What will the advent of digital mean for the advertising production industry? Viewers will change the way they watch and big brands will have to approach the small screen in new ways, as Dominic Timms reports.
Whether it represents a new utopia of choice or a sea of amorphous, 'me too' programming, digital TV means one thing for those who produce advertising: a major headache.

The ad industry is watching the effect of digital TV on long-form programme production with keen interest. Whatever happens to the 'the bits around the ads' is bound, in turn, to affect ad production.

The shift towards low-cost, high-volume programming that began in the early days of multi-channel TV is now rapidly becoming the digital norm.

Battles rage between shrinking budgets and multi-skilled teams scheming to create islands of cost-effective content in an ocean of re-purposed, repositioned and re-archived material.

It's not clear exactly how the new global order will affect the traditional commercial break - the mainstay of the ITV network since Gibbs SR's first 'message' aired in 1955. Fragmented audiences, the spill-over of internet-derived content onto TV and the prospect of true video-on-demand (VoD) plus a host of other activities to distract viewers from TV will change the way audiences interact with ads and the way big brands interact with TV - possibly forever.

Predictions about how viewers will take to and use digital TV are notoriously indeterminate. One research organisation forecasts there will be 75 million digital TV homes in Europe by 2005, while the very next week another suggests 28 per cent of UK viewers will 'never switch' to digital TV. But when the Government turns off analogue transmission, viewers won't have any choice about how they receive their TV signals. That is, unless they think the unthinkable and avoid it altogether.

Those that stay tuned - and they include advertisers - will have to navigate an increasingly populous sea of clutter: more channels, more programmes, more ads, more sponsorship, more interactive opportunities and increasing competition from other forms of media. 'Attention will become a scarce commodity among consumers as they are bombarded with messages,' says Ammirati Puris Lintas (APL) joint media director Matthew Pitt.

Worryingly, attention levels are already falling. Figures from the Institute of Practitioners in Advertising show that from 1985 to 1998 average daily TV viewing dropped by more than an hour. Some analysts, such as Alan Griffiths, head of research organisation Digital Strategy, predict digital TV will kill the traditional commercial break altogether.

Not surprisingly, those producing today's crop of high-cost, high-production value ads are bullish. Mark Hewitt, managing director of commercials post-production facility Rushes, says digital TV needs advertising if only because of its insatiable appetite for content: 'When you have a plethora of new channels you need ads to fill up the space.'

While Hewitt admits that some of the niche channels will inevitably see a rise in cheaper, highly targeted ads, their arrival will not affect the high-end branding campaigns run by the big TV advertisers. 'The proliferation of channels in the US hasn't pulled down high-end commercials. But if Sprocket & Widget Co want to put an ad out at 11.30 on the DIY channel then they can,' he says.

Andy Barmer, facilities director at commercials facility The Mill, is equally confident. 'Just because ad spend on the internet has increased dramatically it hasn't affected the money spent on TV,' he argues. 'Similarly the advent of interactive broadcasting doesn't mean high-production commercials are suddenly not required. You are still selling to a highly sophisticated audience.'

Moving Picture Company managing director David Jeffers agrees. 'There is no tangible evidence that digital TV has had any impact on the way clients consider ad production,' he says. 'There are still as many glossy, high-production, high-value ads being made as there ever were.'

But optimism among those in post-production isn't reflected at a production level where there is evidence of tighter budgets and clients wanting more for their money. Jonathan Murphy, joint managing director of Union Commercials, says: 'There is a definite downward trend. Even if the actual figures stay the same, clients want more and more and more.'

While Advertising Association figures show that spending on TV advertising production had risen to£536 million in 1997, the picture is less rosy after accounting for inflation. Add the recent proliferation of archived-based or just plain old ads - from Cadbury's Flake, Wrigley's and McDonald's (although this ad also uses new footage) - and the evidence suggests clients and agencies are focused on getting more for less.

Murphy cites an industry-wide trend towards centralisation and the growth in pan-European and global advertising as drivers towards a renewed interest in value. He says the growth in pan-European advertising is pushing budgets up, but at the cost of less work, he suggests. One job worth£1 million across Europe now might, a few years ago, have been seven briefs each worth£200,000.

