JUST before kick-off at a recent American football league game at the Ford Stadium in Detroit, fans watched in amazement as three trucks burst through a doorway and raced across the pristine playing field dragging giant billboards. The game started moments later – the trucks hadn’t disturbed a single blade of grass. In fact, no one in the stadium had seen a thing. Only viewers watching at home had seen them. The trucks are the latest of a new breed of TV advert that hits the “target”, as advertisers affectionately call us, with eye-catching virtual images.
Phantom vehicles are a far cry from the familiar 30-second ad break, but they’re just one manifestation of a fightback being mounted by the advertising industry. Many of us rush off to make a cup of tea when the ads come on, and the latest technology is helping us become even more adept at avoiding ads. Even if we stay glued to the couch during the breaks, we channel-hop or use the latest video recorders to skip through the ads in the blink of an eye. So advertisers and TV networks are busy rethinking the medium. More and more of them are turning to interactive computer technology to help get their messages across. Some may even have begun to spy on you, gathering information about your lifestyle. Yet if virtual products that pop up when you least expect them don’t make you part with your money, no matter. The most effective advertisements could turn out to be the ones you don’t even know you’re watching.
If viewers do their level best to avoid the latest washing powder or car ads, who can blame them? Broadcasters in the US, for example, have doubled the amount of time dedicated to commercials since 1990. Each 40-minute episode of the new Star Trek series from TV network UPN runs more than 18 minutes of ads and promotions. And one engineer has even come up with a device called the Time Machine that can “squeeze” TV programmes so that networks can fit in extra ad spots (see “Shrink the show”).
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It’s a vicious circle. As viewers find it increasingly easy to avoid adverts, advertisers cram more commercials into schedules to compensate, raising viewer irritation levels and making us even more determined not to watch them. It started in the 1970s when the video recorder arrived and viewers realised they could record programmes and then fast-forward through the ad breaks. These days, according to Tennessee-based market research company NextResearch, about 95 per cent of video owners do this. And now there’s a new generation of video recorder that captures broadcasts digitally onto a hard disc.
Freed from the limitations of cassette tapes and clunky mechanical motors, hard disc video recorders create the opportunity for all kinds of ad avoidance. TiVo, one of the first hard disc recorders to reach the market, can fast-forward through a half-minute advert in just 2 seconds. And ReplayTV, distributed by Californian company SonicBlue, allows viewers to skip the ad break entirely. There are already over a million of these machines in the US and a few hundred thousand in Britain, according to market research company iTV Marketer, based in New York. And where TiVo and ReplayTV lead, others will be quick to follow.
Combined with channel-hopping and new ad-free video-on-demand services, hard disc video recorders will make the 30-second ad an endangered species. That’s bad news for the entertainment industry. These technologies, the argument goes, break the unspoken deal between viewers, the networks and advertisers. Jamie Kellner, Chairman and CEO of Turner Broadcasting, believes the new video recorders are turning viewers into crooks. “It’s theft,” he told Cable World magazine in an interview earlier this year. “Your contract with the network when you get the show is you’re going to watch the [ad] spots. Otherwise you couldn’t get the show on an ad-supported basis. Any time you skip a commercial…you’re actually stealing the programming.”
“There is no law that you have to be strapped to your chair, with your eyes taped open and get commercials poured into your brain,” says Laurence Pulgram, a lawyer who represents SonicBlue. Henry Jenkins, comparative media professor at MIT, also dismisses Kellner’s rhetoric. With such a significant increase in the number of commercials per hour, and what Jenkins sees as a drop in programme quality in the US, he believes that if there is a contract between you and the network, it’s time to renegotiate.
Viewers are already voting with their feet. London-based consultants Decipher and Boston-based Forrester Research predict that the audience for traditional TV advertising will have fallen by between 10 and 30 per cent by 2005, and will have halved by the end of the decade. Inevitably, networks are going to lose advertising revenue – normally you’d pay around $175,000 for a single showing of an ad on NBC or as much as $400,000 per ad during a popular show such as Friends. “Poor Professor Jenkins is going to say to himself, I guess I got my wish – I do not have to watch commercials anymore,” says Robert Schwartz, a lawyer at Los Angeles-based firm O’Melveny & Myers, whose clients include Hollywood studios. “But he will find there is nothing on TV.” That is Kellner’s point. Ad-skipping, he says, is a threat to the TV landscape as we know it, and if a majority of people take up the habit it could crush the studios.
