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A b s t r a c t
Interactive TV, also referred to as iTV,
combines the appeal and mass audience of
traditional TV with the interactive nature of
the Web. As such, it offers viewers an active
entertainment experience and industry
players new business opportunities to learn
better about and serve their audience and
prospective customers. Interactivity, in par-
ticular, implies a two-way communication
between the viewer and the medium,
allowing for unprecedented personalization
of programming and services. In this paper
we deal with the topic of advertising
over digital interactive TV and describe
a specific approach to the delivery of per-
sonalized interactive advertisement content
to viewers based on their individual profiles.
The emphasis is placed on the trans-
formation of industry business models that
the new technological developments imply.
The main implication of iTV advertising
is a whole new set of information and
information flows among industry players
that are introduced to take advantage
of interactivity and personalization. We
suggest that a new value chain and new
market intermediaries will be needed to
harness the new information flows, pro-
posing an integrated industry business
model for a future technological platform.
A u t h o r s
Katherine C. Pramataris
(K.Pramatari@aueb.gr) is PhD student at
the Athens University of Economics &
Business (AUEB), Greece. Her research
is in the area of Electronic Retailing,
focusing on the personalization of
interactive advertising and electronic
retail services. Prior to that, she has
worked in the Management Systems
Department of Procter & Gamble
Headquarters Europe and the Marketing
Department of Procter&Gamble Greece.
Papakiriakopoulos A. Dimitris
(dpap@aueb.gr) is a PhD student at
the Athens University of Economics &
Business (AUEB), Greece. His research
is into E-Business and especially deals
with Virtual Organizations issues.
George Lekakos (glekakos@aueb.gr) is
a PhD student at the Athens University
of Economics & Business, Greece. He is
a member of the eLTRUN (Electronic
Trading Research Unit), an e-commerce
research group. He has been actively
involved with a number of National
and EC funded projects. His research
interests include emerging business
models and intermediation issues in the
e-commerce framework.
Nikolaos A. Mylonopoulos is Visiting
Lecturer at the Athens University of
Economics and Business and Project
Manager at the eLTRUN research
group. He holds a PhD in Industrial
and Business Studies from Warwick
Business School. He has had teaching
and research appointments at Lough-
borough University, Warwick Business
School, Birkbeck College (University of
London) and the Athens Laboratory of
Business Administration.
INTRODUCTION
As digital technology and consumer
behaviour evolve, marketers can and
need to continuously enhance the
value of their digital marketing offer-
ing. The birth of the World Wide
Web (WWW) in 1993, particularly
its graphical user interface, offered
marketers opportunities that were
previously unimaginable (Poon and
Jevons 1997). The WWW allows for
advanced marketing activities and,
moreover, for interactive marketing,
as the user is actively involved in
responding to the vendor’s promotion
campaign. This kind of interactivity
is not commonly found in marketing
activities conducted through trad-
itional broadcast and print media, with
the exception of interactive television
(Poon and Jevons 1997).
One of the most important con-
sequences of interactivity is that it
opens up new opportunities for
personalization. In traditional media
the vendor, or advertiser, has to seek
customer information elsewhere, from
sources such as market research com-
panies or direct consumer surveys in
order to customize the service or
advertisement. Moreover, it is difficult
to ensure and to verify that the service
or advertisement is correctly targeted
to the intended customer groups.
In interactive media, the customer
identifies herself and often reveals her
personal profile either by providing
Personalized Interactive TV Advertising:
The iMEDIA Business Model
K. PRAMATARIS, D. PAPAKYRIAKOPOULOS, G. LEKAKOS AND N. MYLONOPOULOS
Copyright © 2001 Electronic Markets
Volume 11 (1): 1–9. www.electronicmarkets.org Keywords: interactive TV, personalization, interactive advertisement, iTV, business
model
RESEARCH
such information directly or implicitly through her inter-
active behaviour. Thus personalization in its literal sense is
only possible through interactive media where consumers
are identified individually and not just in groups.
