Riding the Backchannel to Interactivity

Interlocutor

Carbonari is not your typical telco guy. He came from Disney two years ago and is part of a movement within BT’s Vision team to staff the new business unit with a new kind of talent. “The major percentage of people hired are from outside of BT who either worked for broadcasters, or Sky (a U.K. satellite service getting high marks for interactivity), or traditional media companies. It’s an eclectic group of people,” Carbonari said.

And the group has a full plate in front of it. Its road map includes, at some point, delivering enhanced Red Button advertising for the linear broadcast channels. In September, the company expects to launch browser-based advertising that is not linked to broadcasters. In 2009, it will take the next step to provide those linkages to broadcasters. Interactive browsers will give BT the accountability on ad delivery to begin offering targeted advertisements.

In early 2009, BT will begin offering basic targeted ads, and by late in the year will offer more elaborate targeted ads. The phased approach to targeting is twofold. The first is regulatory. “We will adhere to regulation, but many of the regulations around [using customer data] are still not clear, so we are looking at that now before we do anything around targeting,” Carbonari said.

The second phase is about competency. “You have to start gradually and learn how to use it,” Carbonari said. “We will learn from the early stages before we start developing more elaborate targeting.”

This brings us back to the warning by Yankee’s Taylor that between the time wasted by service providers getting their interactivity down pat and the brick wall they’ll hit with their penetration rates, they may miss much of the opportunity in interactive advertising. “By the time cable and IPTV operators are able to deliver interactivity to a large enough number of households, content owners and advertisers will have already made long-term interactive platform investments online,” Taylor said.

In his May report called, The High Water Mark for Interactive Cable, Taylor said that together, cable television and IPTV operators still can capture $3.⁸ billion in ad revenue in the United States by the year 2012. That’s significant, but it is a small slice of the $294 billion currently available.

Taylor said that advertising is a numbers game and Internet-based video content providers win that game with three out of four U.S. households served. Cable and IPTV providers can only hope for 45 percent to 50 percent at best. “Go tell that to GM,” he said.