The national rollout of cable modems and digital subscriber lines is expected to make a vast improvement in the quality of streaming video on the Internet, which would allow marketers the ability to make their Web advertisements more dynamic than much-maligned banner links.
AtHome Corp., a broadband Internet service provider in Redwood City, CA, founded by cable companies in 1995, has contracts with 20 cable systems to provide their subscribers with high-speed access.
TCI, a major shareholder of AtHome, prevents the company from streaming more than 10 minutes of continuous video to its 460,000 subscribers, an action which irritates streaming service providers. The 10-minute limit effectively prevents most traditional TV programs, feature-length films and infomercials from being streamed in their entirety.
The time limit has stirred debate about AtHome’s motives. The company says it does not want to overtax the technical limitations of cable systems, but critics say AtHome wants to protect its cable systems from losing viewership to Web sites that offer streamed programs.
“It’s all about money and keeping their stock price up,” said Krystol Cameron, founder and CEO of SimplyTV, a video service provider in New York that plans to launch a site with streamed programs next month. “AtHome doesn’t care about offering consumers choice.”
He said AtHome could expand the bandwidth by opening its systems to other Internet service providers, but the cable industry is against any procedure that would loosen its monopoly on cable access. It has argued that it is making a major investment in system infrastructure and will only see a return if it is reimbursed for carriage. It also said it does not have the technical capability to provide access to other ISP’s.
The issue, which was addressed in government discussion of the merger deal between AT&T and TCI, is expected to be addressed by the Federal Communications Commission again this year.
Broadband’s Advertising Impact
The 10-minute time limit is not expected to present an obstacle to infomercial marketers, who could break a half-hour program into smaller segments of demonstrations, testimonials and a call-to-action that would be streamed separately.
Susan Bratton, director of advertising for AtHome, sees difficulty in getting viewers to remain engaged with a half-hour sales presentation.
“Instead of asking people to sit down and watch a half-hour infomercial,” Bratton said, “you could have a Web site for ‘Tae Bo,’ for example. When you click on that ad you could see a 10-minute introduction to his methodology or you can switch off to three or four stars doing Tae Bo exercises or fill out an order form for Tae Bo. Instead of doing the same things you do on television, we are trying to leverage the Internet to get beyond just video.”
Broadband provides a more interactive form of advertising than does broadcast television and richer multimedia than standard Internet service.
Instead of a static banner, advertisements are run on streaming video, which are clickable, allowing for sales and rebate offers as well as demonstrations and additional product information. Hard Rock Cafe, for example, has an ad with a printable coupon for free desert on its broadband banner ad, as well as its ISDN Internet sites.
Broadband access is being analyzed by the corporate advertising community as a means to generate direct response leads and sells. AtHome has among its advertisers AT&T, Campbell’s Soup, Citibank, IBM, Lands’ End and Lexus. The corporate advertisers use broadband advertising to enhance brand image along with direct response marketing.
The advertising for AtHome is created by its Enliven business division, and has three different formats that ads appear in called Impact, Impulse and Capture.
The Impact advertising format allows computer users to control the flow of the information shown in the video. A tracking system indicates which household receives the advertisement.
Impulse advertisements are secure forms filled out for product ordering. These ads are similar to traditional DRTV marketing in that 800 numbers are flashed on the screen and multiple products can be advertised in one video stream.
The third format, Capture, creates more interactivity and allows advertisers to ask targeted questions for lead generation.
“One of the things people love about the Internet is that they are in control, they can stop and start the advertising video whenever they want,” said Kasey Zacher, manager of client services for AtHome. “One of the things we are experimenting with is Interactive. If you wanted to see who made Billy Blanks’ clothes, you could click on him and get information about that. If you wanted to see who was in the audience, you could click on them and find out about them.”
Analysts anticipate the rich media to vastly improve Internet advertising.
“The ad opportunities with broadband are unbelievable,” said Shelly Morrissette, an analyst for Forrester Research Inc., Cambridge, MA. “The reason people don’t click on banner ads now is because they are boring.”
Handicapping the Broadband Race
As sophisticated as cable modems are, they are not the only new means of accessing the Internet. Local telephone companies are developing digital subscriber line (often abbreviated as either DSL or ADSL) technologies that will bring the Internet to personal computers.
The bandwidth is intertwined through existing phone lines and transmitted to homes. It is slightly slower than cable modems and is slower the further away it is from the telephone company’s Internet server.
“The Internet will be accessible at a faster rate through both modems but the telephone companies have not been able to get their act together, so it is not as far along as the cable modem,” said Morrissette. “Right now, if I had to bet which one would be the more popular in the future, I would put my money on cable modems.”
He added that companies such as America Online Inc. are putting heat on the telephone companies so they could still serve their customers through the telephone lines they are already leasing. Any ISP that does not have broadband servers is going to be far behind in the development of the Web.
“Companies like AOL hate cable modems,” he said. “Long distance companies who don’t have access to people’s homes yet are signing agreements with cable providers so they can have Web and phone and cable customers on one bill.”
With the Internet evolving at a frenetic pace, traditional DRTV ads will change and will also have to become more compelling. With cable companies experimenting with set-top boxes with Web access, there will be more competition among channels and Web sites, so direct response and brand advertising will have to be that much more compelling to keep the attention of the audience.