Interactive TV, also referred to as iTV, combines the
appeal and mass audience of traditional TV with the inter-
active features such as those currently available on the
Web (Developer 1999). For example, a viewer can request
online to browse local news headlines while watching her
favourite network show. Another viewer may search for
individual player statistics while watching a football game
or order the products he sees in commercials with the click
of a button. Interactive TV makes all this possible by
integrating content similar to that we commonly find on
the Web with traditional TV programming.
Interactive television gives viewers an active viewing
experience and may take back some of the consumer’s time
that has been taken away by the Internet. In this sense,
iTV may, potentially, increase the average time a person
spends on television, depending on the willingness of
a viewer to become active and the level of interactivity
he is engaged into. For television producers, interactivity
allows the creation of layers of content that enhance and
extend the traditional TV storytelling mode of operation.
Advertisers can create more compelling ads and make it
easier for consumers to purchase products from home. For
network and local broadcasters, and for cable and satellite
operators, interactivity provides a competitive advantage
by making it possible to deliver relevant, personalized
information to viewers on demand. At the same time,
interactivity makes possible new revenue streams through
interactive advertising models and special services, like data
broadcasting (Microsoft 1999).
Interactivity in itself is a complex concept. It relates to
numerous important sociological, behavioural and eco-
nomic issues of media research. For example, the degree
of viewer involvement and the level of interactivity are
conditioned by the broader social context, the viewer’s
behavioural predisposition and the economics of the iTV
service. However, such issues are outside the scope of
the present paper. Instead, we focus on the specific topic
of advertising over digital interactive TV and describe a
specific approach to the delivery of personalized inter-
active advertisement content to viewers based on their
individual profiles. This approach has been developed
within the iMEDIA (Intelligent Mediation Environment
for Digital Interactive Advertising) research project (IST-
1999-11038), funded by the Information Societies Tech-
nology Programme, 5th Framework, of the Commission of
the European Union.
More specifically, the second section of the paper
examines the definition of advertising over digital inter-
active TV platforms and relates this to the interactive
advertising experience over the Internet. Alternative
approaches and pending problems are also considered.
This section is followed by an overview of the iMEDIA
architectural approach to offering personalized interactive
advertisement services to TV viewers. Section four presents
the methodological approach employed for the derivation
of the iMEDIA business model. Section five analyses the
implications that this approach has for the TV advertising
industry and explores alternative business models that can
emerge. We conclude with some ideas regarding further
research and development in this area.
INTERACTIVE TV ADVERTISING
Interactive television originated in the context of the
possibility of technological convergence in the early 1990s.
Since then it has developed in various directions, depending
on the strategies of technology developers and of key
players in the media industry. Still today, market dynamics
constantly reshape and redefine the applications of iTV
and the potential for mass-market adoption of different
services. Applications have ranged from simple ideas such
as better viewer feedback and greater flexibility in the
choice of programming, to complex services such as fully
interactive experiences akin to those implemented on the
Web. Similarly, interactive TV advertisement may vary from
registering interest in a product, to interacting with the ad
content (as in a computer game) or making a purchase
through the same medium.
Interactive TV can be delivered over terrestrial, cable and
satellite transmission. Viewers can watch interactive TV
either on television sets or on personal computers. Inter-
activity requires that the viewer has access to advanced
controls and that the network has access to local infor-
mation. This requirement is naturally satisfied in the case
of the personal computer accessing the Internet. Special
software and a compatible TV tuner card are the typical
system requirements. Traditional television is a one-to-
many broadcast medium with passive viewers. A set-top-
box, i.e. a special device that integrates the TV broadcast
signal with interactive content is needed in this case.
Interactive TV programming can range from very simple
productions, that include links to additional content or
related Web sites on the Internet, to highly involved inter-
activity that merges a TV image with menus, graphics,
and supporting text all timed to appear in synchronization
with a particular show. Different kinds of interactive pro-
gramming invoke different levels of interactivity from the
viewer. Thus, interactivity can be seen as a two-dimensional
construct, determined by the nature of the content and the
viewers’ predisposition to interact.
