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Point and Click—at Your TV


Backchannel takes a remote shot at that elusive prize: profitable interactive television

Michael Kokernak has been unhealthily gripped by a very specific obsession for more than 10 years. Fortunately, his fixed stare is trained on something socially acceptable, even though it may not make for scintillating party chat.

Since 1997, Kokernak has immersed himself in the arcana of making advertising accountable, and, more recently, in how to fuse TV ads with the measurable, click-here-now aspects of the Web. Kokernak is the founder and co-CEO of Boston-based Backchannelmedia. The company peddles technology that, to oversimplify somewhat, flashes on TV ads and programs small onscreen tokens that are "clickable" with a standard remote control, à la Web ads.

Backchannel is the product of countless hours of research conducted by Kokernak, some of which came from starting up and running a small media-buying operation—to learn the system from within, he says—and some from long stretches buried in the stacks of the Harvard University library. (He once took a low-paying job there, Kokernak says, to gain unfettered access.)

Today, Backchannel has $9.6 million behind it, the bulk of which came from co-CEO Daniel Hassan, and about 20 full-time employees. The company is nearing an agreement for its first real-world test, with Hearst-Argyle (HTV)'s Boston ABC affiliate WCVB. While not final, terms that have been discussed promise to bring the service to thousands of Bostonians starting this spring. Among other parties engaging in similar discussions are Disney (DIS) for its syndicated Ebert & Roeper show and major advertisers and ad agencies, say executives familiar with them.

The history of interactive TV is strewn with carcasses. Many were related to media biggies in the U.S. and abroad, including Time Warner (TWX); some bore names that have a lovely tinge of the retrofuturist (remember Qube?). Should Backchannel prove viable, it will be the first such service that doesn't end in tears. As with any tech play that asks consumers to behave differently, that may well happen. But it's hard to see any of this registering with Kokernak, since Backchannel's imminent test is more or less the culmination of a long-held dream. One day in 2000, Kokernak recalls with perfect earnestness, "I was driving on the Mass Pike. And the name hit me. 'Backchannelmedia: Charting the return path to your world.' [This remains Backchannel's motto.] And I knew I had to dedicate my life to this idea."

SPURRING TRANSACTIONS

Backchannel's technology mercifully does not require another living-room set-top box so long as you have cable TV. It can be installed in the technological back rooms of TV stations, networks, or cable operations. For consumers, it requires nothing more than a remote control and an Internet connection. Backchannel-enabled TV programming, be it shows or ads, will display at key moments a relatively unobtrusive icon. Hitting, say, the "select" button on your remote at the right moment sends an automated message to an opt-in Web in-box set up by Backchannel, which viewers can peruse on their computers at their leisure.

For the networks, Backchannel can become a way to spur transactions at iTunes (AAPL) or Amazon.com (AMZN) for CDs and DVDs. (Imagine, during a famed singer's appearance on Jay Leno: "Click for a special iTunes offer on Kelly Clarkson's new single.") And the Backchannel, uh, channel becomes a means by which TV advertisers can easily pass along coupons, additional information, and local come-ons to consumers. (Imagine, during a car commercial: "Click to receive a special offer from your local Lexus (TM) dealer.")

Backchannel also adds a key element to TV advertising that was previously missing: data. There is power in the patterns of users' clicks, as a company named Google (GOOG) has been proving. Thus the marketing world has become fascinated with data, as all media dependent on non-Web advertising are keenly aware. "Everyone in this business," says one TV executive intrigued with Backchannel, "is trying to keep [ad dollars] away from the Google-monster." In advertiser terms, Backchannel promises to close an open loop that has long bedeviled the industry: How do you know if ads work? With Backchannel, "you can trace an exposure to an ad and see how consumer interactions occur because of it," says Shari Anne Brill, a senior vice-president at media buying firm Carat, which is mulling tests of the technology.

PRETTY PAINLESS

All this, of course, is meaningless unless users click. Pressed on the point that his technology asks people to act differently when watching TV—which, among other things, helped doom previous interactive TV attempts—Kokernak estimates that it's now not unusual for viewers to click a remote 100 times an hour.

I've played with a Backchannel set-up, and it is a pretty painless and seamless experience. Its onscreen icons are not overweeningly obtrusive; perhaps they don't seem jarring since some TV channels already play with promos that pop-up over shows.

The real test, though, is whether users will pay attention to their Backchannel in-boxes once they're brimming with offers. Given that, I have no idea whether this will work or not. Still, the implications are vast. Backchannel could reshape how TV ads are priced and how they're made; it could give TV shows the chance to get in the transaction business and sell stuff they display on screen. Credit Kokernak with this: If he was going to allow one notion to totally take over his life, at least he chose a ridiculously ambitious one, and this in a time when so many in media are allergic to thinking big.

For Jon Fine's blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia


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