Jon Gisby, director of new media and technology at Channel 4, found his five-year-old son clambering around behind the family's TV set this month. Worried that his offspring could fall, he rushed over and asked what the lad was up to. "I'm looking for the mouse, Dad," he replied. "You know, the one to control the television set."
"One of the easy ways people attack convergence these days", Gisby argues, "is by saying it's only popular with teenagers who will slump on the sofa like the rest of us by the time they reach their 20s.
That will happen to an extent, but - as my son shows - we now have a generation that expects to be able to interact with their TVs. "We already know that when people get a Sky+ box or other PVR in the home, viewing patterns change completely. There is a fundamental consumer change on the way."
Gadget-makers certainly agree. This autumn, a series of deals has been struck between Sony and companies such as Amazon and video entertainment site Dailymotion whereby free content will be streamed down broadband connections through Sony's S-series Bravia televisions, which have an internet video link in the back of the box.
Amazon and Dailymotion join YouTube, AOL, Sony Pictures Television and Sony BMG Music in providing online content direct to Bravia owners. Sony's PlayStation and Microsoft's X-Box are also offering content, with the games consoles' internet connection allowing users to download the movies or TV programmes stored on their PS3 onto a laptop from another country.
With Google's G1 phone labelled the iPhone killer and January's re-versioning of Apple TV - a box that slings shows from iTunes to your wi-fi TV, including exclusive content such as Cashmere Mafia and series four of Rescue Me - 2009 should be the year the industry finally embraces convergence.
In a show of faith last week, ITV closed a deal with BT Vision for a catch-up and archive service across ITV1, 2, 3 and 4, with ITV earning a minimum guaranteed revenue and pence per subscriber. The deal follows Five's announcement in October that BT Vision will be the first on-demand TV service in the UK to feature Demand Five, giving BT Vision customers access to hit shows such as Home and Away and Neighbours.
Ben McOwen Wilson, director of ITV Online, says the broadcaster has experienced massive traffic growth across its sites during 2008. With technology improving, consumers will soon be able to download movies and TV shows to their TV sets, their PCs, their mobile phones and even their games consoles with a simple click of a button, and advertisers will reap the benefits of highly targeted advertising on these so-called three screens.
And yet the march of progress is stumbling. The UK's "big three" IPTV providers - Tiscali, BT Vision and Inuk - were due to be joined by Orange before the end of the year. However, as a result of "changes in strategy", Orange no longer has any plans for an imminent launch.
An Orange statement said: "Our digital TV trials in the UK have been going well to date and we've gained valuable feedback from our customers. That said, we believe approaches to offering such a service have moved on since our initial thinking and we are reviewing different business models for accessing such content, including those that play to the strength of our mobile and portal platforms."
Meanwhile, BSkyB is in talks to acquire Tiscali for £450m, and ITV executive chairman Michael Grade has called on opponents of the planned VoD service Kangaroo - whose chief executive Ashley Highfield left to join Microsoft earlier this month - to stop complaining and invest more in British content. So what is going on?
Rhys McLachlan, head of broadcast implementation at MediaCom, warns: "We are a long way from any serious tipping point for technologies such as IPTV and convergence, despite all the conferences. The past couple of years have seen consumers rushing to buy digital and HD-enabled sets. But, with a recession looming, I can't see households forking out £800 for yet another new set with a wi-fi connection."
He adds: "I'm looking post-2012. Just because the industry is ready, this doesn't mean consumers are. The potential for highly targeted advertising is huge - our experiment with a student service for NatWest has been a great success (see box on page 22). But there's an economic risk aversion running through agencies that's going to hold things back."
Antony Carbonari, director of interactive at BT Vision, says: "People expected too much too soon. Consumers expect to push a button on their Freeview remote and watch entertainment then and there. But technically that's actually very difficult and requires incredibly sophisticated hardware and software."
BT Vision launched in 2006 with 1,500 hours of content and now boasts 7,000 hours. However, the process was slow and each new step requires extensive preparation. This summer's browser, for instance, is a cautious step into the unfettered internet - it is effectively an additional BT Vision channel that runs reformatted web content.
"We'd like to expand that to include transactional services," Carbonari says. "But you have to get each step right before moving on. For instance, we're procuring an ad management system for the platform and hope to have it running next summer. We'll then be able to deliver a highly targeted TV spot around a piece of content that can deliver real-time reports on consumer reaction and click-throughs."
Of course, it's this internet-bestowed ability to target that makes IPTV appeal so strongly to agencies. A recent study of TV advertising, undertaken by Q Media for Channel 4, revealed a doubling of ad awareness on C4's 4oD platform.
