"The way that people consume TV is changing," says Antony Carbonari. "Viewers now expect to see what they want, when they want."
As director of interactive at BT Vision, which provides on-demand programming to set-top boxes, he makes the point with vigour, but few would take issue with his assertion that TV is shifting rapidly towards much greater consumer choice.
It's a trend that's been in train since the early adopters of the mid-1970s began tentatively time-shifting their viewing by means of the video cassette recorder, but it wasn't until the arrival of PVRs (personal video recorders) such as Sky+ that recording and storing programming became a joy rather than a chore. Meanwhile, ITV and Channel 4 have been making the 'unmissable unmissable' online via their variations on the BBC's iPlayer, while BT Vision is bringing on-demand programming into homes and on to TV screens via broadband-enabled set-top boxes.
All this has been something of a mixed blessing for advertisers. On the one hand, the way that PVRs allow viewers to fast-forward through ad breaks has been a cause of considerable pain. On the other, VoD (video-on-demand) services, especially those that stream programmes to the home via IP networks, open up a new world of advertising accountability. The capability is there to track consumers' behaviour and serve ads accordingly, a development that potentially offers a seductive combination of TV-quality ads and targeted campaigns, optimised against live data. In short, we are potentially in Holy Grail territory.
What's on offer
Consumers have a number of VoD options. BT Vision provides a means to buy in films and TV programmes on a pay-as-you-go basis. According to Carbonari, it's a service that fills a sizeable niche in the broadcasting ecosystem. "A lot of people don't want to commit to a year's contract with Sky. We give them more choice without requiring them to make that commitment," he says. So far BT Vision has about 350,000 subscribers.
Meanwhile, cable company Virgin Media and satellite broadcaster Sky are also investing in VoD. Virgin Media's content is piped into homes through its 50Mb (megabyte) broadband feeds and, from January to August 2008, the number of views generated by the service grew 33 per cent, from 34 million to 45 million. That increase in views reflected a healthy rise in uptake, with around 50 per cent of Virgin Media subscribers now using the service on a regular basis.
Sky has also had some success with VoD. Its Sky Anytime TV service automatically saves programming to the Sky+ hard drive, allowing video content to be retrieved by viewers at their leisure. According to Jeremy Tester, director of insight at Sky Media, the ad sales arm of BSkyB, around 3 million homes can now view the service, which is clocking up 10 million programme views a month.
Over the top
There's more to come. BT, ITV and the BBC are working on a common platform that will allow content now available online via the iPlayer to be viewed on conventional TVs via internet-connected set-top boxes. Meanwhile, independent hardware and software companies are also making a pitch for the IPTV market. For instance, Complete TV specialises in making set-top boxes that render audio/visual content delivered across the internet on a conventional TV screen. Marketing manager Phil Smith argues that tightly controlled content aggregation services operated by broadcasters will give way to a more open environment in which viewers will supplement services such as Freeview with content from the internet. He describes this as the "over the top" model - licensed and legal but not necessarily facilitated by a big media company.
According to Paul Hague, managing director of set-top boxmaker and content provider the BIBC (British Internet Broadcast Company), it won't be long before 'open' IPTV boxes become the norm. He says most Freeview boxes will soon come with IPTV functionality. "It won't be economical for manufacturers to make simple digital boxes. They will have to add value." But the public's willingness to use this functionality will depend on content. "There is a lot of content around, but there are also a lot of restrictions, particularly around broadcast material. If the market is to open up we need to be able to acquire that kind of content."
The future of advertising
The use of VoD via set-top boxes seems likely to grow and major players are taking steps to ensure advertisers can take full use of the technology.
Working with advertisers such as O2, Kellogg's, John Lewis and the Royal Mail, Virgin Media is carrying out dynamic advertising trials using ad insertion technology known as AdPulse. When viewers request programmes via Virgin Media's broadband network, Adpulse serves and targets ads on the basis of programme genres, time of day and region. The system is also testing pre-roll and post-roll ads of different lengths and optimising campaigns accordingly.
Sky Media also has plans to introduce targeting and, as Tester explains, advertising formats are being tailored to the VoD service. "We're giving advertisers the opportunity to use long-form advertising," he says. "They can place a short pre-roll ad of up to 60 seconds at the front of the requested programme and a much longer ad of up to three minutes at the end."
This year, Sky Media will add a 'green button' function allowing viewers to request the long-form creative rather than waiting to see it. But the real step forward comes in 2011. "That's when we plan to introduce targeting based on demographics, customer behaviour and information that the viewer has volunteered to us," says Tester.
BT Vision is also talking to advertisers and agencies about VoD services. Carbonari says: "Initially, we'll be offering traditional broadcast spots, but we have bought Microsoft technology that allows us to mix TV and web material onstream. And we can create an interactive experience because we have the internet back-channel." The speed of backchannels could give IP-based systems an edge when it comes to advertising. "Red-button systems haven't really worked commercially because the speed wasn't there. That isn't a problem for us," adds Carbonari.
Targeting problems
In theory, TV advertising becomes as accountable as its internet equivalent, with set-top boxes and servers tracking behaviour and serving ads accordingly. That's the way Complete TV's Smith thinks it will move. "If I'm watching a baseball game it's quite possible that the data could be sent to a server and an ad sent to me offering air tickets to Chicago and ball game tickets," he says.
There is potentially a problem here, of course. Contextual internet advertising tends to depend on ads being served or popping up as we run a search or log on to a particular website. Smith says banners or rollovers won't work on TV but there are other options. "You could, for example, shrink the screen and provide information around that."
According to Julie Drummond, managing director of Drummond Central, it's territory that broadcasters and advertisers should enter with care. She recently worked with gaming firm Bet365 on TV ads that mix live odds into pre-recorded creative, giving customers the details they need to make a bet. In her view, advertising of this sort needs to conform to some golden rules. "It needs to be something that's useful or something that is very entertaining," she says.
The other big issue is privacy. While most of us accept that our online behaviour is tracked, sliced and diced for the purposes of targeted ad serving, it remains to be seen whether viewers will be happy to have their activity monitored by the box in the corner. Again, caution is the name of the game. "When we introduce targeted advertising, it will be an opt-in service," says Tester.
"A lot of people will welcome targeted advertising," says Smith. "If you agree to provide information, you get ads that are relevant to you, rather than yet another commercial from DFS." This clearly represents a sea change - one that brands and agencies should be preparing for.
CASEBOOK - HOW HONDA IS EMBRACING BT VISION
"Video is very important to us," says Jonny Freeman, digital marketing manager for Honda in the UK. "And we're always looking at mechanisms that will present it effectively."
The car manufacturer has had an internet TV channel, Honda TV, for years, using it primarily to deepen its relationship with consumers. Content ranges from promotional features on new cars to video items demonstrating skills such as how to change a wheel. Now Honda has launched Honda TV as a marketing channel on the BT Vision Service.
"The aim," says Freeman, "is to get our video content in front of a wider audience. BT Vision already has around 350,000 subscribers and the company has plans to grow that considerably."
High quality video rendered on to conventional TV screens puts the content on a par with conventional broadcast advertising. At the same time, the internet back-channel means viewers can order brochures or test drives.
"We aren't on an EPG (electronic programme guide) because that isn't available yet," says Freeman. "So we will have to work hard to get people to use the channel. To that end, we'll be promoting ourselves across BT Vision."
The BT Vision version of Honda TV is fairly new and few statistics are available, but Freeman says the company is keeping a close eye on metrics such as dwell time and requests for brochures and test drives.