I’m pleased to kick off my monthly interview with Unicast’s CEO, Dick Hopple. I’ve always enjoyed hearing Dick speak and listening to his views on our business. Dick is a seasoned advertising professional, which just means he probably knows more about this business than you or me. That’s why you should read this interview and gain a leg-up on his unique perspective on the issues like streaming, broadband, creativity and TV on the Web.
Jaffe: A lot of people view interactive in a vacuum and forget it’s actually part of a much bigger picture. Interactive might be going through tough times right now, but so is traditional advertising. How healthy is the above-the-line business in 2002?
Hopple: The advertising business as a whole is going through the worst recession since the early ‘90s. Spending is down across the board. Agencies have suffered. It’s been difficult for everybody. What we hear anecdotally is that the business is firming up some. Clearly the second half will be better than last year.
Jaffe: So as things get better, how will interactive fit into the bigger, integrated picture?
Hopple: Clients view agencies (mainstream) as the keepers of their brands; the people who understand the nuances of those brands and can articulate them best to consumers. When the Internet came into being there was a lot of confusing technology; it wasn’t very big or important to mainstream agencies. As a direct result, pure-play digital agencies grew up in order to support the client interest in exploring this new medium. If the Internet had been important enough or easier to understand, clients would never have segmented their brands to different agencies.
However, considering the fact that (many) pure-plays have had a difficult time making money, (while others) have been bought by major agency groups, you have to conclude that those responsibilities will eventually migrate back to the main agency groups.
It’s inevitable that as the Internet continues to grow in importance and as major advertisers get more experience with online, that more and more of the buying will accrue to major buying companies. And those decisions will be made not in a vacuum but across the board – just like other media. This will put severe price pressure on publishers – much more than they have felt ever before.
Jaffe: I’m not so sure there won’t be a place for a best-of-breed niche Digital partner.
Hopple: That’s where the entire advertising industry has gone. It’s not logical to conclude that if an advertiser doesn’t have a separate agency for print, radio etc., that the Internet should be different. It will be a lot easier for the Internet to earn the share of spending it’s capable of earning if it’s coming out of the same pool as everyone else. This may not be terribly exciting news for the pure plays, but it’s fundamentally important nonetheless.
Jaffe: For your perspective to be realized, you’re making the implicit assumption that the Internet takes its place and is recognized as a fellow branding communications medium. Is the Internet just another medium?
Hopple: It is a medium, but it’s capable of merging and blurring a lot of marketing disciplines. While Direct Marketing messaging generally takes on a different creative skill set compared to a branding message, both kinds run on television, print etc.
Jaffe: Unicast’s bread and butter product is the Superstitial: a rich-media pop-up, using a proprietary technology to load in the background, which effectively counters any bandwidth restrictions. Am I on the money with my top-line description?
Hopple: That’s essentially correct. We built our solution to solve what we believe was a conflict between advertisers and publishers. Advertisers want to deliver the most effective message (TV is the model), which would inevitably translate into larger files. Publishers – not that they’ve awakened to a buyers’ market – want to give buyers what they want. But larger file size degrades the user experience. This is one of the reasons we believe streaming doesn’t work in a narrowband or broadband environment.
Jaffe: That’s a new thought. I don’t recall hearing your perspective on streaming before. Can you expand on this?
Hopple: For the next five to seven years, broadband means T1s and Cable Modems. Broadband is not the advertising panacea we thought it was. No consumer is going to wait for a player to load and a stream to buffer in order to see an ad. No advertiser is going to be tolerant or place a high value on an ad that has to constantly rebuffer.
We don’t think streaming works at all in a narrowband environment. In broadband, it works better for user-initiated content e.g. Sportsline – where the consumer will be reasonably patient. In these cases, embedding an ad is viable, but still won’t be mainstream; it’s also very expensive to embed ads in video streams, and therefore doesn’t scale very well.
Jaffe: And obviously an interrupted steam translates into a makegood.
Hopple: As a site, you can’t sell ads without a firm grasp on the percentage of makegoods, which is all the more difficult when you can’t control the delivery.
Jaffe: This brings up the business case for a viable advertising model on the Web – a win-win scenario in which clients are satisfied and publishers are making money.
Hopple: Major advertisers understand that quality and format are major components of the advertising value proposition. And until the industry invests in formats that allow the quality of communication they get in other media, major advertisers won’t spend money. All the targeting and interactivity is irrelevant if the quality of the message isn’t any good.
Jaffe: Can you expand on this thought, and also list any other challenges that are currently standing in the way of clients spending more dollars online?
Hopple: I think the two biggest ones are clutter and credibility. Every medium I know of has a small number of standard formats that give advertisers and creative people in particular a clear simple way to think about that medium. For television its the 30-second commercial; for print its the full-page ad; and for radio its the 60-second ad. Even matchbook covers have a standard size. In Q4 2002 there were something like 6,000 different ad units online. This kind of chaos is paralyzing to creative people. It’s kind of like telling them to develop advertising without any kind of creative strategy. How can you think clearly about a medium in which there is no foundation?
