Potential for all in digital age

How do companies view the arrival of digital TV? As an opportunity, or a threat? Probably, as both. The recommended policy might be to wait and see what develops, then exploit it as it benefits brands.

Many companies held the same view towards retailer brands. Were they a real threat? Were they an opportunity? The “wait-and-see” policy many brand owners adopted led to their eventual downfall.

With the benefit of hindsight, companies would have changed their policy towards retailer brands. With digital TV we don’t have to console ourselves with hindsight; this time we have the benefit of foresight. The broadcasters urging us to embrace the digital age aren’t secretly plotting to erode our margins, they’re sharing information, and wanting us to get on board and expand with them.

Hindsight tells us retailer brands were always going to dominate many grocery sectors. Foresight tells us that all TV is going to go digital. The policy of both this Government and its predecessor is that analogue signals will be switched off (the current betting is by 2010).

The question is, how best to use digital TV while it’s in the process of becoming the household standard.

Some forward-thinking companies (not just media owners) have already decided to help facilitate the process. Midland Bank has invested in the BIB consortium. Nationwide recently announced it is becoming an Internet service provider, offering a familiar beach hut to the millions of new Net surfers digital TV will create. And, more worryingly for UK companies, US clothing, music and book retailers, with greater Internet-sales experience than their UK counterparts, have begun tying up contracts with UK digital broadcasters to supply online shopping.

Clearly, some people believe that foresight is a better long-term investment than hindsight.

But what can digital TV offer to other businesses, particularly those without the money to join consortia or with products too run-of-the-mill to attract many visitors to their Websites? And those for whom interactivity means a consumer eating a biscuit?

Digital TV brings together two new technologies: multi-channel TV, and the Internet. It offers all the functionality of the former, and then some, while allowing millions of people access to Net-related facilities like global e-mail, video-based home shopping and comprehensive entertainment guides. To understand how businesses can make use of digital, we need to consider how both multi-channel TV and the Net have affected British consumers.

Existing multi-channel services have proved advertisers can reach niche audiences, while still using the most potent creative vehicle: the TV commercial. But as the viewer is given the ability to be their own programme scheduler, the choice of viewing becomes intensely personal, like the purchase of a particular magazine. So how can we make TV commercials more personal?

One answer is versioning; for example, switching voice-overs and music mixes to suit a particular channel. Advertisers and their agencies don’t do this at the moment because the audiences involved are very small compared with the mass audience their standard commercial reaches. But, in the future, that standard commercial will reach a fraction of the audience it does now, and the only way to achieve mass coverage will be to agglomerate a large number of niches. Versioning won’t be an option, it will be a necessity. (Major radio stations already recommend that advertisers provide an FM and an AM version of the same commercial.) Forward-thinking advertisers will have to be tough with their creative agencies and insist that perhaps ten per cent of the production budget must be allocated for versioning, with savings made elsewhere.

Developments on the Internet can also guide our understanding of what digital TV may bring.

Internet penetration in the UK doubled during 1997, according to NRS. There are 5.5 million UK adults using the World Wide Web. And it is not just because companies are desperate to be seen to keep up – the total numbers of individuals accessing the Web from home and from work are virtually equivalent.

Companies using the Net successfully have understood the basic truth of Internet users, who fall into two camps: the zealots and those on their way to becoming zealots (that is, the curious new user). People enjoy the Net, particularly because there is still a sense of discovery about it.

This zealousness creates a divide between Net-haves and have-nots. People who are wired are more likely to find an affinity with others who are wired and, for precisely the same reason, they’re more likely to feel an affinity with brands that are wired. The lesson we learn from the Internet is that any new technology creates a club of users, all of whom are anxious to help prove that their friendly society has real teeth.

If our analyses of multi-channel TV and the Internet are correct, then what Digital TV will create in the short and medium term is pockets of consumers who respond very appreciatively and actively to commercial messages purposely designed to appeal to them. They’ll tend to be young, upmarket people, fairly literate in media and technology. They’ll play whatever game is proposed, as long as the game is rewarding and flattering enough.

And because the audience will be uncompromising, marketers cannot afford to compromise either. The correct policy for digital TV isn’t wait and see. It is one of be here now, or forever hold your breath.

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