IT’S BEEN A LONG TIME coming, but Canada’s etc.tv appears ready for prime time.
The company’s platform lets viewers use their TV remotes to “telescope” into long form advertising content from a standard 30-second ad if they wish – and since its launch on Videotron’s illico digital cable network a year ago, has proven very successful said etc.tv president Mark Sherman.
Sherman, the founder of media services company Media Experts, created etc.tv in 2001 and the concept was further developed and pushed hard by vice-president and general manager Ian Maclean.
The platform is the first-to-market "Telescopic Television Advertising" model and the "ads on demand network" is an end to end advertising management system which offers the ability to precisely count each viewing of an advertisers’ linear (live) TV campaign, as well as each long format ad, watched by self-selected consumers.
Sherman (pictured below) and Maclean have been meeting with senior broadcast and cable executives of late and are hopeful of a much wider rollout through 2007-08.
“One senior cable executive said to us a couple of weeks ago, ‘this is probably the holy grail,’” recalls Sherman. Another senior executive at another major U.S. cable distributor said “this is exactly what we need.’”
Sherman chatted last week with Cartt.ca editor and publisher Greg O’Brien about etc.tv. What follows is an edited transcript.
Greg O’Brien: Since the launch of etc.tv with Videotron and TVA, what have you learned, what have you changed?
Mark Sherman: Well, the app is essentially unchanged through the trial and the comm
ercial launch.
GOB: What have you learned from the viewers though, in terms of what they like to see, what they’re clicking through to see?
MS: The most important piece that we were after is the rate of interaction between the viewers and the long formats, because of course, that’s what drives all the metrics. It drives all the revenue for all of the stakeholders, the broadcaster, the cable company and ourselves.
We had certain assumptions about what that would be and quite frankly they were wildly educated guesses.
GOB: Did those assumptions pan out?
MS: I can tell you that the data is uncannily close to our assumption of what it would be, such that we’re shocked.
GOB: In what way? I’m sure the numbers are proprietary, but can you characterize what people are doing?
I can tell you that the rate of interaction translates into an incremental cost per thousand for the broadcaster and for the cable company that’s staggering as compared to the rate at which they sell their audience for today.
GOB: What’s been Videotron’s response or TVA’s response? Are they happy with it?
MS: Most certainly. They’re happy when their advertisers are happy – and the advertisers are repeating and happy and coming back. So, the whole endeavor here is driven by the relationship with the customer and that’s going very well.
GOB: What’s different about etc.tv when compared to some of the other companies that have been around this space? I’ve covered the cable industry since ’97 so I’ve seen Wink and other interactive ad things go through and fall flat. What’s different with what you do and why should other operators be excited about this?
MS: Well, we designed an application that’s about television, where previously, some of the early things that you saw like Wink or some things that Microsoft did with Microsoft TV, AOL did with AOL TV, these things were more about “lean-in” experiences.
Etc.tv differs in that it’s consistent with a lean back television experience – it’s about TV. And because of that, it’s easier for the consumer to get involved, and it’s also much more attractive to advertisers and their agencies who are comfortable with television.
And further to that, we have a model which allows the ad agencies to engage with etc.tv… and they don’t need to know too much about technology, set top boxes, network infrastructure and so on. We designed a business model that makes it easy for the advertiser to get involved and we have an end to end concept that’s dramatically different from the earlier efforts in interactive TV that were, as I said earlier, oriented around lean in graphic-types of experiences, and not very advertiser friendly.
GOB: And some of those early failures drove cable operators and others away from interactive TV and made them a little bit afraid of it, I think.
MS: That’s well put. Some of those early things were driven by engineers and not advertising people. So, the real point of differentiation for etc.tv is that it’s given birth to, and incubated by, advertising people who have a very strong understanding of the advertising business, of the transactional nature of the advertising business, what the agency needs, what the advertisers need and so on.
And etc.tv is different because we’re an ecosystem in a business model and not an application that an engineer kind of dregs up.
GOB: Now, can you explain the business model? How do you get paid? How does the broadcaster get paid? How does it work with etc.tv?
MS: The business model is pay-per-view. So, that means when the subscriber clicks on an icon and views a long-form ad, a transaction takes place and that transaction is billed at $5 gross to the advertising agency.
The revenue is collected by etc.tv and then shared amongst etc.tv, the distributor and the broadcaster.