His company Turner Broadcasting and other big names in the industry are taking this threat so seriously they’ve launched a counter-attack. And their first target is the hard disc video recorder. A host of Hollywood studios and TV networks, including ABC, CBS, NBC, Disney, Paramount and MGM, have united in a legal battle to block the distribution of ReplayTV 4000 recorders. Apart from their concerns about ad-skipping, the companies worry that other features on the device – such as its 320-hour capacity and ability to send recorded programmes across the Internet – will make video pirating far easier.
On a larger scale the media industry’s fightback strategy is to build on the old idea of “product placement”, slipping branded consumer goods such as cellphones or cars into TV programmes and feature films. These days, thanks to rapid advances in digital image processing, ad agencies can get their products to appear magically more or less wherever they want as virtual images. The technology was developed in the mid-1990s when companies such as Princeton Video Image of New Jersey and Sportvision near New York began to experiment with systems that allowed them to digitally insert images into live TV broadcasts. Among the first applications were virtual adverts placed on the wall behind the batter in baseball games and the virtual “first down” marker, a line superimposed digitally across the field during American football games to indicate the ten-yard gain a team must make to be able to score points. To viewers at home it looks as if the line is painted onto the grass, even when players run over it or the camera angle changes.
Since 1999, digital inserts have been popping up all over the US networks. During one live broadcast from Times Square on New Year’s Eve, CBS caused a storm by inserting its own logo over that of rival NBC on a sign visible behind the presenter. Virtual blimps plastered with huge ads have hovered over sports events. Signs have shimmered up at viewers from the bottom of swimming pools. And most recently, PVI drove its virtual trucks into the stadium in Detroit for Fox Sports network.
PVI’s “live video insertion system” is based on powerful pattern-recognition software that learns to distinguish particular static features of a football stadium, say, such as the centre line and the edges of the stands. During a game, live feeds from the TV cameras around the stadium are sent to a computer that inserts the advert or virtual first down marker and rebroadcasts the composite image. The system must respond quickly, adapting the brightness of the digital insert to match changes in lighting, for example. And to help keep the virtual images in place even during zoomed shots, each camera is fitted with a small sensor that keeps track of its movements and relays them back to the computer. All of this happens in 15 milliseconds, so viewers at home don’t notice a delay, says James Green, Chief Operating Officer of PVI.
Although such virtual adverts are usually brazen and larger-than-life – like the huge virtual Coke bottle and glass that pop out of the playing field during coverage of soccer games in Mexico – there is a growing market for more restrained effects, in particular virtual products inserted into popular TV programmes. In one of the first examples, PVI inserted a branded beach ball into the background of a scene during post-production work on an American sitcom. Seven Days, a science fiction series screened on the network UPN, featured virtual products from three clients, including a major bank and a mineral water producer. Another American network is seeking advertisers to place virtual products in future episodes of Baywatch Hawaii, presumably for suntan lotion, swimsuits and cosmetic surgery.
Virtual products are also infinitely flexible. They can be replaced by other products in reruns or combined with demographic and sales data so that they match the audience in a particular region. They can even be targeted at a particular household.
Part of the impetus has been the radical change in the nature of television itself. Interactive services delivered via TV aerial, cable or through a phone line connected to a satellite set-top box can bring viewers quizzes, special offers or sales pitches. Responses from viewers are especially valuable to networks, who can use the information to tailor the next generation of virtual adverts to viewers’ preferences (see “Who’s watching who?”).
Target for tonight
You could be forgiven for thinking television is becoming less about entertainment and more about direct marketing. One unnamed retailer told analysts at Forrester Research that interactive TV will account for 10 to 20 per cent of their direct-response sales by 2005. “Targeting messages to the right consumer at the right time will be great for impulse purchases,” the retailer said.