The study measured seven major brands -Samsung, O2, Toshiba, COI, Colour Catcher, Vauxhall and Saab - with six of the seven also active on linear TV at the same time. By the end of the study, ad awareness more than doubled among 4oD users on Virgin, with 22% aware of the campaigns, compared to 10% for non-users.
"The next stage is in content. Our subsidiary, Third Screen, is developing technology that can identify which of the three convergent screens the user is on - PC, TV or mobile - and can send the appropriate content for that platform."
Adrian Letts, co-founder of TV and movie distribution company Blinkbox, agrees that advertising can become more creatively involved in content. He says: "We've been looking at pre and mid-roll ads, but why not have overlay ads or rich media ads where there is no separation of ads and content? The consumer interacts with the content and is then having a direct conversation with the advertiser."
Rupert Britton, strategic director of content at PHD, has been working with Drum PHD to create short-form documentaries for O2. "This is basically bite-size branded TV that we can see people sampling in the five minutes they have to kill before their film or show comes on," he explains.
Britton's worry, in common with many buyers, is the absence of a cross-platform trading currency. Paul Hague, managing director of BiBC, which provides content for new platforms through deals with studios and producers, explains. "Although a set-top box lacks the power of a PC, it can measure consumers' behaviour in detail.
"The problem is TV audiences are still measured by Barb. For converged media to have access to full TV budgets and for advertisers to be able to really combine TV with online and mobile, there must be a single trading currency across all three screens."
"Advertisers can't take the lead on this one," warns McLachlan. "The next year is going to be tough enough as it. But if the industry is smart, it will start the right conversations so that businesses will be ready to trade once things have eased.
"At that point, there really will be something to hold a conference about."
Tailor-made TV ads
Barry Llewellyn, vice-president of sales and marketing for video advertising pioneer Packet Vision, is a self-confessed evangelist for "addressable" advertising via IPTV. He identifies five clear advantages to TV ads delivered over broadband:
TV channels delivered over IP networks can gather a huge amount of lifestyle information about viewers. For example, an advertiser placing a spot in Animal Hospital on a broadband network reaching three neighbouring flats could attach a cat food ad to one, a dog food ad to another and a bird food ad to the third, thus reaching viewers with specific pet interests.
Interactive advertising means consumers' levels of interest and response can be accurately measured. A car manufacturer could establish which make, model or even execution secured more click-through appointments at the local dealership. Unilever founder Lord Leverhulme's famous maxim - "I know that half my advertising doesn't work. The problem is, I don't know which half." - becomes redundant.
When a buyer has reached four-plus cover with a particular sub-demographic [when each member of your target audience has seen your ad four times or more], but has not hit full campaign goals, addressable advertising allows them to stop spending on the saturated groups and switch spend to other targets instantly. Planning can thus be more precise and accountable than it has ever been.
Filtering out groups
Spirits advertisers avoid certain programmes and timeslots for fear of their brands hitting viewers under the age of 18. Viewer data can simply block spirits ads if the viewers are too young, allowing for more appropriate messages and avoiding the repeat of recent bad publicity over advertising fuelling "binge drink Britain".
The low cost of entry makes addressable advertising affordable to clients who have not previously had a TV budget. The incredibly tight targeting possible - for instance, reaching all yacht owners who live within five miles of a British marina - means brands such as Rolex or Porsche that can afford TV, but have shied away from diluting their message, could embrace the medium.
Inuk targets students with Freewire.tv
Most UK universities are linked by JANET, a nationwide computer research network that also offers - in some 50 colleges - student TV in halls of residence.
About 50 channels - including the five main terrestrial channels, the Living family of channels, the FX Network, MTV and FHM - are managed by Canadian IPTV provider Inuk, and distributed under the brand name Freewire.tv.
Students download software onto their laptops, connect via an ethernet cable and watch for free.
Channel 4 and Packet Vision have been experimenting with addressable advertising through deals with EA Games, Rustlers Burgers, Weetabix and Cadbury, and a further 26 brands. For example, students could click on a £5 discount ad for Rustlers, print off a voucher and spend it at the student union.
Emirates and Shell have both used the service for highly targeted recruitment advertising, while NatWest trialled its student banking offer last year.
"The NatWest trial worked very well for us, and we're coming back for a second bite," says Rhys McLachlan, head of broadcast implementation at NatWest's agency MediaCom.
"We're very excited about the potential of IPTV when it has this level of penetration. The ability to deliver different content and different executions to different people, with an added interactive element, was perfect."
This article was first published on mediaweek.co.uk