Suddenly interactive advertising is back on the agenda, having been virtually written off earlier this year when Sky's first challenger, Zip TV, went into receivership. Peter Birch, head of interactive sales at ITV, the first UK broadcaster to sign up with emuse, is bursting with enthusiasm about what the new service has already done for iTV advertising in the UK.

"It's fantastic," he says. "emuse has doubled the market, halved the cost of entry and made interactive advertising simpler to buy."

ITV signed up with emuse in April, heralding the launch as a huge boost to the sector. For the first time iTV advertising had an independent platform from which campaigns could be deployed across digital satellite, digital terrestrial, mobile and online, creating a one-stop shop for the market.

ITV kicked off its launch with an interactive campaign from T-Mobile and has used the system for clients including the Scottish Executive.

Dropping prices
Until the launch of emuse, Sky was the only platform to offer interactive advertising, and its monopoly kept prices for advertisers high. emuse charges much less for bandwidth than Sky - around £15,000 per megabit, compared to £25,000 on Sky - and has already had an effect on Sky's prices, which have begun to decrease, according to insiders.

Robert Leach, head of interactive services at Sky, wouldn't comment on the pricing impact but says, "It's never good to have just one provider."

IDS, the sales house for UKTV and Flextech channels, plans to sign up with emuse in the very near future and controller of interactive services Mark Connolly says that Sky's prices have prevented some advertisers signing up. "There's now competition. For five years everyone has had to use Sky."

emuse has also expanded the universe for interactive advertising by running iTV ads on the Freeview digital terrestrial TV (DTT) platform as well as on Sky's digital satellite platform, effectively doubling the number of homes to which interactive ads can now be served.

With all broadcasters (with the exception of IDS and Viacom, whose brands include MTV) now signed up, interactive advertising is a much simpler process. "It's a one-stop shop that allows advertisers to run cross-platform activity seamlessly," explains Birch.

Rather than sign separate deals with each broadcaster or go to a range of suppliers to put together an interactive campaign, emuse can handle interactive ads running across a number of platforms and channels. Its technology can plan and execute the campaign as well as gather responses, providing a smoother service.

"Working with us means that a major advertiser can run a campaign across all the key commercial channels in the UK following our deals with ITV, Channel 4, Sky Channels, Five and S4C, as well as being on Teletext," says Kara Hanahoe, VP of programming at emuse.

Broadcasters have complained that Sky's service is clunky but Leach says that emuse will be using the same operating system. "It won't be any simpler," he says. "People are used to TV being instant but interactive TV isn't always. You have to wait for it to download, like online."

Five was the last major broadcaster to sign up to emuse, committing itself last week, and its interactive business controller Paul Thornton Jones says, "Our main motivation for signing up is to help drive the growth of the iTV ad industry. emuse gives advertisers more choice and flexibility and is letting more people enter the market."

Growing awareness
As more advertisers start to dip their toes into the red-button future, research is beginning to amass on the benefits of putting an interactive element in an ad. Continental Research studied the results of 18 interactive campaigns on the Sky platform earlier this year and found that those who interacted with an ad were 190% more likely to make a purchase (see Data, page 34).

What's more, awareness of red-button campaigns is growing among the general public, with 4m claiming to be aware of iTV campaigns, and 10% of those pressing red, according to the Continental Research report.

Campaign results using the emuse platform are so far positive. The first interactive ad to broadcast on Freeview, for mobile operator T-Mobile, saw a response rate of 9% to 10%. This was the number of people who pressed the red button to find out more about the ad, which was broadcast to Sky and Freeview homes.

"It's great news for the market," says Birch. "Why create analogue ads in a digital age?"

Those advertisers previously nervous about signing up for interactive advertising campaigns, put off by the price or the difficulty, will now have no excuse not to get involved, according to Birch. "This is no longer niche, but mainstream advertising," he says, and forecasts a healthy increase in revenues as agencies and advertisers come on board. "It's a foolish media buyer that doesn't consider iTV as a matter of course."

Second challenger
It's all a far cry from the beginning of this year, when the death knell of iTV was being rung. Zip TV, the first to challenge Sky's dominance in the market, went into receivership in January after failing to strike a deal with ITV. In the same month, Channel 4 chief Andy Duncan pulled the plug on the channel's interactive programming, although it remained open to advertising. A consortium of broadcasters - Channel 4, Five and IDS - planned to take control of Zip TV in order to bring competition to the market, but finally decided it wasn't economically viable. emuse tied up a deal with ITV in April and has since managed to convince the remaining broadcasters - Sky, Channel 4 and Five - to step on board.

