Remote Control

”You think you could get Barry Diller?” asks Mark Sherman.

“I’d like to meet Barry Diller,” replies Ian MacLean, a smile crossing his face as he leans back in his chair, arms behind his head.

It’s a scorching late May afternoon in Montreal, and the two principals in interactive TV service Etc.tv are sitting on a sun-splashed patio across the street from their Crescent Street office. They’re discussing the possibility of landing a meeting with Diller, the U.S. media titan whose career has included stints as CEO of both Paramount Pictures and Fox Inc., and who is currently chair and CEO of InterActiveCorp-a massive interactive conglomerate that counts the Home Shopping Network, Ticketmaster and Citysearch among its assets.

Of course, this little exchange could all be staged for a visiting journalist. After all, a face-to-face meeting with Diller, the man who launched Fox Television and groomed a group of prominent media executives labelled the “Killer Dillers”-including former Walt Disney Company CEO Michael Eisner, and Dreamworks’ Jeffrey Katzenberg-seems awfully ambitious for a startup with only four employees, no distribution outside Quebec, and no immediate signs of profitability.

And Sherman is clearly not above making playful exaggerations to bolster the company’s image, at one point saying, “There’s absolutely no truth to the rumour that Google offered us $50 million.” (We checked. They didn’t.)

More probable, however, the two longtime business partners are emboldened by what they say has been an overwhelmingly positive response to Etc.tv, a “telescopic” advertising service that enables TV viewers to navigate from standard commercials to long-form ads using cable companies’ video-on-demand capabilities.

During a 30-second spot for Knorr soup, for example, an Etc.tv icon will flash on the screen. That’s the cue for viewers to click the “select” button on their digital TV remote, bringing up an overlay that gives them the option of immediately watching a longer ad-perhaps a branded cooking show featuring Knorr products-or bookmark it on the VOD stream for later viewing.

Sherman and MacLean relay tales of senior executives slapping their boardroom table in excitement when presented with the Etc.tv concept, gleefully repeat quotes from people who say it will “change advertising” or praise it as TV’s “holy grail.”

“I don’t think we’ve ever had a bad meeting,” boasts Sherman. “I don’t think we’ve ever been to an advertising agency or advertising partner who said ‘This is stupid.’ We have meetings where people say ‘Gee, this is fantastic, now we have to figure out how to engage in it.’ “

Sherman is cagier than Barnum & Bailey, however, when it comes to revealing who he and MacLean have met with, repeatedly going off the record before naming several high-profile executives in the broadcast, cable and marketing communities. He will allow that they’ve had encouraging meetings with Publicis Groupe Media’s chief innovation officer Rishad Tobaccowala, while Etc.tv’s board members include Francis Fox (the former minister of communications under Prime Minister Pierre Trudeau) and renowned U.S. media commentator Jack Myers.

There’s a growing realization among all parties, says Sherman, that TV’s traditional CPM model-Sherman defines it as “cost per maybe”-is in “distress” and needs to be overhauled. Advertisers are increasingly tired of paying more for diminishing audiences, and now here comes the Internet, showing video and providing the measurability advertisers love.

Sherman, a devout believer in the power of analogy, likens the growing online video trend to the suburbs. Traditional broadcasters “should be building and developing real estate in the suburbs,” he says. “But if you let downtown become dilapidated, the suburban developers (e.g. Google) will end up buying a dilapidated downtown.”

He describes Etc.tv as an “advertising on demand” service, one that enables consumers to raise their hand and say “I’m interested in learning more about this product.” Advertisers get a highly receptive audience and, more importantly, pay only for the people who watch their ad. They contract for X number of ad views-an ad is counted only when people watch 15 seconds of the long-form content-and once that number is attained, the icon stops appearing.

There’s no “magic length” for these long-form segments, and they can be as straightforward or creative as an advertiser chooses, says MacLean, Etc.tv’s vice-president. The ads can expand or contract based on how much information an advertiser wants to convey. For instance, a recent Ford ad lasted just under five minutes. “It told you everything you wanted to know about the F-150 [truck] and it moved by very quickly,” he says.

