Adoption of interactive digital TV and m-commerce by consumers

In last month’s article, we looked at trends in the importance of PC-based Internet access as a marketing channel. This month we turn to the picture for other digital media, namely interactive digital television and wireless or mobile access. We assess the significance these new media now and in the future in influencing purchase decisions and purchase transactions We limit our exploration to consumer usage since currently these media have relatively limited usage by business. Again we examine the ratio access : use : purchase to evaluate the significance of these channels.

The key ratio - access : use : purchase

Marketers involved in assessing the relevance of e-marketing to their organisation, or explaining to colleagues the level of investment required in e-commerce, need to answer three key questions about how their customers in different segments and different markets are using new media. These questions are: How many access each platform? How many actively use it for different purposes and finally how many use it to purchase.

Interactive digital television (iDTV)

iDTV refers to television displayed using a digital signal delivered by a range of media – cable, satellite and terrestrial (by aerial). Consumer interactions are provided by a remote control which enables users to select different viewing options through signals sent to a set top box.

From a marketing perspective, a key aspect is how the return path to the provider operates. This is required to provide interactions which involve exchange of information such as a consumer completing an online offer form in response to an interactive TV ad or a purchase transaction.

For satellite or terrestrial viewers, the return path is provided by the phone line and requires a dial-up and local-call charge in the same manner as the Internet. This currently acts as a barrier in comparison with cable which is an always-on, two-way connection.

Interactive Digital Technology (iDTV) has now been used in Europe for several years to deliver broadcasting to homes and offer new interactive services. In France, Canal Plus launched iDTV in 1996, Television par satellite launched in 1997 and Spain, Italy and Germany have had these facilities since 1996 or 1997.

It offers similar e-commerce facilities to the Internet, but is provided with a simpler interface that can be operated from a remote control. The amount of information available from providers is lower because of limited bandwith on site. With the lower resolution, this means that content needs to be repurposed for interactive TV, often at considerable expense.

Mobile (m-commerce) or wireless commerce

In 1999 the first of a new generation of mobile phones such as the Nokia 7110 were introduced that offered the opportunity to access the Internet. These are known as Wireless Application Protocol or WAP phones, or in more common parlance web-enabled or Internet phones. What these phones offer is the facility to access information on web sites that has been specially tailored for display on the small screens of mobile phones. WAP pages are accessed using wireless techniques from a WAP gateway that is connected to a traditional web server where the WAP pages are hosted. Portals such as those from the mobile phone companies are used to configure the services on the phone such as personalisation.

In 2001 new services became available on GPRS (General Packet Radio Service). This is approximately five times faster than GSM and is an ‘always on’ service which is charged according to usage. Display is still largely text-based and based on the WAP protocol. Later, in 2002 a completely new generation (3G) of services will become available by UMTS, with this delivery of sound and images should be possible enabling instant access or ‘always on’. In the UK auctions for the licence to operate on these frequency have exceeded £20 billion such is the perceived importance of these services by the telecommunications companies. Many commentators now believe it will be difficult for the telcos to recoup this money and this has resulted in large falls in their share prices.

How many customers access digital media?

Levels of access to all three media are tracked by the e-MORI Technology Tracker (www.e-mori.co.uk). At January 2002, in the UK, the level of access in new media was:

- Own mobile phone (75%)

- Use Internet anywhere (45%)

- Have digital TV (44%)

Research by Jupiter MMXI (2002) suggests a similar picture in Europe to the UK, although access levels are currently lower. Total digital TV penetration is set to increase from 20 percent in 2002 up to 52 percent in 2006. The research indicates that by 2006 more European households will be watching digital television than using the Internet.

Interactive digital TV

The importance of digital TV is indicated by the e-MORI Technology Tracker data. This medium has taken just two years to catch up with the Internet and is likely to surpass Internet access in future. For C2DE social groups, interactive digital TV is already more important than PC-based Internet as an access platform.

In the UK, Sky Digital is viewed by over 5 million subscribers and has content from Banks such as HSBC and Woolwich, retailers such as Woolworths, Dixons and Carphone Warehouse. This is known as a ‘walled garden service’ since it is not open access like the Internet. Cable providers Ntl, Telewest and Digital terrestrial ITV digital are the other main UK providers.

