broadband, over the top of existing networks. This is really the most interesting development in my view.

Some might argue that there is little similarity between an interactive advertisement on a YouTube video clip and a television commercial, but the significance must be clear. It means that major online players like Google are moving into the video advertising space. Their advertising revenues are already starting to threaten those of traditional commercial radio and television.

There is still some way to go, of course, but the potential of platforms such as Google is evident. There has been an apparent shift in advertising revenue from television to online.

I suspect it is not as simple as television advertising and its associated revenue just moving to the web. However, it does seem that it is increasingly difficult for advertisers to reach audiences through traditional linear television in a multichannel world of fragmented audiences, digital video recorders and video on demand services.

It is also increasingly difficult for advertisers to account for and justify their television spend. In fact, it seems that they have to spend relatively more on television advertising to reach ever smaller peak audiences.

At the moment, Google is best known for its text based AdWords. Recently they have introduced Flash overlays for video clips on sites like YouTube.

Google is also apparently considering bringing its television advertising service, currently being tested in the United States with the Dish network, to the United Kingdom.

Google already has a partnership with BSkyB as a provider of online search, video and email services, so perhaps might be able to help them with the targeting of advertising.

The term interactive advertising implies that the adverts themselves are interactive. That was the assumption of the early interactive television advertising experiences on Sky. They were called dedicated advertiser locations or DALs — places where viewers could interact with a brand is some form of rich media experience. They have continued to be relatively expensive and difficult to produce and deliver.

In some ways, producing an interactive television advertisement is missing the point. Let me explain. When I was working at the BBC, there were a lot of people trying to produce “interactive television”. By that, many of them meant television programmes that were in some way interactive, or enhanced television as it was called.

A classic example would be something like Test the Nation, a true audience participation show with which viewers could play along at home through their remote control.

It was the era of the so-called red button revolution, where pressing the red button on the remote would some how transport you to a different level of interactive experience.

In many ways the results were a bit of a disappointment. The applications were typically slow to load, often unresponsive when they did, and the actual audio and video were not in themselves interactive. That is because in a broadcast medium, like television, there is only really so much that you can do to make it genuinely interactive. Compared to an inherently interactive, social medium like the web, television seems to remain a resolutely one-way, one-to-many broadcast medium.

A point that I often made at the time — and continue to repeat — is that it is not the programmes that are becoming interactive, but the context in which they are viewed.

What do I mean by that? Well, my viewing of television has become a lot more interactive in the last few years. That is mainly as a result of the electronic programme guide, the digital video recorder and to an extent video on demand. For me, these have completely transformed my viewing experience. I now tend to watch programmes that I actually want to see, when it is convenient for me to do so. As a result the quality of my viewing experience has improved enormously.

Of course, that is a real threat to advertisers and the associated television revenues. Frankly, part of the reason that my viewing experience has improved is that I am no longer interrupted by as many adverts. In fact, it is something of a game in my house to fast forward through any break and line up for the start of the next programme part as quickly and cleanly as possible. I am not sure if that is just as a result of working in television, but anecdotal evidence suggests that I am not alone in this.

Is there anyone that has a digital video recorder that does not regularly skip through the commercials? So I may be more aware of the sponsorship bumpers going in and out of break, but I have very little recall of the advertisements in between. Of course, I do still sometimes see television commercials, but far less than I used to.

Ironically, I very rarely even see the pop-up prompts for interactive television commercials, because they simply do not appear when you are using any of the digital video recorder functions.

In retrospect, skipping commercials is nothing new. I used to do this over twenty years ago when I used a videocassette recorder to time shift programmes. It is just a lot easier now. Technology has always posed both a threat and an opportunity to television advertising, and I am sure will continue to do so.

I often hear people talk about new technologies for presenting commercials. For instance: preventing fast forward during playback of a commercial break in a pre-recorded programme. Or telescoping — allowing a viewer to interact with an advertisement, perhaps to watch a longer video, and then return to the same point in the ad break to continue watching.

For me, these may miss the point. Part of the reason I am using a digital video recorder, part of the attraction, is that I do not want my viewing of programmes to be interrupted by commercials at all.

It is a strange hangover from the dawn of commercial television, and the days of linear channels, when interrupting the programme stream was the only feasible way of delivering advertisements. And the entire industry of commercial television has developed around this.

Of course, some television commercials may be entertaining. Some people may even think they are better than the programmes in between, because some have incredibly high production values. Mostly they are irritating, because that is how a lot of advertising works, by producing some form of automatic association in your mind.

The reason that we can remember advertisements, and my even have affection for some of them, is because they work. I may not be able to recite a single poem — and I have a degree in English — but I can remember countless pointless jingles that I first heard thirty years ago.

