Opportunities and thresholds for advertising on interactive digital TV: a view from advertising professionals

Verolien Cauberghe and Patrick De Pelsmacker
University of Antwerp (Belgium)

INTRODUCTION

The convergence of three industries – namely content (entertainment, publishing, advertising, etc.), telecommunications, and computing, made possible by digitalization, goes hand in hand with a divergence of new media devices (Negroponte 1995). Interactive Digital TV (IDTV) is the most visible result of this convergence; offering new opportunities, but also implicating new threats for broadcasters, marketers, and advertisers because the existing TV business model becomes unstable. Broadcasters face the threat that the new entrants deliver content directly to the telecommunication provider; by-passing the packaging function of the broadcasters (Pagani 2000). To face the major business issues initiated by new digital technologies like VOD and the PVR, Wirtz and Schwartz (2001) recommend that broadcasters cooperate and embrace these new developments to hold steady. As a consequence of these technological changes, broadcasters are investigating strategies to ensure future revenue streams. “The economics of convergence will require people to pay for what they get” (Dennis, 2002, p. 10), through subscription fees for services and channels or pay per view; although advertising revenues can lower the entry barrier to adopt IDTV by the end user.