During an interactive show, a clear and active evidence
of the interactive nature of the programme (e.g. an icon
or a button) allows the viewer to initiate the interactive
experience. Interactive content can include anything that
enhances the viewer’s appreciation of TV, for example local
news headlines, sports scores, programme line-ups, links
to Web sites, public opinion polls, etc. (Microsoft 1999).
In general, the philosophy and nature of the interactive
programming depends on the underlying architecture and
K. Pramataris, D. Papakyriakopoulos, G. Lekakos and N. Mylonopoulos Personalised iTV Advertising
2
the platform for interactive content development and
distribution.
Interactive TV advertising follows the same principles,
integrating commercial with interactive content. The inter-
active content associated with an ad could contain answers
to specific questions about the products or services being
advertised, could offer viewers free product samples or the
possibility to arrange a product trial (e.g. test drive a car),
could even support the viewer throughout the buying pro-
cess by allowing for direct ordering and after-sales support.
Apart from the typical commercials appearing during
an advertisement break, interactive television also allows
for banner ads or other clickable graphics, which can be
constantly displayed, even as the video continues to play.
For interactive commercials appearing during an
advertisement interval, advertisers, advertising agencies,
TV channels and set-top-box technology providers, are
currently struggling with the problem of what happens
when viewers click an interactive link. The critical issue is
that viewers may have to abandon the following ads and the
main programme flow. This concern is partly addressed
with special personal video recorders, which employ a
hard disk for temporary storage of programming. TiVo
(www.tivo.com) and ReplayTV (www.replaytv.com) have
pioneered this category, but all major manufacturers
(Microsoft, OpenTV) are reported to be developing similar
products. To overcome or avoid this problem, alternative
modes of interactivity can be implemented:
•Advertisements of the ‘contact me’ type. By ‘clicking’
on the screen the viewer requests further product
information. This can be a follow-up phone-call or
a visit by a company representative or a sample or
other item delivered to the viewer’s home. This type of
advertisement implies that the interaction does not
require more time than the duration of the advertise-
ment. Thus subsequent advertisements (and pro-
gramming) appear normally as scheduled and are not
foregone by the viewer.
•Advertisements that give the viewer the ability to ‘book-
mark’ them and browse their interactive content at
a later point in time. The viewer can bookmark the
advertisement, continue watching the regular pro-
gramme flow and browse the interactive content of
the commercial later on, at his/her own convenience.
This possibility raises the risk that an impulse response
generated by an advert may quickly fade away as the
viewer’s attention is dispersed to other TV messages or
personal concerns over time. Effective personalization
and targeting of adverts is the only antidote to such
dissipation of interest in this scenario.
•A third alternative is to split the television screen into
partitions (windows) and thus maintain more than one
active stream of content (e.g. one main programme
feature and a multimedia interactive advertisement).
Clearly, the disadvantage of this approach lies, once
more, on the dissipation of viewer’s attention and on the
deterioration of viewing experience for both streams. As
a result, the potential impact of the advertisement may
be significantly reduced.
The above alternatives represent new possibilities for the
viewer, who can directly access relevant information and
other services being just ‘one-click’ away. For the marketer,
the great potential of interactivity rests in the capability it
offers for better understanding the viewer’s behaviour and
building personalized relations with individual consumers.
As the case of the Internet has demonstrated, tracking the
user’s interaction with the system, including navigation,
content preferences, purchasing habits etc, can greatly
support many of a marketer’s objectives and activities.
These may be: measurement of interactive advertisement
effectiveness, better understanding of consumer needs
and preferences, effective targeting of advertisement and,
ultimately, personalization of advertisement messages, site
content and services.
In the context of iTV advertising, personalization refers
to the use of technology and viewer information in order
to tailor commercials and their respective interactive con-
tent to each individual viewer profile. Using such viewer
information, either obtained previously or provided in
real-time, the stream of advertisements adapts to fit that
viewer’s needs, whether they are stated directly by the user
or they are inferred by the advertiser.
