A few thoughts on potential blog posts have been running through my pollen-soaked and congested brain over the past week or so. The common theme is that each has emanated from other sources in the DOOH blogosphere, so perhaps commenting on all of them will result in something readable… or at least clear my head.
Congratulations to TouchTunes on the pending deal with Victory Acquisition Corp. announced yesterday. I was travelling all day yesterday, and only learned of the deal on Dave Haynes’ Sixteen:Nine blog. Under the terms of the agreement, it appears that TouchTunes will become a publicly (NASDAQ) traded and very well-capitalized company. Ron Greenberg and his team have built an impressive company and a gigantic network by any measure. It looks like one of the goals of the deal will be to further monetize the TouchTunes network and relationships with advertising. Looks like a good plan to me, and I am happy to see M&A activity of note in the industry.
Over on Wirespring’s blog, where the prolific Bill Gerba has enlisted a cadre of guest columnists, industry consultant Pat Hellberg posted a piece decrying the sameness of “elevator pitches” at a trade show. I can imagine that a potential buyer walking the floor gets an earful. As a long time trade show dray horse, however, my view is that people who have done a little homework never get an elevator pitch, they get a discussion. The folks with fake names on their badges who walk up and ask “what do you do?” get the elevator pitch. Meanwhile, Pat felt compelled to lob a couple of gratuitous softballs for EnQii and Reflect executives to smash down the fairway in sanctimonious fashion. I can't fault them for swinging away, but what was the motivation there? Forgive my inquisitiveness, but I wonder why Pat didn’t seem inclined to provide a platform for the CoolSign folks he selected when he ran the Nike network. Slipping into his industry hat, Pat puts out a call for an industry “meta-pitch” by asking rhetorical questions about what we are nas an industry. My take on that? We are neither “advertising”, nor “storytelling” nor “information exchange” per se. We are targeted out-of-home communications, capable of highly customized rich media messaging in the most appropriate delivery context. Not sure if that is elevator worthy, but I gave it a shot.
Aka.tv ran a piece by AV integrator Gary Kayye with his take on the DSE conference in Las Vegas. Mr. Kayye makes some good points about fragmentation, PCs and integration with personalized technology. Most of his points, as one would expect, come from the perspective of an AV person. A couple of interesting observations emerge: First, he describes the best pitch he heard as coming from a non-exhibitor, Westinghouse, who had set up camp in a suite at the nearby Hilton. Thanks for your support of the industry, Westinghouse. Way to go! Mr. Kayye also references Wireless Ronin as a “biggie” in the industry. I have tried mightily to refrain from piling on with regard to Ronin, but they are very publicly not a biggie, unless your barometers for bigness include executive turnover, wasted marketing dollars and cash incineration. Finally, Mr. Kayye makes an excellent point related to the chasm between AV integrators and IT integrators, and how the Europeans have done a better job of embracing the former. There is something there to learn from.
DailyDOOH uncovered a piece in Mediaweek by Show+Tell’s Phil Lenger. I have to agree with Adrian, it is a compelling and quick read. The article led me to Show+Tell’s website, which has some nice presentation of industry landscape. Well done.
Last stop on the blog tour is Nate Nead’s Digital Signage blog, where in a rambling post on content, Nate asks (with an intro that pays homage to David Bowie), if “Content is King, _________ is Queen?” Nate, even David Bowie would have to agree: Freddie Mercury is Queen. Rock on.
Wednesday, March 25, 2009
Tuesday, March 17, 2009
2-D or Not 2-D: The Question is When, Not If
There has been lots of talk about convergence, with different combinations of digital signage, mobile and interactive getting most of the play. One of the more interesting points of convergence is digital signage and mobile. LocaModa has made lots of headlines and lots of friends with their very slick method of turning a cell phone into a remote control that can drive content on a digital screen. In effect, their method converges all three elements, using mobile to make digital signage interactive. As such, LocaModa has carved out a niche as a fulcrum between digital signage and interactive applications. But what their product does not do is make the phone itself interactive, it simply uses it (and the attendant network) as a tool for interactivity. It seems inevitable that using software on the phones themselves may well be the future lever for convergence.