Comparing the interactive proposition of iDTV to the Internet for the consumer, we can say that:

- It is an always on service, but return path connections by phone require dial-up like the Internet.

- Speed – typically slower than the Internet for satellite, since bandwidth has to be shared by all providers.

- Content – the service is lower resolution and less content rich where detailed information is required.

- Personalisation – such services where content is tailored to the individual are less feasible than for the Internet.

- Security – potentially more secure than the Internet since personal and credit card details can be held centrally by the service provider, avoiding the need for the customer to enter their details each time.

Mobile access

This data clearly shows the significance of mobile phones as a means of reaching customers. Turning to the proposition for m-commerce, we can see from the table that there are a number of benefits for consumers compared to other access platforms.

Element of proposition

Evaluation

Not fixed location

The user is freed from the need to access via the desktop making access possible when commuting for example

Location-based services

Mobiles can be used to give geographically based services, e.g. an offer in a particular shopping centre. Future mobiles will have global positioning services integrated.

Instant access / convenience

The latest GPRS and 3G services are always on, avoiding the need for lengthy connection.

Privacy

Mobiles are more private than desktop access making them more suitable for social use or for certain activities such as an alert service for looking for a new job.

Personalisation

As with PC access personal information and services can be requested by the user, although these often need to be setup via PC access.

Security

In the future mobile may become a form of wallet, but thefts of mobile make this a source of concern.
How many customers use the new digital technologies?
Interactive TV

Curry (2001) has proposed three alternative types of interactivity that online marketers can exploit:

1. Distribution interactivity. Here the user controls when the content is delivered. Video-on-demand is an example of this. Using personal video recorders such as TiVO is a further example, since users can choose to watch content at a later time and possibly omit adverts.

2. Information interactivity. Here the user can select different information. Curry gives the example of teletext and games which are the together, the most popular interactive TV activities. A further example is where a viewer of an advert can access a micro-site with further information on the advert. Information can be exchanged via a return path such as completing a competition. This provides an improved option for direct response advertising in comparison to traditional TV.

3. Participation activity. This is where the user can select different options during a programme such as choosing a different camera angle in a football match or different news stories. There is no return path in this case. Such services have proved popular.

An example of how interactive TV can be used for direct response is provided by a Sharwoods campaign that ran for three months on the ntl: platform and offered Virgin Atlantic flights and Sharwood’s coupons as prizes. Revolution (2001b) reported that Sharwoods were looking to use iTV to reach a different demographic, test the medium and also promote the brand. Creative in phase one of the campaign used 'Take your tastebuds on an adventure with Sharwood's' emblazoned across a colourful banner, but this was changed later on so that the banner read 'Korma Blimey!' which doubled click-through. Users were asked three questions on the microsite about Sharwood's products as part of the competition in order to promote registration and data capture. Further information about recipes was also available. Results were reported as 2,175 entries and 1.37 million page impressions after 12,959 clickthroughs. Phase one of the banner campaign achieved an average clickthrough of 1.25 per cent and phase two saw 1.37 per cent.
Mobile

Although the penetration of mobile phones is very high, they are less widely used for interactive service – voice calls and SMS messages are the main usage. SMS is effectively a simple form of e-mail that enables messages to be transferred between mobile phones. These consist of voice mail notifications, alerts about news or messages direct between phone users. According to MobileCommerceWorld (2002) 1.3 billion text messages were sent in December 2001 bringing the total number of messages sent in 2001 in the UK to 12.2 billion. This suggests an average of nearly 300 messages per person annually and a much higher figure for some users.

An example of how SMS can be used for sales promotions is provided by Revolution (2001a) which described how Brand owner Diageo used Nightfly SMS channels described as ‘your mobile nightlife guide’ to reach 18-24 year old users. On St Patricks Day, a promotion went out to the 3612 Nightfly users in Nottingham who had opted to receive drinks promotions; 92% were aged between 18 and 29 and 63% were male. Two alerts were involved in the promotion, one a week in advance and one on the day – each listing the bars and clubs where the promotions were available. Follow-up research suggested that sales had increased substantially with 43.7% of those influenced to purchase Guinness.