While personalization is a practice used widely on the
Internet by many sites that exploit the huge amount of
customer information they collect, applying personalization
techniques over interactive television presents at least two
significant obstacles:
1. Broadcast environment: unlike the Internet, where each
web-page is delivered individually to each user’s com-
puter upon request, iTV content is broadcast to all
TV sets. Delivering personalized content over a broad-
casting platform is a contradiction in terms. This would
require transmitting as many streams as the different
TV sets. Thus, other techniques need to be applied in
order to make this happen. These techniques typically
involve a set-top box or other similar terminal device
that stores some personalized content and controls
the interactivity. Further adaptations are needed in the
whole iTV infrastructure network and the broader
industry business models that provide and support such
interactive advertisement services.
2. Viewing environment: whereas the personal computer
typically has only one user at a time, the television
is often viewed by groups of people in both private
and public areas. Consequently, personalizing and tar-
geting advertisements effectively presents technological,
business-related and practical challenges. Even if we
only consider household viewership, it remains a
difficult issue how to identify and target individual
household members or whether to target the whole
household as a group. While it is technically possible
to identify which member(s) of the household is (are)
Electronic Markets Vol. 11 No 1
3
currently watching TV (e.g. through ‘hidden eye’
technologies or remote-control functionality), this
is something not perceived positively by viewers. Thus,
in this paper we make the assumption that viewers
actively select their profile by some form of system
logon.
In the following section we suggest a possible solution to
the above problems for delivering personalized advertise-
ments over digital interactive TV platforms.
AN APPROACH TO PERSONALISED INTERACTIVE TV
ADVERTISING
Information is the basis of applying specialized marketing
techniques, referred to as ‘information-based’ marketing
(Weiber and Kollmann 1998). Interactive television repre-
sents an information-rich environment that opens-up
new possibilities for marketers. Following the case of the
Internet, iTV can be expected to revolutionize marketing
practices and lead to a paradigm shift in the way advertising
is developed, conducted, and analysed (Hoffman and
Novak 1996). However, unlike the Internet, iTV poses
certain obstacles to the full exploitation of information
and the personalization of programme and advertisement
flows. In this section we analyse the approach to offering
personalized interactive TV advertisements that has been
developed as part of the iMEDIA research project.
iMEDIA aims to provide an intelligent mediation plat-
form for enhancing consumer and supplier relationships,
by establishing the necessary methodologies, practices and
technologies for:
•the broadcasting of personalized interactive advertising
to targeted consumer clusters, providing gateways for
access to product catalogues in other digital environ-
ments;
•the analysis of interactive consumer behaviour for assess-
ing advertising effectiveness; and
•the empowerment of TV audience as interactive viewers
and active consumers with total control over their private
personal information.
The main objective of the project is to introduce inter-
activity and personalization in the traditional broad-
casting environment with a view to attracting viewer’s
participation in digital interactive scenarios in order to
further promote the electronic marketing and selling
of consumer goods. The rationale for the project is based
on the fact that Digital TV penetration will evolve rapidly
because television is already much more familiar than
computers and the Internet to consumers all over the
world.
The proposed iMEDIA architecture is depicted in
Figure 1. This architecture has been arrived at through
facilitated workshops among iMEDIA partners. The
architecture is divided into two main modules: the iMEDIA
Mediation Server and the viewer’s Set-Top-Box (STB) com-
ponent. The first implements all the back-office operations
and the services towards the partners involved. In this case
the main partners are: (i) content providers, or else
TV channels, broadcasting content through the iMEDIA
iTV service, and (ii) advertising companies, booking and
scheduling advertisement air-time. The STB component is
located at each viewer’s home, associated with a TV set.
The STB monitors the viewer’s behaviour and controls
which commercials are presented to whom.
Figure 1. Overall iMEDIA Architecture
K. Pramataris, D. Papakyriakopoulos, G. Lekakos and N. Mylonopoulos Personalised iTV Advertising
4
The architecture provides services supporting the
booking, scheduling, monitoring and evaluation of inter-
active advertisements. However, what is of interest here is
to explain how personalization works in this context. The
personalization process goes through five steps as follows:
1. The process is initiated with a request by the advertising
company to present an advertisement for a product or
service to a very specific target group during a certain
time period. The target group is identified by certain
characteristics or rules that may lead to very fine-grained
targeting, even to individual persons. For example, an
advertising company may select to present a commercial
to those viewers who previously interacted with a related
advert.