Interactive TV, says a report by Forrester, is already allowing viewers to use ads to access information about a product, gain discounts or enter contests. Retailers, meanwhile, are using it to learn more about their potential customers. In Britain, for example, anyone watching TV stations E4 or Channel 4 through Sky can access interactive services via a Renault advert. “At the moment people can order car brochures, have people ring them back or order a test drive,” says Merlin Inkley, Channel 4’s airtime management executive. “In a month’s time they will be able to buy.” The experiment has been running since February and is one of several forays into “t-commerce”, the TV equivalent of e-commerce.
Interactive ads are even starting to wander out of the breaks and into the programmes themselves. For better or worse, technology now allows TV programmes to morph into a sort of dynamic database that gives you access to all kinds of spending opportunities. Analysts at Forrester suggest looking out for sitcom plot lines that revolve around a shortage of a particular brand of baby’s nappy, for example, with discounts for viewers who interact. In the next generation of Seinfeld, Starbucks could replace the generic coffee shop, and viewers who catch the bean variety mentioned during the show and click with their remotes will earn a discount.
Dutch TV company Endemol, who developed the global smash hit Big Brother, is taking this concept one step further. “Our customers are changing from broadcasters to advertisers. The advertisers become owners of a format in which we translate their company goals,” says Tom Sova, who runs Endemol Interactive. The company has just developed a dating show called Heartbeat, now showing in the Netherlands,that allows participation through the Web while the show is on air. Another show, TV quiz Achmea Kennisquiz was made for Dutch insurer Achmea and uses text messaging to target 11 to 14-year-old viewers via their mobile phones. Advertisers get valuable data, be it IP addresses, phone numbers or personal preferences, and customers are fed an extended advert that they may not even realise they’re watching.
The transformation of the commercial break into something more subtle, and the creeping of adverts into programmes themselves, shows that some sections of the ad industry have finally learned that most viewers don’t appreciate having commercial products shoved in their faces. But even if some viewers don’t mind surrendering a little of their privacy, before too long others will learn how to evade interactive TV “advertorials” with the same agility they have shown in skipping conventional ads.
Shrink the show
Developed by an engineer from San Jose, the Time Machine frees up extra space for ads by searching through programmes for neighbouring frames that are identical. When it finds a match, it removes the frame, saving 1/30th of a second. Slice 900 redundant frames out of the 54,000 in a half-hour show, say, and you have enough space for an extra 30-second ad. About a hundred broadcasters in the US are already using the device.
However, last October the Time Machine ran into trouble when someone spotted that it was being used by a station as it broadcast a live football game. The US National Football League has strict rules about the number of ads that can be shown during live broadcasts and the station, Pittsburgh-based KDKA, was censured. And the Time Machine is even raising temperatures in the advertising industry itself, since it could be used by stations to shorten commercials too.
Who’s watching who?
Interactive television now offers sophisticated ways of profiling viewers. Simply turning on one show or not watching another, or clicking your remote control during a particular ad, tells cable or satellite TV companies something about your viewing habits. With the information that this provides, retailers will soon be able to steer ads to homes that are more likely to buy. And as video-on-demand and hard disc video recorders make headway, interactive ads will become the ultimate fishing net for all kinds of information – not just gender and location, but also details of lifestyle, hobbies and interests.
A number of Hollywood studios and TV networks are certainly keen on this approach. Earlier this year they convinced a judge to order US company SonicBlue to modify the software in its ReplayTV 4000 hard disc video recorder so that it would collect details of viewer’s habits and send the data to the networks.
However, in June a Californian judge overturned the original ruling. “It is a privacy issue,” says SonicBlue’s lawyer Laurence Pulgram. “We are being asked to snoop on our customers.”
Interactive television also raises an entirely new set of legal and consumer protection issues, says Rafi Azim-Kahn, a lawyer at London-based firm McDermott, Will and Emery. You might not realise it, but when you dive into an interactive ad to enter a competition or order a pizza, you might have left TV and transferred to the Web. And whose rules apply there?
Regulators in many countries are busy playing catch-up, stitching together a patchwork of guidelines that cross multimedia boundaries. From next year, for example, a new regulatory body in Britain called OFCOM will police the emergence of a new industry at the intersection of TV, the Web, advertising and telecommunications. Regulations in the US don’t go as far as those in Europe, however. Critics fear that if legislation is not introduced soon, viewers may find their profiles have been sold to other businesses without their knowledge.