Bridging the “Why Hasn’t It Happened?” gap

Last week, I had the pleasure of attending a talk given by New Media guru Mitch Oscar, who is in charge of televisual applications at the global media agency MPG. (Props to AdsVantage for organizing the event).

In his presentation, Mitch focused on how the world of interactive TV is taking shape. Interactive TV is part of the general media industry which is comprised, as it has been always, of three major components: content producers who create the content, advertisers who essentially fund the content, and distribution platforms which bring the content to the end users.

The biggest changes over the last decade have come primarily on the side of the distribution platforms. Where once there were basically two distribution mechanisms (network TV and radio) today there are nearly 20 different and sometimes complementary platforms with which users encounter content. This includes everything from digital television to satellite radio and includes the set-top boxes and interactive episode guides that power the experience.

The explosion in distribution has fragmented the industry and created internal media silos. Different media agencies and content creators deal with different distribution platforms in different regions. Each one has a different piece of the puzzle, but no one is able to put it together from above.

The lack of communication between the different silos has been one of the key factors keeping New Media (or interactive TV or whatever term you want to give it) from achieving what should be nearly boundless economic and cultural potential.

In this way, interactive TV is a lot like mobile Internet: it should be much bigger than it actually is. You have the technology to drive new media consumption experiences (be it on handhelds, on the Web, or on the TV in your living room); you have what appears to be a critical mass of users receptive to consuming media in new ways; and you have the advertisers who are receptive to the new media and distribution types.

Yet everything remains mired in what I like to call the “Why Hasn’t It Happened?” gap.

Ad spend is still overwhelmingly directed to old media channels, primarily broadcast television and radio. New Media avenues (for example Hulu) remain a kind of sideshow with the relatively small ad budgets to show for it.

There appears to be a missing link here between the situation as it is and the situation that technology makes possible. In order for things to change in a meaningful way, content creators and advertisers will need the ability to provide what Mitch calls a “360 degree experience” based on the consumer and not the device

Interestingly, the key obstacles are less technological than they are worldview-related. Or, more to the point, they are technological but a lot less on the distribution side than one would expect. The real issue is how to provide a unified experience across multiple device types but done in a manner that the advertising agencies are used to dealing with.

Some of the key issues that need to be resolved:

• Measurability – getting reliable data across different platform types. This is a lot more non-trivial than you’d imagine. To give one banal example: When measuring television viewing, do you measure each separate set-top box in a household or the household itself?
• Standardization – This involves everything from standardized ad formats to the definitions of measurable ad spend units. For example: how do you translate a CPM model to interactive TV?
• Addressability – This is the holy grail of advertising, involving as it does the delivery of the right targeted ad to the right person at the right time.

All these issues, by the by, while not necessarily the most sexy part of the high tech world, present huge opportunities for the startups that can crack the code. From the investor side, IMHO this will be one of the most interesting sub-sectors of the overall Internet industry in the next few years.