GOB: The long form content that people see, when they click on a GM ad to go and telescope into the content, what is it that they see? Do they see more video, do they see offers, do they get coupons? How does it work?
MS: It’s a straight video application. They see a long form video piece that’s related to the 30 second television commercial.
GOB: Are you impacted at all by the penetration of PVRs and how does etc.tv work with that?
MS: Yes, but by the time that that become significant, we will have a method of dealing with it. Our current deployment works in (13) different set top box designs on the Videotron network, including PVRs. So, there’s no impact there. We work in all of the boxes on the network, whether they have 8 megs of memory or 32 megs or 64 megs… We are the largest telescopic advertising deployment in North America.
We are the only telescopic deployment in North America with a network broadcaster. All the other telescopic deployments are trials… that are limited to small markets like Albany, New York and things of that nature… And they work in local cable avails with very small audiences.
GOB: The click to view rates are solid enough now where the advertisers and the cable operators and the broadcasters are all pleased?
MS: We have a business that is scalable and our intention is to aggregate etc.tv as on demand network throughout North America.
GOB: Have you had success with other operators, other cable operators to get etc.tv deployed?
MS: We are in talks with almost every cable operator in North America – and at various stages depending on the operator.
GOB: This could seem to be a competitive advantage to a broadcaster if you were to launch with say just one broadcaster. Do you see that happening? Making it an exclusive thing or is this something you want broadly rolled out among all broadcasters?
MS: We want it broadly rolled out across all broadcasters and the nature of our conversations in English Canada to date are such that we envision a deployment in English Canada which will be non-exclusive, which will involve the entire broadcast community.
GOB: You’ve been involved in the advertising world for a long time, a lot of the commentators like to say that the 30-second ad is dead. What are your thoughts on that?
MS: I don’t believe that at all. I believe that television is about to become much stronger than it ever was.
GOB: In what ways and how?
MS: Bi-directionality, where the digital networks bring to television allow the potential to be countable, accountable, two-way and offer them the potential for television to be stronger than it ever was.
GOB: And this is where we can get into the conversation about digital ad insertion. Will your platform support that as well where you’re sending different ads to different boxes in different neighborhoods, that type of thing?
MS: We can already tailor a campaign such that a different long format would be shown in a different area of town. In the Videotron deployment there are 10 geographic regions that we have described and we can link from one 30 (second ad) to a different long format across different geography.
We can also describe those groups in a manner that’s different than geography and we can use psychographic clustering.
So, it has the capability to be pinpoint. But the beauty of telescopic advertising is that the viewer opts-in and the customer gets a qualified, interested prospect.
GOB: The long formats themselves and the 30-second ads themselves, do those need to be changed? I mean do they need to be entertaining or funny or silly or pretty or do they need to be more of a draw than they are now?
MS: Well, there’s a difference between the product values required for an opt-in long format than the production values required for an intrusive 30-second television spot. So, typically today national advertisers in Canada are spending $250,000, $400,000 to produce this 30 second ad.
The long format on our system will require less production value because you’re talking to somebody who says I want to know more. You’re not trying to create a piece that’s intrusive and grabs people’s attention, you’re dealing with somebody whose attention you already have and is an expressive desire to opt-in.
An example of that would be a cooking show. Campbell Soup could use etc.tv to link from a 30-second spot on cream of mushroom soup to a long format that would be a cooking show using cream of mushroom soup and recipes.
You could produce that long form piece for $40,000.
GOB: Why is there such a discrepancy?
MS: Because the short form version, the 30 second ad, is designed to bust through the clutter while the long form ad is designed to communicate with somebody who’s opted into the content and wants to pay attention.
GOB: Can this platform be used for a regular programming as well? You could do the same thing with the program content you could click through to get whatever else on something.
MS: Telescopic functionality can be employed in the programming environment as well. You could move from the typical 30 seconds of locker room footage in a sportscast to 15 minutes of unedited footage of hockey players in their skivvies.
You could move from a 45-second news story on the environment to a feature 15 minute piece on the environment and so on.
But, the economic model on how to support that with advertising, there are many questions around that. The functionality is there. Whether or not there is a business model, I’m not certain.
GOB: What about other platforms? IPTV, broadband TV and mobile TV. Does it work with that? Are you interested?
MS: Our intention is to build a network, to aggregate a network, not just of cable providers, but all television providers in all forms – to include satellite IPTV online and whatever form television can be delivered in.
