Interactive programming and advertising: how it will be delivered in the years ahead.

Interactive is the buzz-word of the '90s. The reason is that the emerging interactive television industry is a very high stakes game. Many independent research reports have predicted that there will be over $6 billion in revenues from subscription services alone by the end of the decade.

Recently there's been a lot of publicity from interactive "wannabees" who are jockeying for a leadership position by touting vaporware for the future. The resulting inaccurate media coverage has caused more confusion over what interactive really means. If you feel confused about it, you are certainly not alone. But this confusion is a situation which is probably to be expected at this early stage of the game.

What is interactive television? First, there is a difference between the conduit and the content.

The conduit will be built by the majors. It will be built by Bell Atlantic, AT&T, TCI, Viacom and Time-Warner -- companies of that magnitude. They are talking about billions of dollars of investment in infrastructure to lay fiber-optic, 2-way cable. But the Interactive Network is already in place and its technology is practical and affordable. Another thing probably not very well understood, is how transportable it is.

But the key question for people in the industry to ask is not about the conduit, but is there a business there? What will consumers pay for? There are a number of trials under way from companies that hope to find the pot of gold at the end of the rainbow, and all of those trials come back to the same basic premise and it's very simple...it's entertainment, it's entertainment, and it's entertainment.

Think of your own consumer behavior. You use it for entertainment. You watch TV. You rent a movie. You play a video game. Those are the ways that you use your TV set.

But if you want a pizza, you call Pizza-to-Go. Do you really need to have an interactive system to order a pizza from your neighborhood pizza dealer? Advertising in the world of interactive television is an ancillary benefit. Advertising is not a reason for a consumer to purchase an interactive system, or to subscribe to an interactive service. Advertising helps to subsidize the entertainment programming that viewers watch on television.

But it's the programming that brings the viewers to the advertising. There are really two forms of entertainment content. Very simply, there is "prerecorded media," and there is "real-time" interactive television programming.

"Prerecorded media" uses the TV set as a monitor. You're not watching TV in the traditional consumer viewer sense, you're putting a tape in a VCR, you're watching a movie, you're putting a compact disc in a player to play along with interactive multimedia, or you're putting a cartridge in a Genesis or a Nintendo, and you're playing a video game. That's not watching television, and that's not where your advertising is.

Now by contrast "real-time" interactive TV programming doesn't require a change in consumer behavior. You come home, if you're a guy you loosen up your tie, if you're a gal you take off your high heels. You go to your refrigerator and you get out a bottle of pop, or a beer, you go and you find your clicker, you sit down in your Lay-Z-Boy, and you turn on the TV. That's what you want to do when you get home. And that's where your advertising is. And that's where your consumers are today.

Interactive Network is a "real-time" programming business, and it is setting the network broadcast standard for interactive television. It is a two-way wireless system; it's practical, it's cost-effective, and it's transportable. It is the standard for the network architecture for interactive television.

Sony Pictures Entertainment, which owns Merv Griffin Enterprises, the producers of Jeopardy! and Wheel of Fortune, will be producing new original interactive programming for the Interactive Network standard.

The software standard is compatible with a wide variety of devices. For example, Scientific Atlanta and General Instruments' Jerrold division announced that this technology will be included in their new cable converter boxes. Its distributed processing network architecture provides for unlimited capacity. It doesn't matter what television program you're watching, it doesn't matter what channel you're on, you don't have to have cable. You could be playing along with the football game in one room in your house, while at the same time, somebody else could be watching Jeopardy! on another channel and playing along with that show in another room. Programming runs from one end of the TV spectrum to the other, from American Gladiators to Siskel & Ebert, to Murder, She Wrote; from NBC to Sports Channel to PBS.

This is the pot of gold for advertisers, because interactive television brings eyeballs to TV programming. The technology has it own rating system, because it is known exactly what subscribers are doing with their control units at all times. It knows what shows viewers are watching, and there is statistically significant evidence that the shows that are interactive have higher ratings than the shows that don't. It makes television more fun, more challenging, and therefore more satisfying for you the TV viewer.

When you think about interactive advertising, it has to be in the context of where the eyeballs are, which is in the context of entertainment programming. As Marshall McCluhan said, "The Medium is the Message." The fact is that the old mass-market advertising paradigm is dead. Advertisers should be testing with interactive programming because viewers must be already interactive in order to be primed to participate interactive television commercials.

There's a lot of talk from the interactive "wannabees" and some in-home placement tests in which companies are paying people to use their service to "test" interactive advertising for the purpose of narrow-casting and targeting specific market segments. But those trials cannot become commercial realities until that billion dollars in infrastructure has been invested.

Interactive programing is here to solve today's problems for advertisers. Today's problem is low recall of television commercials. Viewers are spinning, flipping, zapping, and grazing.

The benefit to interactive advertising is you have an involved viewer. For example, a brief test with Pepsi on the SuperBowl last year showed that the recall ratings of their ads among the general population (according to Nielsen) were 7%. Among interactive viewers the recall ratings were 92%. That was a significant difference in terms of the impact and the effectiveness of those ads.

The recently formed the Charter Advertising Consortium is inviting advertising clients to get involved. The Charter Advertising Consortium is a year-long research and development test with paying subscribers. Nobody knows what is the right way to make advertising interactive, and they invite you to consider that perhaps you don't either.

The only way to figure it out is to try it, and to try it in a the real market place. Because, with a new technology or a totally new concept, or a new category, laboratory research will only take you so far. It is very difficult for consumers to speculate about their behavior in an abstract way about something with which they are totally unfamiliar. The Interactive Network has real subscribers who are paying every month, and are participating in an interactive service.

Ms. Lockton is vice president marketing communications at Interactive Network, the only operating interactive television system for all TV homes in the U.S.