2. The advertising company, using services of the iMEDIA
Mediation Server books the required advertisement air-
time, providing as input the target group characteristics,
the required time zone and the time period, and loads
the advertisement content, both regular and interactive,
to the iMEDIA Mediation Server.
3. The iMEDIA Mediation Server sends to each viewer’s
STB, at regular intervals, all the advertisement content
that is scheduled to appear during a certain time period,
e.g. all the commercials that will appear during a certain
week. The advertisement content is broadcast through a
dedicated channel and is stored locally by each STB.
This possibility is provided by the new generation
set-top-boxes that have enough hard-disk space to store
as much as 4 to 5 hours of video stream. Apart from
the advertisement content, the iMEDIA Mediation
Server also sends to the set-top-box component the
target group identification for each advertisement.
4. The Mediation Server also transmits information as to
which target group is associated to each personalized
commercial. This information is transmitted before the
advertisement break in vector form and is also stored at
the STB either as a whole or selectively.
5. During the actual break, the STB component performs
the following logic: ‘If there is a target group definition
associated to ‘my’ viewer, then select the respective
commercials from the local hard-disk, as described
in the transmitted vector, and display them; else, allow
the regular stream of advertisements to appear’. It is
assumed that the viewer has identified herself and the
STB has knowledge of that viewer’s profile, whether it is
an individual’s or a group’s (e.g. family) profile.
The above process implies that the set-top-box component
monitors the viewer’s behaviour and other characteristics,
which are sent back and aggregated in the Mediation
Server. Based on this information and upon requests from
the advertising companies, the Mediation Server can then
allocate viewers to specific target groups, upon which
targeting is performed. Clearly, this exposition only gives
a short overview of the proposed architecture and leaves
out important technical details relating to implementation
(iMEDIA D2.1).
Having said that, it is important to raise the issue of
privacy at this point. Interactive television and, especially,
personalized interactive advertisements raise important
privacy concerns that extend beyond the scope of the
present paper. Ethical, legal and policy considerations
have to be taken into account, particularly in regions
where legislation imposes specific constraints (notably in
the European Union). The iMedia project addresses these
concerns to great lengths separately (iMEDIA D1.1).
In this case, self-regulation is the overarching principle
adopted. It is envisaged that consumers will have complete
access to information regarding the collection, processing
and distribution of their personal details and will have a
choice as to whether to disclose such details or not. This
choice can be exercised upon subscribing for the interactive
service and/or online while using the system.
METHODOLOGICAL APPROACH TO THE DERIVATION OF
THE NEW BUSINESS MODEL
Although it is widely understood that e-commerce and
the new digital media induce the development of un-
precedented business models and despite the wealth of
literature on analysing industry structure, coordination
mechanisms and business processes, there is no widely
accepted methodology for constructing business models,
either for descriptive or normative purposes. In his seminal
work on business models, Timmers (Timmers 1999)
emphasizes this lack of a generic methodology. Our pur-
pose in the case of interactive TV advertising is normative
in the sense that we aim to suggest a plausible market
organization that can sustain the technological architecture
outlined in the previous section. To this end, we devised
a pragmatic, yet informed by theory, methodological
approach [iMEDIA D1.1]. The iMedia project involves
industry partners representing advertisers, advertising
agencies, TV channels and technology providers from
Greece, Italy and Spain. The role of project partners was
instrumental in our approach. Structured inter views and
facilitated workshops with these organizations have been
the key methods used throughout, supplemented with
market analysis material. Consensus has been sought and
achieved at critical stages where business models had to be
finalized. Our methodological approach is briefly outlined
below in ten sequential steps. The first five steps are a
systematic approach to define the current business model of
the TV advertising industry. Each step addresses different
components of the business model, namely the players,
their relationships, their objectives, value contribution and
competitive drivers. The current business model is then
taken through a process of ‘controlled evolution’ in the
next five steps. Each step considers features introduced by
the proposed iTV architecture (previous section) and
incorporates them into the industry business model. In
step 7, where the roles of industry players are reconsidered
under the light of the proposed iTV service, a new role is
Electronic Markets Vol. 11 No 1
5
identified. This new role is named the iMEDIA service pro-
vider and steps 8 to 10 focus on its implications for the
future business model.