Clearly the Internet presents lots of opportunity for different kinds of one-off ads but there needs to be some kind of clear simple foundation around a set of standardized units such as the Superstitial® for example. Until the industry comes to grips with this and helps advertisers understand it I don't think you will see significant increases in Internet ad spending from major advertisers.
The second issue is credibility and it is related. A couple of years ago the industry accepted nothing basically but banners. It told advertisers they could take it or leave it. Most left it. Now that revenue counts, the industry is so desperate it’s willing to accept just about anything, which is just as bad. We've gone from essentially one format to 6,000. The industry didn't have much credibility before and this kind of short-term reaction isn't going to build credibility now.
I believe the money will flow quickly if there is recognition and action to clean up the medium and standardize the way all other media standardize.
Jaffe: Your shtick is about bringing television to the Internet, and in doing so, delivering emotion, which has been – for the most part –absent from the online landscape. I’d like to challenge you on this. I have my strong doubts that TV will work on the Web (for the same reason I don’t think the Web will work on TV.) Convince me I’m wrong.
Hopple: I don’t think the issue is about “will something work or not on the Web.” To me the issue is “what do advertisers want?” What will advertisers pay high CPMS and spend a significant percent of their budgets on? That’s TV. I would be willing to bet you a lot of money that if magazine publishers could find a way to run 30-second commercials in their publications, they would do it.
I do think that because there is a more intimate relationship between users and this medium, that advertisers have a lot to learn creatively about the nature of the TV-like messages they distribute through the medium. This is an issue of learning how to use it, rather than whether to use it or not. Give them a template and let them figure out how to use it.
Remember that the first TV ads were radio-like and then advertisers learned how to evolve and adapt it to the unique strengths of the medium. That’s what’s going to happen here. And frankly that will be driven by the mainstream creative people in the large agencies.
Jaffe: On your Website, you say, “The Internet will become the most effective advertising medium ever created.” That’s quite a lofty prediction. Can you elaborate on this statement and perhaps clarify your definition of the word “effective”?
Hopple: Sure. I think marketing is in its essence, a dialogue between a consumer and a brand. Advertising is the language of that. Advertising up until the Internet has been a one-way language. The advertiser talks to the consumer; the consumer listens. And that’s it. The Internet provides advertisers with the ability to talk with consumers and consumers the ability to talk with advertisers. And if you accept that marketing is a dialogue, then a medium that makes that dialogue two-way absolutely will become the most effective medium ever created.
Taking this to the next level, the real issue is how to conduct a rich dialogue with your audience. Take banners and Superstitials: Banners are like a four-year old trying to carry on a dialogue with a college professor. A Superstitial is a college professor carrying on a dialogue with another professor. That doesn’t mean I don’t want to talk to my four-year old. I just don’t want to do it 24 hours a day.
Jaffe: Let’s talk about broadband. It seems like both a blessing and a curse for Unicast -- a blessing in terms of expanding the rich-media possibilities, but a curse in terms of potentially negating the need for a polite caching technology in the background. How are you looking at broadband and what kind of strategic position are you taking in its future and deployment?
Hopple: As I mentioned earlier, for the next five years, broadband won’t be a lot more than T1s and cable modems. So the experience you have in your office is the one you’ll get for the next five years. That doesn’t in any way negate the need for a Superstitial.
The opportunity for Unicast, publishers and advertisers is to use larger files on a broadband connection.
Jaffe: And you have the Superstitial 300 and 300V, which does just that.
Hopple: The 300 gives advertisers the ability to replicate TV advertising, add interactivity and run it on 1000s of sites. The 300V gives advertisers 15 seconds of high-quality, pre-cached video, which excites them.
Jaffe: I’m purposely oversimplifying this, but at the end of the day, a Superstitial is just a high-end pop-up. Do you believe the pop-up and pop-under explosion has dented the image of a Superstitial? What steps are you taking to counter things that go pop in the night?
Hopple: The quality of the advertising is so much better than anything else on the market that is hasn’t really affected us. We have some interesting product development stuff in the fall that will take things to the next level. People’s attitudes towards Superstitials have been overwhelmingly positive relative to other popping things.
Jaffe: If you could assign a grade to the standard and quality of creativity out there, what would it be and why?
Hopple: D. To be fair, it’s hard to get more than a D if the template you’re working with isn’t very big. If you had asked Rembrandt to paint on a postage stamp, he wouldn’t have been considered to be the artist he was.
Jaffe: What about your stuff?
Hopple: C+. I don’t mean to disparage it. It’s just that it’s so new, that there’s so much to learn. The quality of advertising on Superstitials is getting better all the time.
Jaffe: What’s the best campaign you’ve seen so far in 2002?
Hopple: The Absolut Citron ad, which was an amazingly innovative use of interactivity, and Diet Coke, which replicated its TV campaign really well.
Jaffe: Final question. If Jaffe Juice were a real drink, what would its ingredients be?
4 parts vision
4 parts pragmatism
4 parts insight
1 ½ parts provocation