It is not so much that I do not like advertising, as much as I do not like it interrupting the programmes that I am watching. As a viewer, it is the programmes that I want to watch. For the commercial television broadcaster, the programmes are simply there to attract viewers and keep the adverts apart, so that my time can be sold to advertisers.

Yet I also buy a lot of magazines. And they tend to be filled with advertisements. I actually read the advertisements because they are often as relevant to me as the editorial. So I do not resent them as much. They are part of the package, part of the value proposition.

I also love special offers, provided that they are relevant to my interests. I also like to relevant recommendations. I have bought any number of books from Amazon on the basis of their up-selling, collaborative filtering, ratings and recommendations.

Of course, if television advertisements were more relevant to my own interests, I might be more inclined to watch them. That is the premise and the promise of technologies like video on demand or internet protocol television.

By delivering a service that is more personal to me, in a connected rather than a broadcast network, it is theoretically possible to deliver commercials that are more accurately targeted to me as a viewer and to record whether I actually watch them.

It sounds great in principle, but in practice it is still a little way off. That is not simply a limitation of the technology. It is more a matter of inventory.

For a start, viewing of video-on-demand services still represents only a small fraction of total television viewing. Internet protocol television services reach only a relatively small number of television viewers.

In the United Kingdom, there are only around 100,000 subscribers to a true IPTV service. There are maybe 250,000 if you include BT Vision which combines broadcast and broadband in single box. That is not a large number to advertisers. It is certainly not large enough to make it worth creating and managing different types of adverts to reach different demographic types of viewers within that relatively small universe.

So it is important to look beyond what the technology can theoretically deliver, and appreciate the current relative size of the market. That is why broadband video, delivered over the public internet, is so interesting. There are already over a quarter of a billion people around the world that can view video online, and the number is growing all the time.

According to comScore, in the United States alone there were 140 million internet video viewers last year, up 15% from the beginning of the year. Over half of them had used YouTube, up 60% on the beginning of the year. And the number of streams that were viewed was up 40%, to over 10 billion. Nearly a third of them were on YouTube, up by over 200% over the year.

That sounds like an enormous market. In reality, the number of impressions is tiny in comparison to television. On average we each watch television around 24 hours a week — billions and billions of hours a year.

Nevertheless, it is the growth potential of online video that is so interesting. The size of the online audience as it stands is sufficient to create a real market for advertisers. It also allows advertisements to be targeted directly at individual viewers.

At the moment, the online advertisements may seem less effective than their television counterparts. They may be cut down from television commercials as pre-rolls, or they may be simple overlays. They feel a little primitive, rather like some of the early interactive television spots.

Part of the problem is that online advertising is still seen by some as a low budget medium compared to television, so it does not attract the same level of creative attention.

Let us fast forward to the future, where online video may have the same quality of presentation — the same emotional impact — as television, with all the flexibility and accountability of the web. That world may not be as far off as you might imagine.

I have been thinking a lot about online advertising recently, in connection with broadband video services that I have been developing. It really requires thinking in both internet and television terms. It is a true convergence. As we say at informitv: “broadband meets broadcast”.

It is by no means clear that companies that come from one side or the other will necessarily get it right. For instance, I am still not convinced that Google completely understands television or video. Despite, or perhaps because of, its dominance in online video, through its acquisition of YouTube, Google does not really seem to understand television advertising or the television advertising industry.

In common with most online video players, there seems to be little understanding of issues like aspect ratio switching, 16:9 widescreen, subtitles, different frame rates and so on.

However, Google probably knows a lot more about me as an individual than I might wish to think, and far more than most brands. So it can target, accurately and efficiently.

The real changes in interactive advertising may come about in the way that advertising is bought and sold. With Google it is virtually automated, and highly efficient. So the current media planning and buying process, which in some ways seems hopelessly inefficient, will probably change.

Brands and campaigns will still need media planning to maximise their efficiency, but the knowledge and skills required may need to change considerably.

The other thing that I think will change is that brands will spend more money on using video to promote their products and services on their own channels, whether on the web or through interactive television in its many forms.

They will still need to create awareness to build their brand, but there are now many different ways that this can be done online, relatively inexpensively, and often very interactively. For many of them, the traditional thirty second television commercial is a relatively rather expensive tool.

So my main message is that interactive television advertising is a bit like interactive television, it is a confusion of terms.

In my view, it is not just a matter of creating advertisements that are interactive, but using more interactive delivery technologies to present promotional messages that are more appropriate and relevant to their audiences in the first place.

Dr William Cooper is an independent consultant specialising in the strategy and implementation of advanced and interactive media services. This text is from the keynote introduction he gave at fourth annual Interactive TV Advertising Show in London on 13 March 2008.

Copyright © 2006 William Cooper. All rights reserved.

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