DM Is the 'Killer App' for Interactive TV

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NEW YORK--While direct marketers have grown jaded over the years with overblown promises of interactive TV that never materialized, there still is cautious optimism about its marketing potential.

"Direct marketing is the 'killer app' of interactive TV," David Harkness of Nielsen Media Research, New York, said at the @d:tech conference here this week. "Direct marketing is a $700 billion business, while TV advertising is only a $42 billion business. Five years from now, every TV commercial will include not only the ad, but the crossover potential to a Web site."

Nielsen's research indicates that 61 percent of Internet users shop online, which bodes well for interactive TV transactions.

"There is a lot direct marketing already on TV, whether it's the Home Shopping Network or infomercials," Harkness said. "Integrating the TV with back-end systems to handle transactions will present an enormous opportunity."

Although interactive TV promises direct marketers the ability to conduct a transaction on the same screen that delivers a marketing message, its adoption by consumers is expected to be gradual. Another market researcher said that of the 61 million U.S. adults who use the Internet, most do so at work, while only 1 percent of the total have TV access. Even as TV access to the Internet grows, it still will be a fraction of the total Internet audience for several years to come.

"Even though TV access to the Internet is going to grow 15-fold in the next four years, less than 10 percent of the adult online population is going to access the Internet through TV," said Tom Hill, a researcher with Cyber Dialogue Inc. "The PC is still dominant in people's thinking."

Part of the problem with consumer adoption is that consumers have not yet experienced true convergence -- the TV and the PC are very separate in perception. But the limited adoption shouldn't prevent marketers from experimenting with interactive TV marketing, one media analyst advised.

"It's important to play around," said Gary Arlen, president of Arlen Communications Inc., Bethesda, MD. "You may as well learn now. Even if you bag the effort, the intelligence you've gained is transferable."
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