Do Business Well

Interactive Digital Television (iDTV) looks similar to PC-based Internet but is delivered through a television set and can be operated using a remote control. From a standing start in 1999, market penetration by 2002 is currently around 40 per cent of UK households and is projected to rise to 95 per cent by 2010, according to a Netpoll survey. Leading providers include Sky Digital, ON Digital, Telewest and NTL. One of the key drivers for this surprisingly rapid growth has been the provision of free set-top boxes by these platform providers. Services currently provided include home shopping, email, video, banking and travel. Forrester Research (2001) predicts that more people will access the Internet through a television than through a PC by the end of 2004.

Advertising through this mechanism can be interactive, as viewers can respond immediately to request further information or to sign up for a promotion. Digital television has helped increase the fragmentation of viewers, as there are over 200 channels now available in the UK. This means that advertising can be easily targeted to tighter niche audiences, for example through exposure on sports, cooking or health channels. Advertisers can develop their own television channels in order to incorporate content provision and communicate with their customers less intrusively. For example, the PC version of Boots’ digital health channel,Wellbeing, is also automatically accessed if you type in `www.boots.co.uk‘. Specialist digital television channels also provide more focus for sponsorship deals. Domino’s Pizza, which is represented on satellite, cable and the Web, is one of the early success stories of iDTV. e-Commerce transactions represent 4 per cent of its total business. Management credit the firm’s sponsorship of The Simpsons as pivotal in building Domino’s iDTV business. This activity has given Domino’s a brand recognition figure of 98 per cent in multi-channel homes.

The UK government is currently pushing for total digital television penetration, and there has been talk of switching off the analogue signal by as soon as 2010. By the end of 2001, the number of digital television owners in the UK reached the same level (36 per cent) as the number of Internet users in the country for the first time, according to e-MORI’s Technology Tracker (www.emori.co.uk ). While the number of new users seeking Internet access is levelling off, digital TV ownership more than doubled in 2001. In social groups AB and Cl, PC-based Internet access far outweighs digital television ownership, but the ratio shifts in social groups C2 and DE, in which twice as many households have digital television as have Internet access via PC. Fewer than half of digital television owners have so far used interactive services such as shopping, banking, gaming or email. This is because PCs have been traditionally viewed as information tools and are a logical choice for accessing the Interne and using online consumer services. The television, however, is viewed as 0,1 entertainment tool, and the biggest driver for digital adoption so far has bee improved picture quality and a greater choice of channels, with little attention being paid by consumers to the advantages of interactive services.

Smith and Chaffey (2002) note the following advantages of iDTV to market:

• direct-response mass-market advertising;
• highly targetable;
• moving buyers through the complete buying process;
• audience engagement through interaction;
• brand-building and positioning reinforcement;
• brand-building through community-building;
• customer service — reduction of bottlenecks;
• security — less risk associated with TV than Web sites;
• controllable — highly measurable;
• cost savings.

These authors go on to recommend five key steps to making iDTV work in practice:

1 Start small; test out advertisements first on a small scale and see what reaction is gained.

2 Develop your own content area or micro Web site linked to iDTV.

3 Design for the lowest common denominator to maximize the number of people who can make use of your service.

4Grow your offer over time to include purchasing or personalization. 5 Form partnerships or build a team for the future to ensure that the necessary skills are available.

However, despite the rapidly increasing volume of viewers, actual purchase transactions have been slow to take off. Forrester Research notes that many retailers currently using iDTV as a channel to market are planning to pull out when their contracts come up for renewal. The main reason for their dissatisfaction is weak sales. The Forrester Research report points to a poor visitorto-purchase ratio of only 2 per cent. Also problematic is the location of transactional sites within ‘walled gardens’, which are dedicated interactive channels that are separate from programme content. The challenge is to find ways and means of driving consumers to these interactive channels and encouraging them to carry out transactions. Although a shake-out of unprofitable business is probably inevitable, the iDTV medium is slowly evolving, costs are falling andinteractivity becoming less ‘clunky’ , suggesting that opportunities will present themselves to companies prepared to take the longer view.

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