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Broadcasters learn convergence game

WebTV's Steve Perlman and Network Computer's Mitchell Kertzman tell broadcasters assembled in Las Vegas that technology is their friend, and can make them money.

Las Vegas--For broadcasters, the coming convergence of television and Internet technology offers two advantages that can't be ignored: It can tell them who is watching, and what viewers want to buy.

So said two of the biggest proponents of convergence--chief executives Steve Perlman of WebTV and Mitchell Kertzman of Network Computer--who took part today in a panel discussion on e-commerce during the National Association of Broadcasters convention here.

"Money spent on broadcast advertising has one purpose: to get consumers to remember that product or brand, so when get to the point of purchase, they remember that product or brand," said Kertzman. "Interactive TV moves the point of purchase to the point of advertising. This is an incredible improvement in the effectiveness of advertising."

Kertzman demonstrated how a commercial with embedded content written to an emerging standard called ATVEF (Advanced TV Enhancement Forum) can pass along a toll free number to a telephony application in the recently announced US West @TV box, and automatically dial the number. Such capabilities, he said, increase the value of advertising.

Perlman noted that it is sometimes difficult to get consumers to respond to an ad in 30 seconds. "The way we've designed [our system] is that we can capture links, then users can click on them at their leisure."

On the other hand, WebTV will soon be offering its service on a system sold by Echostar that can store portions of a program and replay them, as well as give consumers the ability to skip commercials. Perlman said that the advantage of the new device is that it also stores information about the commercials and can even be used to download infomercials.

Broadcasters must not only determine how to use the new technologies, but also determine how to make money from them.

That's what local broadcasters wanted to know from Perlman and Kertzman. For one, the pair answered, broadcasters can use the ATVEF technology, to insert local ads.

But, asked one broadcaster, who makes the money: The commercial producer who inserts the enhanced content that helped enable the sale? The broadcaster who serves up the viewer? The service provider such as WebTV that enables consumers to view enhanced content? Or the e-commerce site that actually makes the sale?

Perlman's said his company's model is to give everyone a piece of the action. Sometimes cash transactions are involved, but his company also barters for ad time to help increase awareness of WebTV's service.

NCI's Kertzman, in a minor jab at Microsoft (which owns WebTV), said his company doesn't take any money from anywhere in the chain because it sells its software to service providers and device manufacturers, Perlman countered by noting that WebTV is now also sold as a platform to clients to "do as they see fit."

In fact, broadcasters might become valuable partners to both interactive TV providers as well as portal companies such as Yahoo.. At a roundtable discussion yesterday, Jerry Yang, co-founder of Yahoo, noted that local ad sales are the "last bastion of competition."

Very little local advertising is happening on the Internet, he noted. A broadcaster's local ad sales force is "something to be leveraged," Yang said.

An audience member at the e-commerce panel asked NCI's Kertzman if it wasn't going to be difficult to train salespeople on the advantages of interactive advertising.

"I have confidence that if there's more money to be made, they'll figure out how to sell [ad space]," Kertzman said.