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Press Your Remote, Get a Car Delivered

Interactive ads make their debut—again 4/10/2005 08:00:00 PM Eastern

In a few weeks, Terry Ferrante, general sales manager for Larry Miller
Hyundai in Phoenix, will make one of the riskiest moves of his career: gambling
a big chunk of the dealership's second-quarter marketing budget on what has
amounted to fool's gold on Madison Avenue. For several weeks starting in mid
May, Ferrante will become one of the few advertisers to actually implement an
interactive-TV advertising campaign.

Arranged by Carat, the big media-buying agency that handles Hyundai's
account, the interactive-TV buy on Cox Communications' Phoenix system uses an
addressable-advertising technology developed by Navic Networks.

The Hyundai dealers' Phoenix-market interactive-TV buy was worth only
tens of thousands of dollars at most, and the entire
interactive-TV–advertising marketplace (excluding interactive program guides)
is estimated to be several million dollars.

It's a big bet for Ferrante, who works in one of the most competitive
auto-sales marketplaces. Next to Los Angeles, the Phoenix metro area is the
biggest new-car market in the world.

It's also one of the most cluttered automotive-advertising markets.
That's one of the reasons Ferrante is making the buy: TV, newspaper and radio
ads simply don't work the way they used to, and auto dealers are increasingly
relying on the Internet and highly targeted direct-mail campaigns to generate
leads for customers in the market to buy a new car.

Pinpoint targeting

“In the old days, we would have stood a guy out on the corner with a
sandwich board that said, 'Best Deals Here,'” says Ferrante. Now
automotive marketing has evolved into one of the most sophisticated forms of
retail marketing. Dealers use complex geo-demographic targeting techniques,
mine data from high-powered computer systems, and fine-tune their TV, radio,
print and direct-mail ads with a level of precision that might make some
national marketers envious.

Even local newspapers are no longer good enough to target customers with
the efficiency that dealers need, he says, requiring them to come up with
something far more precise.

Interactive TV, he hopes, is the solution. “In any retail business,
there's a finite number of ways of reaching a customer, short of going
door-to-door,” Ferrante explains. “You can't really take a car
door-to-door, but I think this is as close as you are going to get to bringing
a product to the most interested parties.”

In fact, bringing a car to the door of those interested parties is
exactly one of the options Ferrante is considering as part of his
interactive-TV strategy. Instead of trying to get Phoenix-area new-car shoppers
to show up at Larry Miller's lot for a test drive, Ferrante would like to
allow interactive-TV viewers to take a car to their home for an overnight test
drive.

“The only way to know,” he says, “is to actually implement the
program and find out if somebody sitting in front of their television set can
click on an icon and immediately be transferred to us.”

The interactive car commercial is a product of Carat Interactive TV
Exchange, which has assembled a disparate group of interactive-TV stakeholders
to take the concept beyond the R&D test-bed stage, where it has remained
stuck for the past 20 years. It's a big gamble for Carat CEO David Verklin,
who hired Mitch Oscar as executive VP of Carat Interactive, New York, more than
a year ago to lead the agency's effort to develop the interactive-TV
marketplace not just for Carat but also for the industry at large.

In the same way that Verklin has taken on a leadership position for
media buying overall, he recruited Oscar to do the same for interactive-TV
advertising.

“What I'm gleaning is that nobody knows anything about why anybody
does anything,” said Oscar during the brainstorming session he organized to
plan the Hyundai interactive-TV buy.

To date, he says, interactive advertising has been a rocky and
frustrating experience, mainly because key stakeholders have been so reluctant
to share information.

Oscar, who is a member of the American Association of Advertising
Agencies' advanced-media committee, says its members generally talk in
generalities and platitudes and hesitate to talk about anything meaningful
because of competitive concerns.

Real ad dollars

Because agencies weren't talking, Oscar tried to get the nation's
largest advertisers directly involved, helping to organize a special task force
of the Association of National Advertisers (ANA) last year not just to think
about interactive TV—or what the group termed “enhanced television”—but
to begin spending real advertising dollars to stimulate its development.

It is a noble, if not quixotic mission. Marketers have been burned by a
number of high-profile interactive-TV tests going back to Warner Amex's Qube
system in the late 1970s through Time Warner's futuristic Full Service
Network in the 1980s and a series of ill-fated ventures by telephone companies,
cable and satellite operators, online-service providers, and a host of
interactive-TV developers ranging from ACTV to Wink.

But Carat believes the time is now right for two reasons: First, the
technology has evolved to the point where interactive-TV ads are finally
economically feasible to do on a mass scale.

Second, and perhaps more important, there is now a sense of imperative
that, if advertisers don't get involved now—when TV is poised to change so
much from on-demand viewing and Internet advertising—the opportunity may be
lost.

Some big advertisers and agencies have already begun to see broadband
video as the real catalyst for interactive-TV buys. One giant media buyer,
Starcom MediaVest Group of Chicago, drawn by the pinpoint addressability of
online-advertising buys, has made buys on top-tier players AOL, Yahoo!, MSN and
Feedroom.

Rishad Tobaccowala, chief innovation officer of SMG parent Publicis
Media, Chicago, describes an ideal video investment strategy as encompassing
multiple screens: broadband video to a PC, interactive TV to a set, and
wireless broadband streaming to cellphones and other portable devices.

“What happens to television when it becomes viewer-controlled? And
second, what happens to the Internet when it becomes television?” he asked,
striking a somewhat ominous tone during a panel discussion at the ANA's
recent Television Advertising Forum in New York.

Before that happens, Carat hopes to make interactive TV a viable option
in its own right. Carat is in talks with Time Warner to utilize Navic
Networks' addressable-advertising capabilities for Hyundai dealers in Albany,
N.Y., on the cable operator's system there.

The media buyer is also working with addressable-advertising developer
Invidi Technology Corp. on a plan that would bring advertisers—along with
their budgets—to individual cable operators.

Only one important result

“If we can show them that we're bringing in real advertising
dollars, we think the cable operators will want to start using this,” says
Carat's Oscar. He says Carat still needs to test many interactive-ad
scenarios to identify what works and what does not. Too many options might make
it difficult to analyze the data and determine results.

Ultimately, dealers care about only one result, he says: “When we ran
the ad and made the offer, did it mean that new-car customers showed up on the
dealer's lot? At the end of the day, that's all that really matters to
them.”

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