1. Examining the relationships currently developed by
key players in the TV advertising market. The main
theoretical basis for this task is identifying the role of
stakeholders (Pouloudi et al. 1999) in this market.
The project partners provided input on the nature and
content of their current relationships in the market.
2. Defining current business objectives for each key player.
Basic advertising and broadcasting operation literature
has been used in this step (Belch 1995). The findings
have been verified through the participative processes
described above.
3. Identifying current value flows in the marketplace. We
adopted the concept of the marketplace (Kim and
Mauborgne 1997; Malone et al. 1997) in order
to establish the value contributed by participating
players within the scope of the proposed architecture
described previously. For the purposes of further
analysis, the interactions and exchanges among busi-
ness entities can be decomposed into financial, service
and information flows.
4. Identifying key competitive drivers in the market.
We identified the main drivers of competitiveness by
analysing the informational role of each player in
the marketplace. Additionally, we explored the role of
feedback loops for verifying and measuring advertising
effectiveness.
5. Synthesizing the current business model. Based on
previous analyses, we derived the complete chain of
value creation in the marketplace, depicting both
financial and information exchanges.
6. Embedding the iTV advertising architecture into the
current business model. Following Dutta’s framework
of business performance improvement (Dutta and
Manzoni, 1999) we evaluated the fundamental impacts
of the proposed technological architecture to the TV
advertising industry, in terms of capabilities, processes
and relationships. Through further workshops with
project partners, we identified anticipated new or
revised roles and potential business benefits for each
player in the marketplace.
7. Defining requirements for technological capability devel-
opment for existing key players. We adopted Bane’s
[Bane et al. 1999] framework for industry conver-
gence to specify the roles required in the emergent
iTV-advertising marketplace in order to exploit the
opportunities afforded by the technology. This exercise
has revealed a missing role. A new entity is required to
exploit the full potential of the proposed architecture.
We defined this intermediary as the iMEDIA service
provider and we described the activities necessary to
fulfil this role.
8. Defining the mediating functions performed by the
iMEDIA service provider. At this step we specified the
functional behaviour of the iMEDIA service provider
in value-adding terms. Using the findings of step 6
above, transaction cost considerations (Williamson
1986) and personalized digital marketing theory
(Deighton 1996; Iacobucci 1996), we defined a list of
potential services for the iMEDIA service provider.
These were checked for consistency with the rest of
the findings and were validated through further
workshops with project partners and other industry
stakeholders. Essentially the iMEDIA service provider
centralizes and controls the interactivity and the feed-
back loops and provides related information services to
other industry players.
9. Developing a new coordination scheme in the iMEDIA
marketplace: exploiting the role of the iMEDIA service
provider. In this stage, emphasis was placed on defining
the nature of communication and cooperation (co-
ordination) between the iMEDIA service provider and
the advertising companies on one hand, and between
the iMEDIA service provider and the TV channels
on the other. The analysis here drew heavily on co-
ordination theory (Malone et al. 1987).
10. Synthesizing the proposed business model. In the final
stage of our methodological approach, the current
business model (stage 5) was revisited. Specifically we
adjusted the business objectives of key players in the
presence of the iMEDIA service provider, we traced
changes in the structure of value creation in the
iMEDIA marketplace and we explained how com-
munication value added is augmented by additional
feedback capabilities derived through the inter-
activity capabilities of iMEDIA. At this point we have
arrived at a consolidated business model explaining
the presence and value added of key players in the
iMEDIA marketplace.
THE iMEDIA BUSINESS MODEL
As shown in the previous discussion the project introduces
new value adding services enhancing the traditional value
chain of TV advertising. As such, it extends the traditional
business model with new types of mediators and introduces
new players in the marketplace. The aim of the extended
business model is to facilitate the new complex information
exchanges using information technologies. In the following
paragraphs we make an attempt to define some of the
anticipated changes that will emanate from the intro-
duction of the iMEDIA platform and services in the
interactive TV environment.