The evidence is piling up: Apple’s iPhone AppStore has been a phenomenal success by any measure. The millions of iPhone users have shown little hesitance to add function to their device if it is cheap and easy. AppStore is both, perhaps with cool thrown in as a kicker. With the advent of pervasive 3G networks in the US, users are likely to evolve their view of cell phones toward way they are used in Europe and especially Asia: portable computing devices that happen to have phones built in, rather than phones that have some other capabilities built in, as we tend to see them in North America.
An interesting article in AdAge discusses one way that this merging of channels is likely to occur. 2-D barcodes, known as QR (quick-response) codes in Japan, are starting to make their way to the US. The technology allows cell users with a simple application installed on their phones to use their phone cameras to actually scan a simple barcode. The software interprets the code and redirects them to a web site that provides more information, special offers or coupons. Japanese 2-D campaigns have been launched from “magazines…outdoor posters…(and)promotional materials”. It is not a great leap to envision embedding a 2-D code in advertising or promotional content on a digital sign in order to gauge response and offer coupons and other opt-in information. The possibilities are endless, and case studies exist already. Scanning a 2-D code is clearly a step ahead of a text message/short code in terms of convenience, in that the phone does the communications work once the camera does its thing.
As the article discusses, there is the usual battle over standards and some element of cell carrier hegemony over choosing application providers and embedding 2-D scan software on the popular devices. But like anything else, demand and money will drive the carriers toward making choices to stay apace with their customers. As North American cell phone users adopt a more Asian-style view of that device in their pocket, we can expect software on the phones to play an important role in helping make digital signage content more engaging and effective. 2-D looks like an early favorite to be adopted, but there is certainly room for innovation.
The evidence is piling up: Apple’s iPhone AppStore has been a phenomenal success by any measure. The millions of iPhone users have shown little hesitance to add function to their device if it is cheap and easy. AppStore is both, perhaps with cool thrown in as a kicker. With the advent of pervasive 3G networks in the US, users are likely to evolve their view of cell phones toward way they are used in Europe and especially Asia: portable computing devices that happen to have phones built in, rather than phones that have some other capabilities built in, as we tend to see them in North America.
An interesting article in AdAge discusses one way that this merging of channels is likely to occur. 2-D barcodes, known as QR (quick-response) codes in Japan, are starting to make their way to the US. The technology allows cell users with a simple application installed on their phones to use their phone cameras to actually scan a simple barcode. The software interprets the code and redirects them to a web site that provides more information, special offers or coupons. Japanese 2-D campaigns have been launched from “magazines…outdoor posters…(and)promotional materials”. It is not a great leap to envision embedding a 2-D code in advertising or promotional content on a digital sign in order to gauge response and offer coupons and other opt-in information. The possibilities are endless, and case studies exist already. Scanning a 2-D code is clearly a step ahead of a text message/short code in terms of convenience, in that the phone does the communications work once the camera does its thing.
As the article discusses, there is the usual battle over standards and some element of cell carrier hegemony over choosing application providers and embedding 2-D scan software on the popular devices. But like anything else, demand and money will drive the carriers toward making choices to stay apace with their customers. As North American cell phone users adopt a more Asian-style view of that device in their pocket, we can expect software on the phones to play an important role in helping make digital signage content more engaging and effective. 2-D looks like an early favorite to be adopted, but there is certainly room for innovation.
Sunday, March 15, 2009
The Value Of Results
A breakfast chat at DSE about measurement as it relates to DOOH advertising has lingered in my mind. As mentioned in a post-DSE blog entry, Nikki Baird of RSR observed that advertisers and agencies seem to clamor for their comfort zone of traditional CPM (cost per thousand impressions) when evaluating a DOOH buy. Despite the increasing number of devices and schemes being brought to market to provide some proxy for measurement (of traffic, eyeballs, and with some occasional gaffes, gender) in a digital signage environment, it seems to me that the angst of the agencies is NOT about measurement itself: it is about value.
