It’s Time to Take Broadband Seriously

Broadband cable became firmly entrenched as the system that will one day carry interactive television with this week’s announced merger of AOL and Time Warner.

Marketers who want to take advantage of interactive television must now eye a serious commitment toward partnerships with broadband technology-based companies that will allow them to market to consumers through advancements such as click-through streaming video ads.

“There is no question that broadband cable will be the primary delivery mechanism for the new platform of interactive TV, and I strongly believe this new company will accelerate the process,” said Jill Frankle, director of retail marketing research at Gomez Advisors, Lincoln, MA.

The biggest advantage the merger will have for AOL is broadband cable and content access for its new service, AOL TV.

“Before the merger, AOL TV was only going to be available through one channel, being satellite distributors,” Frankle said. “This deal has every cable distributor in the country looking at where they stand in respect to Internet content partners, technological upgrades and when they can roll this out to their customers.”

AOL TV- set to launch this spring- will offer subscribers who choose to upgrade an interactive service on their televisions with key pieces of the AOL service, such as e-mail and buddy lists. Most importantly, it will allow advertisers to specifically target and track audience members with interactive ads.

Last summer, AOL announced agreements with key players in the development and planned deployment of AOL TV:

* TiVo, whose digital technology allows people to pause and record programs.

* Satellite distributor DirecTV.

* Technology companies Hughes Network Systems, Philips Electronics and Liberate Technologies.

According to AOL, Time Warner is simply the last piece to the puzzle.

“We know that AOL TV is going to bring interactive TV to our subscribers,” said Regina Lewis, vice president of communications at AOL. “The merger aside, we have 20 million members and we view AOL TV as an upgrade, so it will first be targeted primarily at AOL members who already like to use our instant chat, already have buddy lists and who spend a great deal of time on the Web.”

Meanwhile, broadband competitor [email protected]’s new Net top system is slated to launch this spring or summer.

“We’ve been running interactive video advertising since we started up in 1996 and we have 23 cable systems all over the world currently providing broadband to our customers,” said Susan Bratton, vice president of market development at [email protected], Waltham, MA.

[email protected] is already able to track whether a user is on broadband and allow access to specific interactive advertisements only to broadband customers. Bratton estimates another three or four years until one in four homes has broadband access.

Meanwhile, almost as soon as the merger was announced, AOL/Time Warner made public several new promotional agreements that will immediately take hold. AOL’s Internet service will begin prominently featuring Time Warner entities InStyle Magazine, and as well as being able to offer a host of music and film clips through Time Warner’s extensive library. There also are several promotions planned in conjunction with AOL’s MovieFone.

“We’ve got hundreds of partners, and Time Warner has been one for some time, so some of these promotions are already in existence. The others will be added almost immediately.” Lewis said.

Forrester Research media analyst Josh Bernoff doesn’t foresee a major problem for the two firms’ existing marketing partners.

“Anytime a merger like this happens, there is some general chaos, but all these companies with pre-existing deals with AOL-Time Warner have clauses in their contracts that allow for renegotiation. If they can find a middle ground, it may not even be an issue until two or three years down the line when contracts expire.”

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