For those in the interactive market, the fact that all broadcasters are now signed up to the same system is a good sign for the future, and they're unanimous in welcoming the increased competition in the market.

Contrast that with the fate of Zip TV. Connolly says that emuse's approach is very different to that of Zip, which failed to get all broadcasters on side. "Zip was quite confrontational and told advertisers it would do the advertising for them, telling them not to go to agencies or broadcasters. It was a strange way of promoting it."

emuse, on the other hand, has been embraced by agencies, broadcasters and advertisers. Hanahoe says it doesn't intend to go head to head with Sky but to expand the iTV market. "The UK is a very substantial market and we now offer advertisers access to 20m set-top boxes," she says.

The addition of Freeview to the iTV landscape opens up interactivity to a new raft of viewers, but so far only ITV has signed up with emuse on the Freeview platform as well as Sky's digital satellite platform. Five and Channel 4 say that they will sign up to run ads across Freeview and other applications in the near future, but the advantages of the increased universe are not clear. Without a return path, can ads on Freeview be described as interactive? Campaigns that have so far been broadcast via the Freeview platform, for the Scottish Executive and T-Mobile, are enhanced rather than interactive. They allow viewers to press red to find further information, but don't let them interact with the advertiser.

For Connolly, the definition of iTV is that it allows the consumer to interact during TV viewing. "It allows an advertiser to give enhanced content and brand extension," he says. "A viewer can see an extra two to three minutes of content."

This, he says, marks a "paradigm shift in terms of power", shifting from a broadcasting age of push to one of pull. "Media power is eroding from advertisers towards consumers."

TV has been losing its appeal as an ad platform following the emergence of digital technologies like the internet, which allow transparent return on investment as well as unlimited space through which an advertiser can communicate. Enhanced and interactive TV solutions let advertisers take advantage of the shift in power.

But Merlin Inkley, head of airtime management at Channel 4, isn't convinced that adding Freeview homes to the interactive market will radically change the landscape. While admitting that the competition that emuse provides is a step in the right direction, he's not sure that it will radically increase the number of advertisers.

"Digital terrestrial TV has no return path and a limited supply of bandwidth," he says. Advertisers can use Freeview as an interactive platform only by running enhanced TV campaigns that use mobile as the return path. Sky remains the gatekeeper of true interactive advertising solutions. "Terrestrial will increase the universe but it's not as rich as interactive," says Inkley.

Most Freeview set-top boxes aren't equipped to run a return path, although in the long-term this will change. And the introduction of IPTV to the market and the harnessing of cable will mean that in the future most digital TV set-top boxes and applications will have a return path.

But in the short term, mobile and the web will be used as return paths, limiting Freeview's usefulness for the advertiser.

"Interactive TV is very important for us but very small in terms of revenues," says Inkley, who remains pessimistic about it vastly increasing revenues in the future. "It's quite costly to do and it precludes regional advertisers."

emuse's technology is future-proofed and is already gearing up for the interactive platforms of the future, embracing mobile, online and IPTV. And many broadcasters are looking further down the line for a truly interactive future.

"The arrival of emuse will be particularly beneficial in the long term," says Five's Thornton Jones. "We're currently at an interim stage technology-wise, but this will get easier in time."

For him the benefit of interactivity is its ability to generate leads, which only works with a limited number of advertisers and requires that vital return path. "For clients like those in the automotive industry and the COI, it's about generating hot leads," he says. "But for washing powder it's more of a challenge."

Sky's interactive revenues grew by 30% in the last year but Leach says that the purpose of iTV ads is not to set up a separate revenue stream but to make TV ads better. "In an era when TV ads are losing share to more accountable media channels, interactive advertising can boost TV's reputation as an advertising platform and help the TV pound work harder," he says.

He adds that Sky is the best-placed platform to take advantage of new opportunities. "The interactive TV model we have now is the first step. With the new emerging technologies, TV advertising will get better and better."

Quick Take

	emuse has now signed up all major UK broadcasters to its interactive ad system
	It brings an end to the dominance of Sky in the interactive ad marketplace, and its launch has already lowered costs, doubled the interactive ad universe and simplified the process for advertisers
	Broadcasters are predicting a rapid increase in revenues from interactive ads as more advertisers get on board and research proves the efficacy of the medium
	But some are doubtful that the introduction of Freeview as an interactive platform truly expands the interactive market, given that it has no return path
	With emerging technologies around the corner and new platforms for iTV, the true test of the market could yet be to come

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