SINCE changes in technology often precipitate changes in the ad business, certain forward-looking agencies and clients are preparing for a new set of realities expected to arrive with the advent of video-on-demand services. Some directors, such as L.A.-based commercial director Boris Damast, and agency folk, including M2’s Hugh Dow, have already decided that the new ad models for VOD need to be explored. Both are taking steps to be at the forefront of these emerging frontiers.

Damast has joined Toronto’s Steam, and not just for the traditional reasons. He jumped shops in part for a higher calibre of work, new surroundings and a fresh start, along with what he calls Steam’s ‘strong creative bias.’ Another key reason for Damast’s move was Steam’s commitment to exploring new advertising vehicles that he feels will be integral in the future of the ad biz.

‘There are various things in play that will alter the landscape of commercial production and the way broadcast advertising is conceived,’ says Damast. ‘The Internet has already had some impact, but not as much as we thought. The new factor that will impact us in the next three to five years, is TiVo and [VOD] style technology.’

Damast is one of many firm believers that this technology will completely alter the way television viewers interact with their sets.

Since VOD services give viewers the option of skipping commercial breaks, and testing has shown that consumers take advantage of this feature, industry pundits say product placement will become more prevalent than before. How conventional commercial production companies will react to this development remains to be seen.

Hugh Dow, president of M2 Universal, the media division of agency MacLaren McCann, is also exploring this shift in the model. He agrees with Damast’s theory that product placement will represent the biggest new avenue in advertising. He has already seen examples of this that, in his opinion, have worked well. He cites CBS’s popular reality show Survivor, which had contestants competing for the luxuries of Doritos and Mountain Dew. Another reality show, Big Brother 2, had its 12 ‘house guests’ compete for a Buick SUV on its premiere episode. He is certain this trend will continue.

‘Packaged goods and automotive are two [areas] that come to mind that could certainly be very major categories for product placement,’ says Dow. ‘Inevitably, as the systems become a factor, we’ll see more interest in terms of product placement and integrating commercial components into the content of programming. In some cases, that will be difficult to do because most of the top television programs are of U.S. origin, but Canadian-produced programming will lend itself very well. I think we’ll also see interest from the media owners as far as developing a new revenue stream, perhaps from advertisers and agencies interested in that area.’

This system will only work if there is some greater purpose for the product’s existence within the framework of a show, Damast adds. He has heard rumblings about a new crop of series that will feature products integral to a show’s key plot points.

‘Knight Rider did it,’ he says, referring to the 1980s series that featured a talking Trans Am named KITT as a central character. ‘Knight Rider may have unwittingly been the pioneer of some of these ideas.’

With these new ad models coming quickly, and with VOD offering the option of avoiding commercials, many are speculating about the fate of the 15-, 30-, and 60-second spot. Dow believes that the traditional television ad will happily co-exist with TiVo, ReplayTV and the other VOD services, just as radio continued to thrive after the invention of television, and television ads continued with the invention of the VCR. However, he acknowledges that traditional spots and the production companies behind them will not escape completely unscathed.

‘When we get quantifiable evidence of reasonable numbers of the population avoiding commercials, it is certainly going to put a lot of pressure on the conventional commercial break,’ says Dow.

A number of Canadian studies conducted earlier in the year reported that commercial avoidance in 2000 reached 60-69%. Other reports in the past year have stated that nearly 90% of commercials are avoided by households in the U.S. that are accustomed to VOD technology.

Damast is hoping he and his fellow Steam directors will also explore long-format ad models that could work with VOD services. BMW’s Web site provides a leading example of this by incorporating its cars into a series of narrative short films by feature directors including Ang Lee, Guy Ritchie and John Frankenheimer.

Some marketers are already experimenting with a system whereby a targeted television audience has been offered the option to link directly to ads on the Web, which BMW did with TiVo. To drive viewers to their Web sites, advertisers will then have to raise the bar on compelling ads, explaining BMW’s willingness to pay for such high-profile talent.

Still a proud director of the 30-second commercial, Damast, like Dow, believes that although the industry had better start preparing for VOD, there will still be a need for the conventional spot.

‘That is still the backbone of the business and that is Steam’s core business,’ says Damast. ‘That’s the thing we are there for and still the thing we do best. In the meantime, the company is committed to staying ahead of the curve and committing resources to that. But we still shoot commercials.’

-www.maclaren.com

-www.bmwfilms.com