Adopting the perspective of business performance
improvements, two types of changes are expected to con-
tribute to the transformation of value chains (Kim and
Mauborgne 1997; Malone and Crowston 1994). These are:
•Business Opportunities: Offering new products and
services increases the market penetration of extant
K. Pramataris, D. Papakyriakopoulos, G. Lekakos and N. Mylonopoulos Personalised iTV Advertising
6
players. When significant demand for new products or
services is generated, a whole new market is created and
a number of companies compete and cooperate in an
effort to capture a share of the new market.
•Technology Advances: Production of innovative new
technologies or replacement of older techniques with
new ones, leads to faster growth, efficient and effective
accomplishment of business objectives, and gives the
ability to develop new products and services. A tech-
nological innovation may create competitive advantage
for the first movers who can realize gains from efficiency
improvement and growth.
The iMEDIA platform constitutes a technological inno-
vation improving business performance through the
possibilities it offers for better targeting and interactivity.
Interactivity and personalized advertisement through
sophisticated targeted mechanisms, first introduced in
the Internet environment, represent new business oppor-
tunities for turning passive viewers into active participants.
Interactivity and personalization focus on the customer.
The main objective of this customer-centric approach
is to reverse the operation of the TV advertising value
chain towards a more demand-driven (as opposed to the
traditionally supply-driven) scheme.
The outcome of the process described in the previous
section is the proposed business model for the iMedia inter-
active television advertisement. It is outlined graphically
in Figure 2. The diagram identifies the key actors in
the industry and the main interactions among them. It
resembles a value chain and it borrows concepts from
value chain modelling but it is not a value chain. Instead, it
aims to provide a basis for analysing roles, interactions
and processes as well as business interests, benefits and
effectiveness. For example, further analysis can be applied
to decompose the interactions among business entities into
various elements such as information flows, feedback loops,
financial flows or service flows. In the present exposition of
our approach we offer a general overview of a likely future
industry structure. This business model aims to characterize
the value added of each actor in three main respects,
namely, (i) its objective, (ii) its main benefits and (iii) its
key relationships with other actors. These properties are
elaborated in Table 1.
Today the Internet and the Web are the pioneers and
benchmarks of interactive electronic media. The proposed
architecture and business model for interactive TV advertise-
ment adopts certain characteristics from the Internet but it
is still short of offering the wealth of possibilities available
on the Web. Some differences arise from the context of use.
Whereas the personal computer (the typical access point to
the Web) is used individually, the television lends itself
to group viewing. Other differences arise from the nature
of the network infrastructure. The broadcast TV network
is a one-way channel, which inherently cannot support
interactivity. In contrast, the Internet is a fully distributed
network. Table 2 summarizes some key differences between
iMEDIA and the Internet in general.
It has to be noted that any actual manifestation of
this business model may give rise to variations in structure,
roles or interactions. To emphasize this point further, in a
potential future reality multiple variations of the proposed
structures, roles and interactions may coexist in the same
marketplace as each business identifies different market
opportunities and jostles for competitive positioning.
This is particularly relevant in this industry which involves
high competition and large financial stakes. The proposed
business model suggests new roles and relationships in the
industry. However, extant players, rather than new entrants
may well undertake these new roles. Having said that, the
relevance or usefulness of our model is not diminished. It is
a conceptual model, a basis for further analysis and a tool
for decision and policy making. It is not a rigid prescription
for specific actions. For example, we anticipate that the
iMEDIA Service Provider may undertake to broadcast
interactive content, to upload interactive content from
advertising companies and to feed user profiles and online
behaviours back to advertisers and advertising agencies.
However, it is also possible that other industry players
may undertake some or all of these functions and that the
TV channels will continue to ‘own’ and sell the main source
of revenue in this industry, i.e. the advertisement space.
