In this second of a two-part interview, the chairman, president & CEO of this technology company talks about Internal Marketing, creatives, agencies and other such topics.

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 the first of this two-part interview, Rice covered 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. In this second segment, he addresses the importance of Internal Marketing in the bigger picture; whether Viewpoint is the TiVo of online advertising; if the real Interactive visionaries really aren’t interactive at all; and how agencies feature in the equation.

Jaffe: I was introduced to Viewpoint over a year ago. The first thing that struck me was that this was not as much an advertising solution as much as it was a Website solution. It’s an opportunity I call Internal Marketing – the ability to turn a client site into an experience – that I don’t think has been remotely leveraged yet by the market. And I’m not talking about the 10-second skip-intro; I’m talking about the ability to deepen an experience by bringing a brand to life so to speak.

So I must admit, I was a little disappointed when I heard Viewpoint was diversifying into online advertising because I thought the opportunity was just so strong on the client’s site side.

Talk a little bit about this decision to move into the paid media space and perhaps give some cases where clients have branched out from a site to a paid media solution.

Rice: Your observation is exactly correct and it’s certainly not as though anybody here feels we’ve even scratched the surface in terms of people making their own Websites more involving and engaging, and visually compelling. The reason we’re moving into online advertising now is because we can. That is to say we couldn’t before, because we didn’t have sufficient penetration on the client side.

Also, we certainly couldn’t expect people to download a media player in order to see an ad.

We had to earn our money the hard way early on – going to sites where this kind of technology was so obviously a winner and they had to adopt it even though there was no line item on a budget accounting for it. So it took convincing people it was the right idea and to take a risk on a relatively new technology.

We’re not going to diminish our commitment to Website marketing by moving into online advertising. At the same time, several things are true. It’s a very scaleable business. There’s also an extraordinarily large market opportunity right now. One of the most important points is that interactive 3D, especially when married with flash, results in the ability to do some stunning things in small file sizes. We just ran an ad for Compaq on CNET that Compaq will tell you was the most successful ad it has ever had (JJ - in the online space) in terms of generating sales.

Jaffe: Last week you mentioned you didn’t consider yourself to be a visionary. So who are the visionaries in the space? Are they the creative people? Someone has to be a visionary in an infant industry.

Rice: Well we think a lot of the visionaries have been busy making television commercials, largely because the creative possibilities are so much greater on TV. However, what we’re beginning to see the very start of is bringing the classic advertising creatives into the Internet space, because of the ability to bring together video with interactivity. So we’re starting finally to get the attention of the creatives with this medium and that’s obviously a good trend. Very specifically what we’re also seeing is some of our key clients bringing a lot of creative firepower into what they want to do on the Web.

Jaffe: You just now alluded that the interactive visionaries might not be in interactive right now; they might just be the traditional keepers of the brand. There is talent out there and talent knows no boundaries: traditional or interactive. The ability therefore is to lure them in and give them a palette that they can truly use…that’s an interesting point to me.

Rice: There’s just no question about that. It actually goes to the whole idea of what is an “interactive agency.” That it doesn’t do anything else? Because if it does, it does call into question as to what the depth of the creative is going to be. And more importantly, in this day and age with the economy not doing so great, what the relationships are going to be.

There are many things that impact on the development of the online advertising space and one of the things is that the “kids” running around doing the interactive agency work don’t have deeply-ingrained relationships with the major marketers. What is Proctor & Gamble spending on the Web? Essentially nothing. What’s Ford spending? Just a little bit. It’s relationship. It’s trust. Ford has learned to trust JWT over 50 years.

You can’t just pop-up one day and say, we have a new medium, it’s called the Internet...and therefore we’re qualified to take your brand message out. What’s the word I’m looking for….it’s such an ego- or industry-centric view.

We’re not trying to stick our nameplate in front of the end-user; we’re trying to make them unaware of the technology. When you saw the first three Star-Wars movies, you didn’t sit back and comment on the technology that was used to make it happen.

Jaffe: It’s like Sound at a concert. The only time you’re ever aware of the sound is when it sucks. Oh and by the way, the words you were looking for earlier were “sense of entitlement.”

Rice: You might be right.

Jaffe: Based on your earlier comment, how would you feel by this question: Could Viewpoint be the TiVo of Online Advertising? And I mean this in a positive way in terms of a technology that can revolutionize the business -- it doesn’t have the penetration and the critical mass yet, but you just know that it represents part of the future.

Rice: It’s our job to execute on our own promise and not be thought of 10 years from now as the company that led the charge but failed to execute on it. It’s a wonderful question and is certainly the management challenge that is before us. The trick for us has been 1) to survive the past couple of years, which we have, 2) achieve the penetration rate necessary for critical mass, which we have, 3) get the kinds of strategic partners necessary like AOL, Adobe etc., which we’ve done, and 4) have both the technology architecture and business model that will allow us to be hyper responsive to the marketplace, instead of trying to predict the future.

The problem with TiVo is that it is a great idea, but it requires a very large shift in human behavior very quickly. We’re trying to get to the goal by inviting and being able to make money on smaller shifts in behavior along the way to the big shift in behavior.

Jaffe: Let’s talk about the agencies. From what I hear from you, you’re a consultative partner – you’re not telling people how to do their jobs (which is never a good thing with the agencies, especially with creatives), but at the same time you are providing the platform and being a partner nonetheless.

Agencies certainly are the vital link between the sell and buy sides, especially in terms of having the relationships with clients and the trust that goes along with it. Talk a little bit about agency relations right now and agencies’ willingness to “test”, “experiment”, “invest” and work with you.

Rice: Right now we’re in a good place with the agencies. It seems we’re in the middle of a Honeymoon period, frankly. They’re trying hard to create more compelling marketing messages. Our model at the very minimum doesn’t interfere with the way they do business, and at a maximum -- which we’re hoping for – helps them do business because they can become experts at this kind of messaging…and win business for it.

We’re making what they do more valuable to their customers and letting them make money in the way they’re used to making money with their customers. We’re making their jobs – we think – easier and more interesting, and we’re extracting money from the advertiser when they see the benefit of more effective advertising.

Jaffe: You’re one of the few companies aggressively investing in marketing – in terms of event marketing sponsorship, advertising in traditional trade publications like Ad Age, advertising online, etc. It’s certainly encouraging to see this kind of investment – putting your money where your mouth is and sending out a strong signal to the market.

Rice: And this is just the beginning. We’re just going to get more aggressive.

Jaffe: A couple of quickies: Give me an elevator pitch to CMO in 10 seconds or less …

Rice: Companies like Compaq have decided to put more and more of their marketing funds into online because it’s proven to be a more effective way of bringing in customers, raising brand awareness and selling product. Don’t take my word for it…talk to the customers.

The big idea is that this cannot be an academic debate. No one in this industry is going to win an academic debate. Where we’ll win is by demonstrating how strategic clients, leaders in their industries, have utilized online to great effect and are reinvesting in it and upping their spend. Nothing speaks louder in this industry than the actions of a competitor!

Jaffe: You speak my lingo – I believe that clients will invest based on two mutually exclusive scenarios: either because their competitors are doing it (followers) or because they aren’t (leaders).

And finally…If Jaffe Juice were a drink, what would it be and why?

Rice: Just another name for a Bloody Mary – something to chew on and slightly intoxicating.