It is fair to say that advertising dollars do not and will not grow in aggregate in perpetuity. Recent evidence from big agencies seems to indicate that the big ad bucket will actually hold less water in 2009. So what really matters is how those precious dollars are allocated. To be sure, over the past two or three years, we have seen a marked shift toward alternative media, which includes the Internet, mobile and DOOH vehicles. Advertisers moving into these alternative channels do so with recognition that there are good reasons to be there.
Given their static or possibly shrinking budgets, media buyers must take a marketing Hippocratic oath when making their brand building investments, in effect “to do no harm” by shifting their allocations and making new buys. That is not always something that can be done with assurance when shifting from the established science of traditional media buys to the new world of digital media buys. Internet click-throughs and mobile opt-ins and SMS campaigns provide a way to measure interest and response, but advertisers have continued to struggle with the cost effectiveness and value of brand building via those types of campaigns. A typical DOOH campaign does not offer that built-in response meter analogous to click-throughs or text responses, putting a digital signage network buy behind the eight ball even when compared to the other primary digital media options. However, it may be that digital signage can emerge from the haze and claim an increasing share of brand dollars by demonstrating the best value to the advertisers.
The ongoing focus on cost, as measured by CPM or some proxy of CPM generated to placate nervous media buyers, is a red herring. It defies logic to think that 1,000 impressions on television, usually viewed in a home environment, have equal (or greater!) value than 1,000 impressions in an out-of-home environment that provides context for engagement. Perhaps an example would be illustrative. An imaginary CPG company has a new product, an analgesic pain reliever called “Bliss”. The product is great for headaches and muscle pain, but is primarily targeted toward arthritis sufferers and the 45+ demographic. The agency makes traditional buys for Bliss in magazines, newspaper FSIs, and television. Alternative media buys are focused on targeted web sites and a DOOH campaign in doctor offices, grocery stores and pharmacies. The media buyer struggles with the DOOH buy, because she feels the CPM as measured by a formula involving traffic, dwell time and loop length seems “high” to her. She makes the buy desite her hesitance, essentially taking what seems like a leap of faith. But is it a leap? Does a Bliss commercial during Grey’s Anatomy engage the target audience? How many are watching on a DVR, skipping ads? How many use the commercial breaks to do email, get food, or use the bathroom? What can engaged viewers DO if they are favorably impressed? On the other hand, if a Bliss advertisement (perhaps in 15-second short forms, repeated multiple times in an hour) is presented to a potential customer in a medical environment, there is context for engagement, and a halo effect from the environment itself. We know that a large majority of patients visit a pharmacy before going home from their medical appointment, presenting a scenario for multiple engaged impressions. When presented on screen in a pharmacy or grocery venue, the product is nearby and the opportunity to act upon an impression exists where it does not in the den or bedroom. The proper DOOH buy provides targeted viewers, context, credibility and opportunity. These add up to value.
Still, we must get past the leap of faith and provide a measure of that value in order to establish DOOH as a viable candidate for an increasing slice of the brand building spend. I am not sure that will come by measuring footfalls, dwell time or gender with more accuracy, although these measures will play a role in defining the reach of a network. It makes sense that measuring results will validate the value message. To do this, DOOH network owners might have to do a number of things to build their case, which could include the following and more:
• Provide collateral, such as traditional paper coupons, in the area of the digital display. These can easily be coded and measured when they are used.
• Incorporate electronic collateral and calls to action, such as SMS campaigns and web site couponing, into the ads themselves. This would also provide a measure of opt-in activities and potentially conversion.