Similarly, the role of the network provider may be fulfilled
by the TV channel or by a separate business entity (as it is
Figure 2. The Proposed Business Model
Electronic Markets Vol. 11 No 1
7
Table 1. Defining the Value Added of Industry Actors in the Proposed Business Model
Properties Objective Main Benefits Key Relationships
Actors
Advertiser To sell goods/services, to acquire
new customers and to manage
customer relations
Effective targeting, better
customer relationship
management, new sales channel
Requests, negotiates and buys
advertisement services from the
advertising agency. Monitors
advertisement effectiveness with
the advertisement agency and the
iMEDIA service provider
Advertising Agency To manage personalized
advertisement campaigns through
interactive content
Dynamic segmentation, online
feedback, online market research
Produces interactive advertisement
campaigns for the advertiser. Books
the advertisement campaign with
the TV channel and handles consumer
interactivity through the iMEDIA
service provider
iMEDIA Service Provider To coordinate interorganizational
processes in order to support
interactive personalized
advertisement campaigns
Exploits consumer profile and
interaction information by
controlling it and making it
available to other actors
Controls consumer profile information
on behalf of all actors. Controls
consumer interactivity. Manages
the distribution of interactive
advertisement content with the
TV channel
TV Channel To source or create and market
interactive television
programming. To sell advertising
capacity
Better programme scheduling
for advertising, fine-grained
viewership feedback
Communicates TV programming and
advertisement capacity to the iMEDIA
service provider and to advertising
agencies
Network Provider To own and manage the network
infrastructure
New value added services, new
business opportunities through
technological innovation
Transmits the TV channel’s content to
consumers. Feeds interaction events
to the iMEDIA service provider
Consumer To interact with advertisements
and buy goods/services
Interaction with the medium,
personalized service
Receive and interact with interactive
advertisement content
already observed). It is very difficult to decide now what
functions each actor will perform. This will emerge as the
evolutionary outcome of competitive market dynamics and
may well lead to coexisting variations.
In summary, the construction of the proposed business
model along the lines discussed above offers us the
opportunity to:
•identify and justify the new roles that key players will
need to assume in order to exploit the iMEDIA related
business benefits;
•identify and justify new business functions that arise
because of the proposed technological architecture
Table 2. Some Key Differences Between iMedia and the Internet
Internet iMedia
Content origination
Interface
Viewing context
Terminal functionality
Entry barriers
Pull
Multimedia
Individual
Complex
Low
Push
Enhanced
Group
Limited
High
(in this case the iMEDIA service provider). These new
functions are necessary in order to deliver the promise of
the technology in an effective and sustainable way.
CONCLUSIONS AND FURTHER RESEARCH
According to Forrester Research (8/1999) interactive TV
services will generate $11 billion in advertising, $7 billion
in commerce, and $2 billion in subscription revenues by
2004. The companies pushing interactive TV are relying on
advertising to turn a profit. The idea is for central com-
puters in the cable control room to gather demographic
and viewing information about subscribers and provide
aggregated lists to marketers. Bell Atlantic, for instance,
believes people will use their remotes to call up addi-
tional information on new products and services that are
specifically targeted to those viewers. But such advertising
depends on viewers’ willingness to sell off their privacy in
return for cheaper programming, by participating in what
are essentially direct marketing campaigns.
These figures and attitudes demonstrate the great
potential behind iMEDIA’s approach to personalized
K. Pramataris, D. Papakyriakopoulos, G. Lekakos and N. Mylonopoulos Personalised iTV Advertising
8
interactive TV advertising, but also the issues that arise.
They also imply changes to the market structures and the
respective business models, as has been briefly discussed in
the previous section.
The topics that need to be studied and resolved before
this new technology is fully exploited are still innumerable.
Indicatively, we mention here issues such as ‘how can
we exploit the additional information that is available in
order to apply more effective targeting and personalization
techniques to both advertising and services?’, ‘which new
services and business models emerge?’, ‘how will the con-
sumer behaviour evolve in the new digital environment?’,
‘how do we define and apply interactive advertisement
measurement in that context?’. These topics need to be
addressed from both a technical, business and scientific
perspective, opening up a whole new area for development
and research.
Note
This study was partly funded by the iMEDIA project
(IST-1999-11038), Information Societies Technology
Programme, 5th Framework, Commission of the European
Union.
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