Tom Morgan and Tim Hanlon showed iMedia Summit attendees how the Net is affecting television and vice versa.

At December's iMedia Summit in Arizona, two of the brightest minds in all things digital provided insight into the look of media in a consumer-controlled world. Rebecca Weeks, iMedia's Summit Content Director, started the session off:

Rebecca Weeks: Continuing our discussion about the redesign of old media (see Doug McCormick's keynote address on Lessons from Cable), we will now have a presentation entitled “All Things Video -- Key Lessons Learned From TV’s Battles," led by Tom Morgan, co-founder and CEO of DiMA Group (Digital Media & Advertising Group), and Tim Hanlon, Senior Vice President Director Emerging Contact at Starcom Media Vest Group.

Tim and Tom will discuss how new technologies such as DVRs, interactive guide navigation, and video-on-demand are providing consumer-controlled environments that go beyond the traditional boundaries of impression-oriented mass media. They will also provide us with an update on the state and promise of enhanced video, an example of their research lab’s findings as well as an overview of how their practices are shaping the modern advertising market place. Throughout these examples, they will prove to us that TV and the Internet are not simply converging; they are rather colliding into one medium.

Tom Morgan is a 20-year veteran of the world of interactive services with a focus on early stage business development and economic issues. In 2002 he organized an emerging digital media forum called Digital Spectrum where advertisers asked the pivotal questions that were addressed in the DiMA Group’s groundbreaking report. He served as the first vice president of Business Development and West Coast General Manager for America Online and led the initial launch and partnership with Apple Computer. He is a Founding Officer of Broad Vision where he worked on the ITB Initiative and in 1995 was recruited to serve as President of IDG Interactive Services, where he conducted early development work in the areas of innovative advertising and ecommerce. 

Our second presenter, Tim Hanlon, is responsible for all U.S. client activity and agency initiatives in the field of Emerging Media Technologies. Not only has Hanlon had a decade of traditional and interactive agency media experience, he has also had a substantial journalism experience, having written for CBS News, Sports Illustrated and The Voice of America. Tim currently serves as Chairman of the Four A’s Advanced Television Committee; as a member of the Steering Committee of the Innovation and Digital Advertising Consortium; and as a Member of the National Academy of Television Arts and Sciences Advanced Media Committee. Let's give Tom and Tim a warm welcome.

Read parts one and two of the transcript.

Editor's Note: Tim and Tom both spoke throughout, and from time to time our audio had trouble distinguishing their voices. Once we have the video (to be hosted on AOL) we'll go back and insert the markers. In the meantime we want to bring you the content. So here's part three of the transcript.

So, what are some of these touch points. I sort of alluded to them before. There could be a multitude of ad touch points. The 30-second ad, I think not only doesn’t go away, it gets more impactful. It gets more jazzy, right, and provides an ability for longer form video to be served off that 30. Imagine 30s as being the beginning of the marketing conversation. If the 30 isn’t relevant to somebody, guess what, it’s going to wash over them like it does today. No harm, no foul. But for that small percentage or hopefully if your targeting is better, a greater percentage of those seeing that ad, it’s actually the beginning of the conversation. It’s the incentive to do more. It’s a click to a longer form video ad. It’s a click to sending more information, whatever. And again, I am not saying it’s all the things that we do online in the TV side. I am saying being very deferential to what television is, video-based entertainment and information, and allowing ease of use. Simple button push. With all due respect, TiVo has done a really good job of trying to pioneer what some of those things look and feel like. The challenge, though, and the reality is that TiVo is increasingly a smaller and smaller part of the overall expanding DVR landscape, whether they know it or like it or not.

