In this first of a two-part interview, the chairman, president & CEO of this visionary technology company shares his thoughts on the future of banner advertising and more.

Bob Rice is chairman, president and CEO of Viewpoint Corporation, a technology company that offers a graphics-operating platform capable of synchronizing multiple media types and interactions into a single, unified user-experience. Viewpoint technology enables high-resolution 2D images, 3D content, interactivity such as zooming, panning, rotating, and swapping colors, accessories, and textures, to be deployed on the Internet, CD-ROMs, DVDs, Kiosks, and more. Viewpoint content is accessible over any Internet connection. And in fact, Viewpoint’s graphics-operating platform is installed on more than 57% of the computers in the United States; AOL selected Viewpoint to serve as its rich media platform; and Adobe Photoshop 7.0 includes a direct export feature to the Viewpoint ZoomView format.

After hearing Rice speak recently, Joseph talked with him in length about the Internet’s role in advertising. In this first of a two-part interview, Rice covers the need for a unique business model for the Internet; computing vs. broadcasting; standardization vs. customization; advertising on demand; the need for interactivity; and the future of banner advertising.

Jaffe: I heard you speak at the IAB Annual Members day and was visibly impressed with some of the things you had to say – I normally expect “self service” gratuitous commentary, and instead witnessed some very original thinking, with a unique point of view.

I don’t know that people have completely figured out the role for the Internet as far as online advertising is concerned. I’m not even sure there’s a viable business model on a critical mass scale yet – we still seem to be backpedaling somewhat – I call it subsidized content on the back foot…in other words, what you give you can’t take back.

You, however, had some interesting and fresh thoughts about how the Web should be used, namely as a computer…

Rice: First of all, and most importantly, it’s clear that so far as an industry we haven’t really invented unique advertising types to the Internet; so far it’s been pretty much repurposed ads from other media. It’s comical how there are those people who desperately desire the day when these magnificent CPUs will emulate TV sets; that day being the golden day of Web advertising – the day when we can send video out.

Every major communications revolution has generated a native media type.

For example: Television ads have today essentially become an art form but in the early days, TV was a moving picture of a guy sitting in front of a microphone reading a script just like he reads on a radio – in other words, TV applied the new technology to the existing radio form, but didn’t do anything very different to it. So far, we’re very much in this way with the Internet, and it’s been a very disappointing run.

So one thing we generally believe is that we have to use a computer like a computer; we can’t use it as a passive decompression and display device – much like TV or radio – and we certainly can’t use it to display static images – much like print. Rather we have got to develop ways of explaining marketing positioning, product stories, creating emotional appeal -- all the things that really good marketing campaigns do – in a way that’s unique and takes advantage of unique capacities of computers, both in terms of the power of real time compute, and in terms of connectivity – the ability to communicate with other people at the same time. Those are the things that are barely a gleam in anybody’s eye right now.

I therefore think it’s absolutely comical that so many panel discussions center around standardization – standardization of what? Nothing has been proven to work yet and all everybody is talking about is how we’re going to standardize everything to make it easy to sell. Well, it might be easy to sell, but it will be valueless.

First, figure out what works and then figure out how to make it an easier process to buy and sell.

Technologists for some reason have this absolute overwhelming desire to create committees to standardize anything the moment it is mentioned aloud. People can talk all they want about the W3C – what standards have it produced that have actually driven this industry forward? I can’t think of any.

Jaffe: I’ve often said, you want standards, I’ll give you standards – full screen, half screen, quarter screen. Let’s start off with a full screen and work our way from there.

I’m a big believer of “bigger is better” for the most part. It certainly would help fulfill all the objectives you spoke about earlier in terms of branding, emotional connectivity, functionality from a computing perspective etc. I think this brings out a third component in the customization vs. standardization debate: innovation. Surely we are still at the very beginning of this infant industry’s growth curve…

Rice: There’s no question that any standard that would have been articulated 18 months ago would clearly not have been able to take advantage of a lot of capacities that machines have developed since then. Our entire idea is to put the graphics operating system and all the functionality on the client side and take advantage of Moore’s Law, instead of trying to put everything on the server side, compressing the hell out of it and sending it down the pipe and using the computer as a passive decompression and display device.

This opens up a whole world of creative possibilities both in terms of what kinds of media you can deliver and how interactive that media can be, as well as how you can involve other people who are in that same community in the activity that is driving the marketing messages. For example: Instant messaging hasn’t been used at all yet. Are you going to tell me that isn’t going to become an interesting way of telling branding stories and getting across advertising messages? That’s insane. Of course it is!

Not to mention the pure technology things like the introduction of video and interactive 3D, which is our big calling card, where you can produce beautiful photo-realistic files at incredible small file sizes and take advantage of the fact that CPUs are strong enough now to take advantage of all the real time rendering and interactivity.

Jaffe: I’ve seen you do some interesting things even in a 468x60 banner. I’m curious as to your views regarding the banner and its future.

Rice: As long as this is where the industry is, fine. We’ll deliver more compelling marketing stories in it. However big the playing field is, we’ll play and we think we can do better than any other given media type in that space.

Even though larger is better, it doesn’t mean that smaller is unworkable.

It’s not practical to say, forget about everything you’ve done; throw out the last eight years and start over. It’s rather that within the parameters of where we are, how can we help advertisers deliver the most compelling message?