• Offer samples where appropriate, perhaps including opportunities to receive discounts at retail (again a measurable event)
• Test product movement in stores and/or markets with ads running versus statistically similar stores and markets without the ads running. Calculate lift.
• Measure recall of brand messaging through opt-in email or web surveys after visits to medical or other non-retail venues.
DOOH provides an incredible medium for targeting and messaging consumers in a context conducive to real engagement. How networks, brands and agencies work together to create and place those messages, and then measure results rather than delivery, will dictate how the value of DOOH is perceived. Establishing value moves the conversation away from the traditional dichotomy of cost and gross impressions to one of contextual impressions and results. We need to move as an industry towards a results-centric focus, and in so doing differentiate DOOH from traditional media on value.
It is fair to say that advertising dollars do not and will not grow in aggregate in perpetuity. Recent evidence from big agencies seems to indicate that the big ad bucket will actually hold less water in 2009. So what really matters is how those precious dollars are allocated. To be sure, over the past two or three years, we have seen a marked shift toward alternative media, which includes the Internet, mobile and DOOH vehicles. Advertisers moving into these alternative channels do so with recognition that there are good reasons to be there.
Given their static or possibly shrinking budgets, media buyers must take a marketing Hippocratic oath when making their brand building investments, in effect “to do no harm” by shifting their allocations and making new buys. That is not always something that can be done with assurance when shifting from the established science of traditional media buys to the new world of digital media buys. Internet click-throughs and mobile opt-ins and SMS campaigns provide a way to measure interest and response, but advertisers have continued to struggle with the cost effectiveness and value of brand building via those types of campaigns. A typical DOOH campaign does not offer that built-in response meter analogous to click-throughs or text responses, putting a digital signage network buy behind the eight ball even when compared to the other primary digital media options. However, it may be that digital signage can emerge from the haze and claim an increasing share of brand dollars by demonstrating the best value to the advertisers.
The ongoing focus on cost, as measured by CPM or some proxy of CPM generated to placate nervous media buyers, is a red herring. It defies logic to think that 1,000 impressions on television, usually viewed in a home environment, have equal (or greater!) value than 1,000 impressions in an out-of-home environment that provides context for engagement. Perhaps an example would be illustrative. An imaginary CPG company has a new product, an analgesic pain reliever called “Bliss”. The product is great for headaches and muscle pain, but is primarily targeted toward arthritis sufferers and the 45+ demographic. The agency makes traditional buys for Bliss in magazines, newspaper FSIs, and television. Alternative media buys are focused on targeted web sites and a DOOH campaign in doctor offices, grocery stores and pharmacies. The media buyer struggles with the DOOH buy, because she feels the CPM as measured by a formula involving traffic, dwell time and loop length seems “high” to her. She makes the buy desite her hesitance, essentially taking what seems like a leap of faith. But is it a leap? Does a Bliss commercial during Grey’s Anatomy engage the target audience? How many are watching on a DVR, skipping ads? How many use the commercial breaks to do email, get food, or use the bathroom? What can engaged viewers DO if they are favorably impressed? On the other hand, if a Bliss advertisement (perhaps in 15-second short forms, repeated multiple times in an hour) is presented to a potential customer in a medical environment, there is context for engagement, and a halo effect from the environment itself. We know that a large majority of patients visit a pharmacy before going home from their medical appointment, presenting a scenario for multiple engaged impressions. When presented on screen in a pharmacy or grocery venue, the product is nearby and the opportunity to act upon an impression exists where it does not in the den or bedroom. The proper DOOH buy provides targeted viewers, context, credibility and opportunity. These add up to value.
Still, we must get past the leap of faith and provide a measure of that value in order to establish DOOH as a viable candidate for an increasing slice of the brand building spend. I am not sure that will come by measuring footfalls, dwell time or gender with more accuracy, although these measures will play a role in defining the reach of a network. It makes sense that measuring results will validate the value message. To do this, DOOH network owners might have to do a number of things to build their case, which could include the following and more:
• Provide collateral, such as traditional paper coupons, in the area of the digital display. These can easily be coded and measured when they are used.