There are more generic DVRs coming into the mix. You saw the numbers before. What I think is really interesting is what … when can we do the types of things that TiVo alone allows us to do with DVRs at large. And some of the stuff that’s coming out of the Idea Project and the Adlab project with a lot of major advertisers and programmers; we are already on the cutting edge of that; hopefully on the cusp of that sort of happening in a more mainstream way. And think about it too, again, here’s where online expertise really comes in handy. We are very familiar with ad networks today and the ability of us controlling our ad messages when they are placed where they are seen. If it is not working, pull them down, optimize. Imagine the same kind of idea in the television world. Now, this is very embryonic but it doesn’t stretch logic, especially as television becomes more broadband-oriented or IP-oriented, for an ad network of sorts, a DoubleClick if you will, for television, to come into play where, in essence, the ads are placed with the reception of such a network and allow the advertiser to be in control of when and how those things are seen. Because guess what, the advertiser is the one that’s driving the interest in the first place, right? 

The advertiser is the one interested in getting somebody to click further from that 30-second ad. And, by the way, this is not in the face of programmers. This is actually in concert with them. And this is not a challenge to the operators, the satellite, the cable, the Telco’s who are delivering program; it’s in partnership with them. There is ecology here. A new ecology, we think, that comes into play here. Now, again, it doesn’t happen overnight and I think some of the sort of old guard of media sellers and television folks either have to get with the program or sort of wash themselves out. But the mentality that’s very much in this room, I think is going to clearly come into the television side.

Tim Hanlon: Starcom Media Vest Group has been very active with the Idea Project. We have been very active with the Adlab spin-off of this. There are a number of Starcom Media Vest Group clients on that chart, but there are a number of advertisers that have stepped up, especially those with big television-centric budgets or video budgets, and not only doing the old experimentation and all of that buying that they do with the online side and the broadband side, but also working in these environments to work on the new forms of video. It’s a multi billion-dollar industry and instead of just sitting around and saying the sky is falling; ad skipping is here; what are we going to do about it? Or worse, what are we not going to do about it because everything seems to be fine? We need to start recognizing that there are solutions. There are possibilities. So I think the year of 2005, if I could sort of dove tail into Doug’s ending comments is, my hope is that 2005 is the year of the what can we do in the face of all of this? Not as reactive but as proactive. Versus, you know, either ignorance ala CBS or arrogance in that everything is just fine, thank you. Because neither of those answers is appropriate. And with that, do you want to sort of finish up. 

Tom Morgan: Yeah let me just finish off with ideas.

Hanlon: And then we will take questions? 

Morgan: Yeah. It’s a collection of about 50-plus industry executives who are basically looking at things like what the IAB did in the early days of the Internet. What are the standard ad units? What are basically the issues we need to address? It’s a group of cable companies, satellite companies, programmers, television networks, advertisers and agencies, and technology providers. Basically we are trying to work together, trying to bury the egos and the competitive nature at the door, and come up with a series of issues that we have to address on things like development of standard ad units that work inside this environment. And guess what; the same ad units you work on the broadband side with video are the same kind of ad units we are working on here. Long-form telescoping, what’s a showcase? How do you deliver? What do you do on the overlays? What kind of functionality do you have? What are the metrics now that you can measure all of this stuff? And some of the click-through rates, like you have had on the Internet, you have got to measure here. And also how do you tag them? You get into tag stripping issues. You get into, you know, not having the Gators and the hi-jacking of ads in these environments.

There are some basic business practices. So everything we do in the Idea Project is aimed at the business practices and what we are trying to tackle is how can the advertisers engage? We are flying literally tomorrow to meet with the A & A for a group, to start getting them engaged, start the understanding that it’s … there are lots of new options. And there are lots of new options in tying in broadband into these environments. We're looking at a lot of new devices that are basically digital broadcast and IP devices. So don’t … what I am saying is you talked about making sure knowing who your partners are, think about the role that you all play in this emerging video world, moving video onto the IP networks and also moving interactive services into the back ends of the TV networks. Because you can do it.

