Will Interactive Infomercials Work?

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Consider the number of orders direct response television companies never receive because viewers just didn't want to get off their couches and dial the toll-free number. Wouldn't it be wonderful if these beloved couch spuds could just click a special "Send it to me now!" button on their remote controls?


Well, that day is here. Almost.


Since the mid-1990s, at least, various cable TV companies have been experimenting with eTV - enhanced TV - or I-TV - interactive TV. One of the more famous tests was Time Warner's Full Service Network in Orlando, FL, in 1994, which reportedly cost the company hundreds of millions of dollars to prove that video-on-demand didn't work. At least not then.


Time Warner hasn't been alone in the it-almost-works arena. As David Kaiser, CEO of B3TV, San Francisco, said, "There is a graveyard of failed interactive television attempts out there." B3TV supplies the technology for, but does not produce, interactive commercials.


Time Warner, Cox, Charter and a half-dozen other cable providers haven't given up the idea, however.


Cox is launching another interactive test in San Diego later this year, starting with video-on-demand and stepping cautiously into full I-TV in early 2001. Charter is trying it in Los Angeles.


And B3TV is in the middle of what interests us direct marketers the most: giving TV viewers the opportunity to buy with just a click of the remote.


B3TV and Domino's Pizza are running a test I-TV ad over KBHK-TV in San Francisco. The company earlier had been involved with a Sea World test, said to be somewhat positive in results, over the same station.


Another prominent player in I-TV is RespondTV, which also has been using KBHK-TV as a proving ground. Three of these tests are worth mentioning: a World Wrestling Federation T-shirt offer, a Melissa Etheridge compact disc offer and a Domino's Pizza test.


The WWF test involved a spot during its "SmackDown!" program in which viewers could order a T-shirt without moving from their seats. The response rate was 13.8 percent with a 13 percent conversion. This translates into 17.9 buyers for every 1,000 viewers.


The Melissa Etheridge offer - through CDNow - ran during a televised Melissa Etheridge concert. Here the response rate was a whopping 46 percent with a 22 percent conversion rate. This comes to 101 buyers for every 1,000 viewers!


The Domino's commercial drew a 23 percent response rate. RespondTV's announcement of this feat didn't mention a conversion rate, so you must assume this means 23 percent of the commercial's viewers ordered a pizza.


You're going to see more ventures and co-ventures during the next two years, as the number of digital televisions in households increases. Liberty Digital, for one, invested several million dollars in a sales processor, OrderTrust, as part of an I-TV deal. Liberty Digital is creating 12 different I-TV commerce channels and wants OrderTrust to take care of its back-end business. And a few weeks ago, Liberty purchased 50 percent of The Game Network, seeing huge potential in gaming interactivity.


In another co-venture, RespondTV is teaming with AT&T Broadband to run trials and a rollout of I-TV infomercial-style programming beginning late this year and early next year. AT&T Broadband has 16 million subscribers. Add this number to the millions of subscribers claimed by Cox, Cablevision, Time Warner and the other cable companies, and this venture - along with theirs - will be important for us in DRTV to watch.


The advent of interactive infomercials will add yet another variable to our media- buying efforts and our own back-end infrastructure. In addition to regular cable buys, we'll have to consider iCable buys. What will that time be worth? Will we - especially in the early days - be able to cut good deals? Will media outlets be willing to do per-inquiry deals?


On the back end, will we have to hire yet another third party, such as OrderTrust, to handle iCable purchases? Will the cable companies supply this service? If so, at what cost? Will our existing fulfillment companies have the necessary connections to the cable system's order-processing infrastructure?


According to B3TV's Kaiser, there could be a higher cost to us for I-TV than for what we're doing now.


"This is not your average shopping cart style of interactivity," Kaiser said, referring to Internet shopping carts. "This form of advertising makes the dollar work harder. In the case of networks, they will be able to charge higher rates, while cable and satellite stations will be able to extract higher fees."


If there is a higher cost involved, will it allow for a decent return? There's no way of telling. We will just have to continue to watch the pioneers. The ones with arrows in their backs will tell us just as much as those who make it to the Pacific.


Timothy R. Hawthorne is chairman and executive creative director of hawthorne direct, a full-service DRTV ad agency.
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