Portals such as Loot (www.loot.co.uk) which have been audited by ABCelectronic for both fixed-Internet access and wireless access, show a very small proportion of users are using wireless access.

How many customers buy using the new digital technologies?

Interactive TV

Although there are few publically reported figures of the overall use of these services due to proprietary interests, individual examples indicated some early successes: On Sky Digital, Bank HSBC registered 80,000 customers within 3 weeks of whom, 20,000 were new. Domino Pizza had 10,000 requests in first 10 days. It expected 5% of sales to come from this source in 2001. However, usage and sales are generally lower than the Internet and the online shopping service formerly branded as ‘Open’, but has been rebranded as Sky Interactive since 2001 in order to stimulate further purchases. Curry (2001) reviewed the success of online shopping on the Open platform and he reported that while 80% have heard of the Open platform, only 50% have used Open and just 10% have bought through Open. In contrast, he reports that 50% of Internet users have bought online and have spent more, more often.
Mobile

The services delivered for consumers, to date, have included transactional and informational. Consumer applications to date include retail (WH Smith Online books, the Carphone Warehouse), Ticketing (lastminute.com), Broking, Banking (The Woolwich), Gambling (Ladbrokes), Bill payment and Job searching. Some informational services based on personalisation such as that of Excite UK and Yahoo! have also been launched. These include information such as sports news, stock prices, news, cinemas, weather, horoscopes and reminders.

Levels of product purchase by mobile phone have proved very low in comparison with the Internet, even for standardised products such as books and CDs. Many m-commerce providers such as Sweden’s M-box went into receivership.

However, analysts expect that with new access platforms with an improved proposition, such as 3G, this will change. Taking the example of travel, this is the leading e-commerce category in Europe by revenue for the fixed Internet. Analysts IDC (2002) estimate that by 2005 23 million Europeans will buy travel products and services using their mobile phones.

The Japanese experience with i-Mode suggests that with suitable access device which supports colour images, the impact of 3G could be significant. MobileCommerceWorld (2001) reports that Japanese i-mode users spend an average of JPY2614 (USD21.60) each month on wireless content and m-commerce. Mobile phone ringtones and other music downloads are the most popular i-mode purchase, followed by other paid-for information services. The strength of the proposition is indicated over 30 million Japanese use this service despite a launch less than two years previously.

Summary - adoption of digital media

In the future, PC-based access to the Internet for consumers will be eclipsed by mobile or wireless access and interactive digital TV. This will provide new opportunities for marketers. However, these new channels are currently being used for their core services of voice traffic and programme delivery. Their usage for informing product selection decisions and online purchases is much lower than the Internet due to limitations on the depth of information they can display. This suggests that PC-based Internet usage will remain the dominant form of e-commerce until these limitations with the new access devices are overcome through new technology approaches such as 3G.
Next month in E-marketing Insights

Over the next two months, building on the environment analysis of this month and last month, we will describe approaches for developing e-marketing strategies.
References

Curry (2001) Whats next for interactive television. Interactive marketing. Vol 3. No 2. October/December 2001, pp128-40.

IDC (2002) Online Travel Services Set to Boost Mobile Commerce. IDC Research press release, 23 Jan 2002. www.idc.com.

Jupiter MMXI (2002) Low cost set top boxes kick start Digital TV market in Europe Press release, 7th March. (http://uk.jupitermmxi.com/xp/uk/press/releases/pr_030702.xml)

MobileCommerceWorld (2001) i-Mode users spending more on content. 26/11/2001 Press release based on data from Infocom. http://www.mobilecommerceworld.com

MobileCommerceWorld (2002) British SMS records smashed in December. 24/01/2002 Press release based on data from the mobile data association. http://www.mobilecommerceworld.com

Revolution (2001a) Campaign of the week. Revolution. 16h May 2001, 38.

Revolution (2001b) The night belongs to text messages. Revolution. 16th May 2001, 30-2

Note: This article is one of a series originally written between 2000 and 2003 for The Chartered Institute of Marketing What's New in Marketing Newsletter. Many of the concepts remain valid, but some more recent concepts such as Web 2.0 and social networks aren't referenced.

For the latest on these concepts search my DaveChaffey.com blog site for web analytics articles.