“I’ve dealt with these issues where we couldn’t cram everything we wanted to say into a 30-second spot,” says Sherman, who is also founder and CEO of Montreal media agency Media Experts. “An advertiser wanted to say six things and we have to explain that you can only say one. I’ve dealt with an advertiser’s frustration at not being able to say the other five things, and I’ve also seen campaigns ruined by trying to say three things when you should only say one.

“It’s very apparent to me,” he continues, “that advertisers want to say more and want to have extended conversations with their interested consumer, and certainly we see that consumers are learning more about products, services and brands. I’ve also seen numerous campaigns signed with URLs that rather naively expect the viewer to leap out of his easy chair without disturbing his beer, go over to the computer and pound in some keys to get more information.”

Adds MacLean: “The reason people like our model is because it leverages a common currency of the legacy TV system. We’re not reinventing television.”

Etc.tv is currently commercially deployed on Vidéotron’s Illico digital cable system (which reaches 653,000 Quebec households), with broadcast partners including the TVA network and the French-language all-news network LCN. Advertising partners include big names like GM, Ford, Molson, Procter & Gamble and National Bank. The company is also involved in what Sherman terms “promising and varied” discussions with cable companies and broadcasters throughout North America, although the Quebec partners have an 18-month exclusivity agreement that extends through May of 2008.

Nancy Cottenden, a spokesperson with Rogers Cable in Toronto-the country’s largest cable company with 2.3 million subscribers and 1.6 million digital set-top boxes in 1.2 million homes-says her company has had “initial discussions” with Etc.tv, but won’t provide further details. “It’s premature for us to comment whether we have any interest or not.”

Cossette Media in Montreal recently concluded a test with Etc.tv for its Pontiac G5 and Chevy Cobalt models. The two-and-a-half minute segment was adapted from a “virtual advisor” initially created for the web (web adapted for TV, how often do you hear that?) that enabled users to see the two models with different interiors and exteriors.

John Tarantino, vice-president of Cossette Media in Montreal, says the ad generated the predetermined number of views-he won’t say how many, except that it was under 10,000-“significantly earlier” than anticipated. But while Tarantino says he supports Etc.tv “100%,” he believes the key to its success will be training normally passive TV viewers to interact with the screen.

“[Clicking] is not a natural behaviour as it is on the web,” he says. “We’re all aware on the web that if you click with the mouse it brings you elsewhere. But the TV, you’ve got the remote in your hand, but the reality is you’re asking the consumer to change their behaviour. They’ve got this remote, they’re watching this commercial in a fairly passive mode, and you’re asking them to click. It’s a behavioural thing that will take some time to grow.”

But results indicate that viewers adapt quickly to the Etc.tv application, MacLean says. There have been roughly 125,000 long-form ad views (89,000 of which are unique) since the application launched in April, 2006. Preliminary data also suggests that rates of interaction vary with everything from pod position to the advertiser and ad category. (It’s still too early to gauge click rates based on program environment and time of day, he says.)

There’s a “wide variance” on click-to-view rates across different advertising categories, with one advertiser-a product 18-34 male oriented and “with some anatomical suggestions” is how MacLean jokingly describes it-garnering clickthroughs four to five times greater than those of other categories.

Etc.tv advisor Myers has been an interactive TV advocate for years, even serving as executive vice-president of a short-lived interactive service called UTV Cable Network in the early 1980s (the service contracted with Sears Roebuck for the first TV home shopping service.) That idea was about 20 years ahead of its time, he says, but interactivity has since become a key part of the consumer experience.

“With all the dynamics we’re seeing on the Internet, there’s obviously huge pent-up consumer demand to be involved and not just have it be a lean-back experience,” says Myers, a former sales executive with CBS who now covers the media business with his widely read Jack Myers Reports.

The key for Etc.tv, says one media buyer, is rolling out the product into other markets, particularly English Canada. “They need a critical mass and they don’t have it right now,” he says.

Perhaps Barry Diller should be expecting their call.