Transactional television is a now big business, encompassing voting, quiz and participation programmes, gaming and gambling, as well as more traditional teleshopping channels. But broadcasters need to understand and respect their viewers if they are to sustain long-term relationships and revenues.

Jeff Henry, head of the consumer division of the ITV commercial television network, kicked off a conference on transactional television in London by asking an audience of television executives to try an experiment.

He invited them to use their mobile phones to text ‘Jeff’ to a short code number, which the vast majority of the audience duly did. “Congratulations,” he said. “You have just donated to one pound to charity”.

It seems symptomatic of an apparently arrogant approach to the audience which makes assumptions about who they are, makes little attempt to get to know them better or build a long-term relationship, relieves them of their money, offers them little reward or feedback, and celebrates this as a success.

ITV Play, the new participation brand of the commercial network, has generated almost £30 million in its first six months. The entry of ITV into this market has certainly shaken up the sector and shaken out some of the more opportunistic early entrants.

Transactional television is now under the regulatory spotlight. There has been some criticism of quiz programmes that offer prizes for simple multiple choice questions and generate considerable revenues in the process through premium rate telephone numbers.

ITV is keen to be seen to be taking a responsible position. In addition to telephone calls it also offers free online entries, to avoid being viewed as an illegal lottery. “This is hardly the behaviour of a company that wants to exploit people,” said Jeff Henry, adding that “the sector needs to grow up and take the high road to success”.

“Interaction is at record levels,” according to Janet Goldsmith of the consultancy Mediatique. “Interactivity is seen as an intrinsic part of the industry,” she said. “Functionality has blurred the distinction between the viewer and consumer.”

Mediatique has counted a total of 110 transactional channels in the UK, and anticipates gross revenues, including gambling, of £2.5 billion by 2010, making it a major revenue stream for the broadcasting business.

“In the past it would have been unthinkable that television channels would have embraced premium rate telephony,” said Edward Bonnington of Harvest Media. “That has all changed,” he said, but added that “the industry has got a fairly tainted image that has to be turned around”.

There is a general recognition that many existing participation programmes present a poor viewer proposition and that there is a lack of consumer confidence in the mechanics by which some formats may operate.

A more sophisticated form of interaction was admirably demonstrated by service provider Million-2-1, which believes that engaging with the audience is not as simple as ‘A,B,C’.

They offered a prize of a personal media player to the person who bid the lowest unique amount. Their text message system automatically managed the reverse auction, with many participants engaging in multiple bids with apparent enthusiasm and enjoyment. The name of the winner, with a bid of just 12 pence, was later announced by text message.

Chris Banatvala, director of standards at the UK communications regulator Ofcom, noted a move from regulating the standards of content to one of consumer regulation. One possible outcome is that some services could be classed as advertising rather than editorial. That could restrict some services, such as ‘physic’ television programmes and those that promote adult phone lines.

By and large, greater regulatory clarity seemed to be welcomed by the speakers. The provisions of a modernised gambling act in the UK will reduce some of the grey areas around which operators have had to tread carefully.

New platforms, particularly broadband and IPTV, were also eagerly anticipated, combining the ease of the remote control, the functionality of the web, and the payment power of premium rate telephony.

Brian Farrelly, the broadcast director of QVC in the UK noted that it is “more feasible than ever before to create a viable transaction television channel”.

Regulations differ from country to country, even state to state, and the success of different formats varies accordingly. Germany has been in a leader in call television formats, while France has embraced multiplatform programmes. The UK is a leader in interactivity, but the US lags behind as a result of limited premium rate telephony, fragmented technical platforms and more restrictive gambling regulations. Nevertheless, the potential opportunity is enormous.

A recurrent theme was the importance of customer service and customer relationship management, a new area for many broadcasters, but one that is more familiar to subscription service operators. Gambling operators also stressed the importance, not just to provide consumer protection but also to manage high-roller accounts.

Developing a more personal long-term relationship with individual users will be increasingly important to the future of television, but for passive viewers to remain active participants will require a strong element of trust and respect to be maintained and preserved.

The Transactional Television conference organised by Broadcast magazine took place at The British Library on Thursday 28 September 2006.