Emerging TV trends signal big changes in the advertising industry. A new report outlines the struggle to stay ahead of the curve.

New technologies are dramatically impacting America's TV viewing habits -- especially when it comes time for a word from our sponsors. According to a recent report from Brightline Partners, an interactive TV media agency, many of the so-called full service ad agencies are having a hard time keeping up.

I Want My iTV

Interactive television, or iTV, is the term coined to describe a range of new technologies that give viewers more control over their viewing experience. At an iMedia Brand Summit last year, president of the Interactive TV Alliance Ben Mendelson defined it as "new things the viewer can do with the remote control... includ[ing] everything from video on demand and digital video recorders like TiVo to enhanced TV and home entertainment gateways."

Various iTV vehicles are already forcing advertisers to adapt. TiVo, for example, recently announced plans to serve ads to users who fast-forward through commercials. And the two-way communication made possible by digital cable and satellite systems is leading to rapid growth in "enhanced advertising" -- ads that give users the ability to push a button on their remotes to indicate interest or get more information. New programming models, such as video on demand (VOD) and virtual channels, demand new sponsorship models as well.

While uncertainty abounds as to which iTV technologies will have staying power with consumers, an article in Fortune last week indicates that cable and satellite operators are strongly committed to rolling them out. For one thing, Rupert Murdoch, whose British Sky Broadcasting has raised television interactivity to unheard-of levels in Britain, took control of DirecTV a year ago and is almost certain to blaze a similar path in the United States. There's a strong sense that, in the world of TV advertising, nothing will ever be simple again.

Are ad agencies up to the challenge?

How is Madison Avenue dealing with this changing landscape? To judge by the Brightline Partners report, reps at many large ad agencies may be burying their heads in the shifting sands. The report finds that marketers are frustrated and confused by the role of iTV in their marketing plans, and many don't believe they can rely on their ad agencies to solve their problems.

Among the report's memorable quotes from clients:

"We've had to approach iTV similarly to product placement -- and go outside our agency relationship to seek out specialty skills."

"I should be able to expect my agency to keep me abreast of ways to begin integrating these vehicles, but it's never part of the conversation unless I request it."

"They say they support my objectives where interactive advertising is concerned, but I get the feeling they don't really know how."

Statements from agency personnel are just as blunt:

"We talk about iTV with our clients in a broad sense ... but the reality is that we just don't get much done."

"One would have to say we are more reactive than proactive."

"I have to be careful how I handle [iTV] opportunities -- we really don't want to detract from our ability to keep traditional TV advertising the main focus."

Perhaps most telling: While 90 percent of marketers interviewed said they wanted to learn more about potential uses of iTV, over 80 percent said they were only "somewhat" or "not at all" satisfied with their agencies' ability to provide that expertise.

What accounts for this knowledge gap? According to CEO of Brightline Partners Jacquelline Corbelli, traditional ad agencies suffer from internal structures that promote isolation and competition among account reps, as well as a dependence on revenue from traditional 30-second TV spots. But their biggest obstacle, says Corbelli, is that agencies can't simply bring more expertise in-house by hiring the right people. "Unfortunately, the individuals that they're looking for can't be hired in the market right now," says Corbelli. "It's a new discipline. It's a new skill set. We just happen to be 21 months up the learning curve."

Some Agencies Get It

However, not all ad agency representatives agree with such dire assessments. "I certainly reject the statement that agencies aren't embracing [iTV]," says Alan Schanzer, managing partner of The Digital Edge,  an interactive agency affiliated with Mediaedge:cia. "We've embraced it very early, and we have lots of clients involved in the space," including such well-known brands as Xerox and Lincoln-Mercury.

But Schanzer does agree that clients' knowledge about iTV -- and their expectations of their agencies -- have grown. "Twelve or 18 months ago it was, 'Hey, we really want to show you what a TiVo box looks like,'" says Schanzer. Now, he says, many clients routinely expect to see a percentage of their advertising budgets applied to iTV marketing vehicles.

Alan Chapell, president of Chapell & Associates, argues that the limits of agencies' iTV expertise should be put in perspective. "It's easy to beat up the agencies" for being slow to adapt, says Chapell, "and a lot of that criticism is pretty well justified. But they're being asked to become experts in a whole bunch of new areas ... and to invest in them way before they're going to be able to see any money from them."

It's probably no surprise, then, that such massive and risky shifts have left some ad agencies uncertain about which way to turn. "Even if this doesn't mean the death of the 30-second commercial, it means a change in the way consumers access commercial messages," says Schanzer.

The future of television is now in viewers' hands -- right there with their shiny new remote controls.