Will the Information Highway Bypass Mad Ave.?

Cover Story

Will the Information Highway Bypass Mad Ave.?

Mark Landler, with Laura Zinn, in New York
Business Week

July 12, 1993

Tired of all the hoopla about multimedia? Head for Madison Avenue. You will hear blissfully little about the digital revolution in the bastions of American advertising. Normally voluble ad executives clam up when asked to define their role in the new media landscape. "There's a certain sensitivity about talking about things you can't deliver," says Allen Rosenshine, chairman of BBDO Worldwide.

His comment symbolizes advertising's struggle with multimedia. Most agencies still make their millions by producing brief TV commercials for a mass audience of viewers with relatively few choices. Give every one of those people a remote control and a much broader array of options, and you have a recipe for marketing mayhem. Asks McCann-Erickson Worldwide Media Director Ira Carlin: "How do we make advertising attractive enough so that consumers will select it?"

The answer: You probably can't, unless the nature of advertising changes dramatically. And so far, agencies aren't really motivated to try. The four broadcast networks booked $ 10.3 billion worth of advertising in 1992. That compares with just $ 1.6 billion for all of cable. Interactive services such as Prodigy and America Online do feature ads from marketers such as Honda and Microsoft. But agencies still perceive such campaigns as supplemental. Only now are BBDO and other shops even assigning staffers to study multimedia. The pace has been so slow that Time Warner Inc. will begin a road show in early July to raise the awareness of the industry.

If Time Warner feels more urgency than the agencies, it's because the company knows it will need advertising to underwrite some of its multimedia dreams. Consumers simply won't be willing or able to pay the cost of everything they watch. So media companies are likely to offer some movies or other services at a cheaper price, but with commercials. You may be able to order Jurassic Park for $ 2.95 instead of $ 4.95. But you'll get a McDonald's Jurassic Park promotion tacked on.

Futurists see intriguing new applications. Don Peppers, a marketing consultant who specializes in new media, says viewers may be assigned a video mailbox that they can use to order information services or, say, last week's episode of Murphy Brown. In return for sending you these services, the company that maintains the mailboxes will have the right to give your name to a limited number of advertisers, who then place messages in your box.

PRIVACY ALERT

The advertising would be precisely targeted because the company will have compiled a data bank based on your viewing habits. Clearly, such promotional practices will raise privacy issues. Even traditional mass marketers, however, say the ability to aim programming at individual TV sets vastly expands the opportunities for targeted marketing.

Take American Telephone & Telegraph Co. The long-distance provider is currently airing a big-budget TV campaign to win back customers who have fled to MCI Communications Corp. or Sprint Corp. and another campaign to retain those who haven't. If AT&T could beam the right spots directly into the right homes, it could save millions in redundant advertising, says Robert Watson, AT&T's director of advertising services.

Retailers hope to ride the interactive wave by getting into home shopping. Already, Saks Fifth Avenue peddles its wares on QVC Network Inc., while R.H. Macy & Co. is starting its own 24-hour home-shopping channel, called TV Macy's. The retailer says its new channel is designed to boost sales and won't supplant more conventional TV or newspaper advertising. But Macy's also believes it can no longer ignore the spread of such services as home shopping.

For other marketers, multimedia is less an opportunity to be seized than a threat to be minimized. For one thing, holding the attention of viewers will be harder than ever in an era of infinite choice. To survive, marketers say they must produce spots that are just as entertaining and informative as sitcoms or documentaries. One way is to blur the line between the two.

WRONG GALAXY?

Bell Atlantic Corp. has chosen to go the infomercial route. For its inaugural effort, the Baby Bell didn't just hire a talking head to do a 30-minute demonstration of call waiting. Instead, it produced a half-hour sitcom featuring a family called the Ringers. In the course of the show, the family promotes several Bell Atlantic services. General Motors Corp. is among other major marketers that have used infomercials, though few big ad agencies have yet assigned staffers to specialize in them.

The trouble is, this approach clashes with the prevailing culture of Madison Avenue. "Creative people don't want to do little stuff. They want to do galaxy-bursting stuff," says Don E. Schultz, a professor of integrated marketing communications at Northwestern University. "But that's not where media is going."

The risk for agencies is that marketers might decide to go elsewhere, too. Already, Co-ca-Cola Co.'s major U.S. brand campaign comes from Hollywood talent shop Creative Artists Agency Inc. Ad executives say CAA's 24 commercials are clearly designed for the new media world, with a visual style that stands on its own as entertainment. CAA's campaign has drawn japes from ad veterans. Bob Garfield, a critic at Advertising Age, likes the commercials, though he notes: "The things are riddled with technical deficiencies of all kinds. It's clear the people who cut them don't understand the 30-second format." Maybe that's the point. Coke, for one, seems to think that the future of advertising won't just be found on Madison Avenue.

GRAPHIC: Photograph, BELL ATLANTIC'S HALF-HOUR, SITCOM-STYLE INFOMERCIAL FEATURES THE "RINGER" FAMILY PHOTOGRAPH BY KEN KERBS/DOT; Photograph, CARMAKERS ARE BIG FANS OF ON-LINE ADS, SUCH AS HONDA'S INTERACTIVE COMMERCIAL ON PRODIGY PHOTOGRAPH BY KEN KERBS/DOT