Interactive Ads: Beyond Watercooler Buzz

It has become a cliché that the goal for a TV ad is to generate watercooler talk. But when big media agency Carat met with three of the largest cable operators earlier this month to discuss plans for stepping up its interactive-TV- ad spending, the buzz was literally about, well, watercoolers. Specifically, how a Phoenix car dealer used them to get TV viewers to buy his cars.

“Why watercoolers?” asked Mitch Oscar, executive VP of Carat Digital, when Tempe Hyundai announced that it was giving the units away to viewers who responded with a remote click after seeing one of the dealer’s interactive TV ads. The explanation was simple: The Hyundai dealer had a surplus of them from a previous promotion that apparently flopped.

That ad and cable executives are talking about giving away watercoolers indicates just how unsophisticated interactive advertising is today. Also known as enhanced television, the concept allows marketers to send their message to a specific audience, and allows the audience to respond through a back channel, such as a click of the remote. After decades of false starts, interactive TV continues to beguile Madison Avenue with promises of making TV the super-efficient ad-targeting vehicle that the Internet and direct-response advertising are, as well as a conduit of information with consumers that can completely shake up TV advertising.


Although ventures like Warner Amex’s fabled Qube cable system in the early 1980s and Time Warner’s Full Service Network in the ’90s never grew beyond the test stage, the difference now is that Madison Avenue no longer thinks it has the luxury of testing interactive advertising. Given the rate of digital-TV deployment—particularly digital video recorders, video-on-demand and broadband video options that allow consumers to time-shift or bypass ads—advertisers believe they must shape the future of interactive TV themselves.

Carat has been one of the most aggressive. It created the Carat Digital Exchange, a think tank that invites suppliers and even rivals to share information on interactive advertising. At the next meeting, Mediaedge:cia, a New York-based shop that competes with Carat, will present a case study showing how Xerox is using interactive TV spots.

The exchange idea was conceived by Oscar, a veteran of several interactive-TV experiments at Universal McCann before being recruited to build the initiative at Carat. The concept is working so well that Carat CEO David Verklin is exploring similar exchanges in other areas of digital media, including online search. In fact, Carat’s parent company, London-based Aegis Group, is re-envisioning its entire organization to focus on digital. A recent analysis by the agency projects that 50% of all media will be digital by 2007.


Carat is not alone in its refocusing. Publicis, the French parent of big media agencies such as Starcom MediaVest Group and ZenithOptimedia Group, has formed Publicis Groupe Media to explore interactive ads and is in the process of establishing a venture-capital arm to invest in new-media technologies. The goal is to have a say in the development of new-media outlets that will alter the way people consume media—and advertising.

While such actions show Madison Avenue’s determination to make the interactive-TV advertising business work before viewers render its ads obsolete, the Carat Digital Exchange meetings illustrate just how far the ad community has to go. Carat’s confab earlier this month was designed specifically to bring its local-TV buying group up to speed on interactive-ad opportunities offered by local cable systems. The meeting, organized by Carat’s Oscar and Mary Barnas, head of the Carat buying group, was held just as the agency enters the 2006 planning and buying season for local-TV ad deals.

“There have been some missed opportunities,” Barnas told the cable sales executives. “We’re just trying to educate our buyers on what can be done.”

Carat missed an opportunity late last year to utilize interactive advertising on a local-cable buy, even though the agency purchased enough local ad time on the system to receive it for free.

A similar thing almost happened this spring, when Carat’s local-TV buyers realized that they had purchased enough time on Cox’s system in Phoenix to qualify for an interactive deal. So Oscar quickly put together an Exchange meeting to brainstorm how the agency could implement such features for client Hyundai’s dealers in the market. The agency tested four ads in four ZIP codes, some offering free overnight test drives of new cars, others featuring raffles, and still others offering such gifts as those watercoolers.

Low-tech as it may have been, the Phoenix buy was deemed a success, because the dealers—one said he sold 12 cars thanks to the interactive feature—were as a whole “not discouraged” by the experience and learned enough from it to be enticed to do more.

The problem, Barnas says, is that her media buyers don’t know how to do more. “We get excited” when the buyers sit in on interactive-TV pitches, she says. “But when [we] leave, we really don’t know where to start.”

The cable executives agreed that the interactive-TV business remains in an educational phase and that sellers need to do a better job of educating buyers. Toward that end, each operator agreed to participate in a seminar to educate Carat’s rank-and-file spot-TV buyers on the interactive features that their systems offer, how they work, and how advertisers can participate in them.