Those involved in the production process admit the jury is still out on the future of the 'three-week shoot in the Maldives, four weeks in post' glossy ads. But the side of the industry that buys TV airtime for clients suggests the rapid take-up of digital technology and the onset of interactive advertising, and VoD in particular, will change the marketing strategies of big-brand advertisers. That will affect how production and post-production agencies work.

Facilities are thinking about, if not yet moving to, diversification beyond the slick production of 30 or 60-second spots. At this year's Production Show, Glassworks managing director Hector McLeod told delegates that simply servicing ad production was unlikely to continue to bring post-houses long-term returns. McLeod said the falling price of technology, the spiralling cost of keeping 'star operators', and the arrival of more players in a crowded market were all factors behind the facility's plans to ally with a production house and develop its own 3D animated programmes.

For broadcasters, the main problem is keeping viewers glued to their medium. BBJ broadcast director Chris Boothby says: 'The critical battleground will be TV's interactive capacity, and how rapidly it changes people's concepts of how they use television: as a lean-back entertainment medium or a lean-forward transactional one which people currently use PCs for.

It is going to be critical for advertisers to understand how viewers will interact with TV, how we use this vast expanse of new channels which will eventually replace their mass predecessors and how we can exploit it far more than just with a 30-second spot.'

But issues still need to be addressed with interactive services from BSkyB's Open, Microsoft's Web TV and Carlton and Granada's On Digital, which appear to promise golden opportunities for advertisers. Decisions by both BSkyB and On Digital to limit interactivity to a 'walled garden' have nothing to do with fears about viewers stumbling on internet pornography or their supposed indifference to web-on-TV technology.

Both are justifiably concerned that full-blown net access will take viewers away from their broadcast services. Yet even partial access via a hyperlink to a re-purposed advertiser's website is problematic.

Another key issue is how advertisers manage interactive links and how successfully they take viewers from an 'entertainment' mindset into a transactional one. Andrew Curry, senior consultant for the Henley Centre's electronic consumer group, asks: 'What happens if you've got a classic multi-million dollar brand advert full of luscious colours, brilliant effects and a heavy soundtrack and when you click you are through to something that resembles a Powerpoint presentation? It's a bit like going through the cupboard to Narnia, except in reverse.'

While some advertisers are seeking to get to grips with an interactive future, others have migrated from an over-dependence on the 30-second advertising spot to explore new ways of raising and maintaining brand awareness. Clients - such as Cadbury's with its Coronation Street sponsorship, Jacob's with Who Wants To Be A Millionaire?

and Martini with the ITV Bond season - have taken to alternative means of branding with gusto. This works out cheaper - Cadbury's is thought to be paying£6.5 million a year for its Corrie link and has only recently been showing its archive-based Flake commercial outside the package. It also enables brands to build a closer relationship with commercial television's top-rated shows and, by association, with their millions of viewers.

With many observers believing EPGs and true VoD will make channel-based viewing a thing of the past, ownership of shows looks like a sensible bet when viewers can watch Corrie or EastEnders at any time of the day or night and build their own schedules. Programmes, not channels, will become the accepted currency of the new digital millennium.

Others - like ITV with its network-wide marketing strategy - believe channel loyalty will still count. Whatever the balance, advertisers will need to be extra canny in negotiating access to the right amount of the right sort of viewers.

APL's Pitt suggests the newer digital operators are more inclined than ITV to negotiate with clients. 'Smaller channels are more willing to get involved with the client and work on joint promotions.' And once the relationship between advertisers and newer channels matures, the tentative excitement around UK advertiser-funded programmes is likely to mushroom. With a desperate lunge for cheap new content from broadcasters, the genre could become a must-have.

'We are having conversations with many TV companies,' says Pitt, 'but such is the excitement it's very much to the back of the queue. With advertiser-funded you can't just bolt it on a brand. What you have to do is produce a quality programme and then subtly brand it. Everyone is beating a path to successful independent production companies. For them the future is incredibly rosy.'

But whether the future is ad-funded series, interactive, sponsorship of VoD films or a mixture, the question of how viewers will view TV is still core.

In the meantime, ad production is changing. Sure, the glossy car ads like those for Ka and Lexus and star-driven mini-films like Madonna's for Max Factor are still around and no-one's saying these values will disappear overnight. They'll just become very hard to justify for an ad watched by less than 100,000 people on a 24-hour cooking or dwarf-throwing channel.