What we really want to do is to get into a position – and I think you’re going to see this more and more – of user-initiated advertising and marketing messages. We’re trying to develop units in which it’s rewarding to click and see the story; you’re not going to get whisked away to some Website; while you’re there you can really explore and have fun; it’s not obliterating the page without permission – it’s inviting me to do something fun and interesting.

Jaffe: I’m totally with you on this one – it’s a trend I refer to and call advertising on demand. It’s funny because during my Creative Panel at the iMedia Summit in Keystone, Colorado, at least three separate creative executions utilized some form of this kind of user-initiated activity. One expression is the process of starting big…going small…and then waiting for the user to initiate some kind of additional follow-up experience.

Rice: And that’s what the CNET ad basically did…

Jaffe: CNET has done something smart. Its people know its audience and so it’s all about getting the attention and rewarding the interest…

Rice: …right, and that’s how our technology works in terms of the way we can progressively download throughout the experience. That has got to be one of the key ideas going forward. Again going back to the top of our conversation – that’s unique. It doesn’t happen with any other kind of medium. Digging deeper into product or brand stories…that’s one thing the interactivity of the Internet allows you to do.

Jaffe: So here’s the most leading question of this interview: What would you say about those people who argue that the solution to growing the pie is just to take television and transplant it online, without a degree of interactivity? Would you say they’re throwing out the baby with the bathwater?

Rice: That’s leading all right. Of course. That is so profoundly unimaginative and in the self interest of people who make a living selling television commercials. It doesn’t work to take old media types and repurpose them in new media. I’m not saying it won’t have any place. Streaming just isn’t there yet. We’re developing technology that will pre-load the entire 30-second commercial using idle time before playing it.

Jaffe: It seems like you’ve done a good job at straddling the fence between the best of the old and the best of the new.

Rice: We’re not trying to dictate the future. One of the reasons why we’re still here is that we didn’t try to predict the future. Inevitably whatever you and I think will be wrong. Our approach to make a viable business is to provide an auto updatable platform that plays all available existing media types and goes to work on the client side, and then let the market develop over time. I’m not trying to be a visionary; I’m trying not to be a visionary. I’m trying to give the creative people the tools and equipment they need in order to develop the most compelling creative possible.

You and I spoke about the differences between Web Marketing and Web Advertising (see part II next week for expansion on this thought), but there is also a distinct intermediate concept that is very important: sponsored content. For example, Compaq might take out a significant space on a partner publisher Website in order to set up a mini-site or store. It’s paid for and it’s helping to convey a marketing communication message, however it’s not what you would call advertising, nor does it reside on the client’s site, so it’s not Web marketing either.

Jaffe: Well it could fall into a category that I call New Marketing, which is essentially any new form of marketing that is transforming the way marketers connect and deepen relationships with their target audiences. So much of what we do in this space is bigger than media: In this case a cause-effect relationship that fulfills a dual brand and business building objective at the same time…so it has to be somewhere in the middle of marketing and advertising.

Rice: Right, it’s somewhere in the middle. New Marketing as you call it. I’ll start using that term.

We’ve also seen a lot of interest in generating promotions and games. By participating, you’re learning about a brand in an engaging and interesting way. That’s another thing that is in-between.

Jaffe: It ultimately comes down to the concept of real estate. The ability to own prime real estate – it doesn’t matter how you own it, but the fact is that when one looks at a page, and doesn’t look at it as a fleeting push-based message, it becomes something that sustains itself over time through consistent user-interaction. When you’re on the homepage of one of the big three: that’s prime real estate. That’s Location; Location; Location in traditional retail terminology.

Rice: Absolutely. It’s still a real estate play. You’re dead right about that. The question is what to do with that real estate. In the early days, we used this like people used old real estate – this is different real estate with different naturally occurring features; it’s that kind of thinking that has been so grossly lacking.

We’ve been working closely with the major portals – obviously with our close relationship with AOL, as well as a relationship with MSN which is just beginning, and a couple of other breakthrough discussions with some of the other major portals – and you see how common the problem set is. They’re all facing the same problems – the very problems you’ve been talking about. I assure you they’re feeling the heat to find the new marketing solutions not because of any reason except that they’re not getting paid right now for the old marketing solutions.

Jaffe: I want to go back to an earlier thought – the idea of computing vs. broadcasting – you have this tremendous processing power…make it work for you. My core business belief set revolves around the interrelationship and interdependence between Technology, Creativity and Intelligence – or in essence that a computer without a creative, intelligent user behind it is just a dumb box. So the power of people and talent is becoming more and more important in the process of leveraging technology…

Rice: …can I stop you there for a moment? I want you to know that for a company which is known as being a pure-technology organization, more than half our headcount is in creative services. We are the living example of your philosophy there. And it’s certainly mine as well.

You simply cannot dump lines of code over the rooftops of somebody and say, have a nice day! You’ve got to be able to exploit it and provide leadership in the space. We want the agencies to pick up our ball and run with it, but you have to at least show what it’s capable of doing in the first place. We look at our Viewpoint guys as the Green Berets of content creation.

Given the sophistication of computers and how relatively unsophisticated many of the users are at this point, you also can’t just have the creative either. You really do have to have both. And that’s why we have the peculiar mix of headcount at this company.

How important is Internal Marketing in the bigger picture? Could Viewpoint be the TiVo of online advertising? Are the real Interactive visionaries not really interactive at all? How do agencies feature in the equation? If Jaffe Juice were a drink, what would it be and why? All these questions – and more – will be answered in part 2 of the Jaffe Juice interview with Bob Rice. Don’t miss it!