And your experience in CRM, your experience in optimization and customization, interactivity and response mechanisms and every thing else is a skill set that the television industry does not have. And I think the biggest challenge that we have in sort of doing this … a lot of this sounds like sort of setting standards for the industry, which is a perilous road. But the reality is that cable operators need to start thinking about how they commonly work together and perhaps even cable operators and satellite operators, for the good of the advertising business, if they lust the dollars that they lust after, to be able to work in concert to sort of create a basic platform. And the same thing with the broadcasters versus the cable networks. With all due respect, they are all part of the same companies anyway, okay. So what is broadcast? What is cable? The consumer doesn’t know any difference. What is delivered from an online perspective, whether it’s an IP-delivered video onto a TV set; the consumer is not going to care. So it really is a rising tide that floats all boats here and the reality is you can sort of work in your own little myopic sort of silos, or you can start to recognize that a little bit of something, in partnership with the rest of your quote/unquote “competitors,” may actually look a lot better than a lot of nothing. Because I will tell you this, and everybody here in this room knows better than I do, that when you have got all of these new emerging platforms and stuff, it’s all very cool but you can’t buy 15 different platforms and 30 different touch points. You know, TiVo is the mother of all one offs, unless it gets scaled. So that’s kind of what we are trying to get going on a more scalable proposition. 

And having advertisers in the room and the agency in the room now, may hopefully get us to that point. And the good news is that this idea thing has been going on for what, two years? 

Hanlon: Two years. A little over two years.

Morgan: Right. So this is kind of a little bit of a coming out party. It’s not really sort of shout it from the rooftops but the conversations are happening and they are very, very good ones, which is great. We have got two minutes and 47 seconds for questions. 

Audience Question: You touched on it a little bit at the end -- the multimedia centers are starting to get a bit hot today, bringing the Internet into the TV. Two questions: How do you think that will affect advertising and when do you see mass consumption happening?

Hanlon or Morgan: Mass consumption of those devices, if you go down to Best Buy now, you are starting to see DVDRWs with IP connections and everything else. You will see Intel with a major push on something called the EPC, Entertainment P.C., which is really an IP-based digital broadcast combined box. Or look at the Microsoft Media Center edition kinds of ideas. So I think the idea of blending a digital broadcast and IP networks is probably in scale two years off, probably. In context of the up fronts. Now how fast the consumer buys those boxes versus they buy embedded satellite and cable boxes, the satellite guys would go IP first because they have to. The question is will the cable guy start putting IP back ends on their DVRs or not? Probably, when they see the advertisers demand it. The advertisers are going to want access to all your CM systems and optimization systems. So, therefore, they are going to demand the back ends. They are going to demand the linkage into the broadband and Internet side of the world.

Hanlon or Morgan: I would actually go; I would go one more, sort of meta-level. I would say it really doesn’t matter from a consumer perspective …

Hanlon or Morgan: I agree with that.

Hanlon or Morgan: … If I am a content owner, okay, I want to make sure that my content is across multiple touch points and all of the relevant ones. And with all due respect, in the lab they should be working the media PC environment now. It’s just as well it should be in the wireless space and the broadband space and the DVR space, the VOD space. You need to basically have your foot in all of those, sort of, those fires. The consumer is not going to care.

Hanlon or Morgan: Let me give you an example. A real huge issue that comes up with that question -- the consumer stores a show; now watches it 90 days later off of the local server on his media center. Who has rights to maintain the avails? We do it on the Net all of the time. Old articles, new ads. Is there a DVR syndication or a media center syndication model here? Because really DVRs are a bigger threat to television syndication than they are for first-run television. It’s the back end where the profitability of television occurs that’s at threat here.

Hanlon or Morgan: And I think it’s less about the technology and which one or which one’s the penetration.

Hanlon or Morgan: Right.

Hanlon or Morgan: It’s about the business models.

Hanlon or Morgan: Right.

Hanlon or Morgan: And a lot of what Idea’s about is sort of figuring out the business models and just recognizing that you know what, the technology conversation, it’s already over. Let’s work on how the business looks going forward. That’s it.

Moderator: I would like to thank you guys very much.