Backchannelmedia

Mass High Tech, January 25, 2008

Firm's tech would add shopping dimension to TV

By Efrain Viscarolasaga, Staff Writer

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Michael Kokernak has been working for 10 years to bridge the wide reach of television advertising with the functionality of the Internet.

In the coming weeks, his company, Backchannelmedia Inc. of Boston, is expected to launch its first consumer beta test of its flagship technology, aimed at allowing viewers to link TV-based promotions and information offers to an online portal.

If it sounds like interactive television, a catchphrase for such technologies in the late 1990s, it essentially is -- just don't let Kokernak hear you say it.

"Interactive TV has become somewhat of a dirty word with investors and networks because of some of the failures of the past," he said. "It's a different beast today."

The beta test is expected to launch in the second quarter of this year and will begin with 200 to 1,000 households. Eventually, the company hopes to roll out its service to about 20,000 testers before pushing into commercialization, according to Kokernak.

Backchannelmedia's innovation is the use of a web portal to manage the information. For example, if a viewer were watching the Grammy awards, an icon might come up to buy a winning song. The viewer would hit one button, sending the offer to a web portal. Later, at his computer, the user can execute the transaction (possibly with specific billing information already entered with iTunes) in one step. The process eliminates any interruption in a user's viewing experience, said Kokernak, and will encourage additional use of the technology.

While the idea is intriguing from a consumer point of view, it is the advertisers and networks who foot the bill -- and they are willing to pay, according to Brad Agate, senior vice president of research at Horizon Media Inc., a large media planning firm in New York.

"There is an awful lot of pressure from Internet advertising being put on television in terms of measurement," he said. " 'Who went to my site? How long did they stay? What did they buy?' Marketers love that, and that's what this kind of system can provide."

For its share, Backchannelmedia gets no revenue based on a campaign's effectiveness. The company's revenue instead is expected to come from licensing fees to networks and advertisers, as well as targeted marketing data generated from the service.

The company was officially launched in 2000 and has generated revenue through other products, such as direct-response infomercials and result-tracking for clients.

It has taken in $9.5 million in funding over the past two years, including about $4 million from Daniel Hassan, the company's co-CEO and son of Fred Hassan, CEO and chairman of New Jersey-based drug giant Schering-Plough Corp.

Kokernak expects the beta test to last well into 2008 and said the company is being very deliberate in its rollout, despite pressure from TV stations and networks that want access to subscribers quicker that the company's timeline.

"Because this is a consumer-based product, everything has to be perfect, and we're well on our way to achieving that," Kokernak said.