SAN FRANCISCO (04/17/2000) - Interactive television advertising has finally reached Madison Avenue. It's gotten to Park Avenue, too - Time Warner Cable began to air interactive TV commercials in Manhattan this month. Although many other systems already have begun testing interactive TV ads, the Manhattan launch is seen as a milestone. Nearly 150,000 New Yorkers, including some of the wealthiest viewers in the U.S., have access to the current interactive ads.
Wink Communications, based in Alameda, Calif., makes the software that enables ITV to work through set-top boxes, and the company worked with advertisers and Time Warner to launch the ads in Manhattan. Wink pays cable companies a fee of 5 percent for revenues derived from the interactive ads they carry. On average, Wink pays the companies $5 per subscriber for the first year. Wink expects that figure to rise to as much as $15 per subscriber within a few years.
Wink-enabled interactive ads have already appeared in 14 other markets. Only subscribers in those areas with digital set-top boxes or digital televisions can view the interactive ads.
"You don't want to debut this type of service on Madison Avenue first," says Wink CEO Maggie Wilderotter. "It really gives us a great opportunity for learning how we would take interactive advertising to the next level." Wink is in a good position to go after the ITV market. Although it reaches only 200,000 homes so far, it expects to reach 3 million homes by the end of the year. Wink will begin to serve 1.5 million DirecTV customers this summer, and the company says it expects more people to buy digital TV sets. The company's investors include Microsoft, dominant set-top-box maker Scientific Atlanta and Dallas-based General Instruments.
Wink already has begun to run interactive ads for some major clients. An ad for Disney movies invites viewers to use their remote controls to buy home videos.
Ads for Clorox and Tilex invite viewers to order coupons. Several companies contacted about their interactive TV ads declined to discuss the effectiveness of the interactive campaigns. In November 1999, Oldsmobile tested an interactive ad on WebTV, inviting viewers to e-mail the company for a gift certificate to an online music store. To redeem the gift certificate, though, people had to test-drive an Oldsmobile at a local dealership.
"Oldsmobile's target consumers are tech-savvy and early adapters, so it behooves us to get out in front with new mediums," says Li-Yuen Yee, Oldsmobile's interactive marketing manager. "It would be interesting to see how well this type of medium reaches and dialogues with our consumers versus the computer." WebTV used to produce ads that directed viewers to a specially designed Web site, but the company now helps companies develop more refined interactive ads that have minimal calls to action. "The key is simplicity," says James Aguilar, director of a WebTV group that helps advertisers develop interactive campaigns. "In the living room, people don't want to feel like they're working on a spreadsheet."