• Incorporate electronic collateral and calls to action, such as SMS campaigns and web site couponing, into the ads themselves. This would also provide a measure of opt-in activities and potentially conversion.
• Offer samples where appropriate, perhaps including opportunities to receive discounts at retail (again a measurable event)
• Test product movement in stores and/or markets with ads running versus statistically similar stores and markets without the ads running. Calculate lift.
• Measure recall of brand messaging through opt-in email or web surveys after visits to medical or other non-retail venues.
DOOH provides an incredible medium for targeting and messaging consumers in a context conducive to real engagement. How networks, brands and agencies work together to create and place those messages, and then measure results rather than delivery, will dictate how the value of DOOH is perceived. Establishing value moves the conversation away from the traditional dichotomy of cost and gross impressions to one of contextual impressions and results. We need to move as an industry towards a results-centric focus, and in so doing differentiate DOOH from traditional media on value.
Thursday, March 12, 2009
Research Backtalk
This morning I found an interesting piece written by Fred J. Aun in Evan Schuman’s Storefront Backtalk retail technology newsletter. Mr. Aun provides a recap of findings in an ABI Research report on Digital Signage written by analyst Zippy Aima. Ms. Aima, formerly of Frost & Sullivan, has her roots in storage, DRM, digital asset management and security. Certainly not a stranger to digital media. The talking points that formed the basis for Aun’s review and Ms. Aima’s table of contents both are worthy of further discussion.
In the article, Aun leads with ABI’s assertion that retailer adoption of digital signage technology is being boosted by “reduction in prices for data storage and electronic goods in general”, and would ramp even faster if not for “data security concerns”. One can not argue that prices of electronics tend to decline over time, and indeed they have, especially on the big ticket digital displays critical to digital signage deployment. The concept of declining prices as a driver of adoption is hardly new (guilty!), but as the market has evolved, it seems clear that effectiveness of digital signage has become the biggest driver. I have to take issue with her case for storage costs being a driver of adoption however. Data storage is such a small component of the cost of operating a digital signage infrastructure that declines in costs of big disk (e.g. server level RAID arrays, NAS or even cloud storage) or small disk (media player hard drives) are not noticeable. The cost of data transport is far more relevant to adoption than data storage costs.
Aima goes on to forecast a 33% increase in the U.S. digital signage industry for 2009, although she appropriately hedges a bit based on the timing of the report (4Q 2008) and the subsequent implosion of the economy. Oddly enough, our own evidence here is that demand is amazingly strong despite the gloomy economy, so props to Ms. Aima on taking that stand.
An interesting tidbit follows in which Aima postulates that the abundance of technology vendors may actually be working against adoption, as it tends to confuse potential buyers. It is hard to argue the concept that the market is over-vendored. The economic cycle may do more to thin the herd than the long-predicted consolidation. I would make the case, however, that the source of confusion is really a lack of semantic resolution and general clarity regarding the various models of digital signage and how it is deployed. Hopefully, through the work of analysts like Ms. Aima, Nikki Baird, Janet Sherlock and others, a common understanding of the structure of the marketplace and the various technology models will emerge.
The next topic of discussion, security concerns, seems to have more to do with entering Ms. Aima’s personal comfort zone than any reality we have encountered in the marketplace. She points out that “connectivity is IP-based so networks become prone to being hacked when delivering content”. She asserts that encryption is essential. While we agree that security is always vital, our experience in the marketplace, especially with retail and health care venues, reveals that the security concerns do not center on the media players being hacked and bizarre or inappropriate messages being displayed. The security challenges arise when the digital signage network piggybacks on any element of the venue’s LAN/WAN backbone. The primary fear is that somehow the media players or other digital signage devices could be compromised to gain access to private data, especially credit card information at retailers, and patient records in medical venues. PCI compliance is an incredibly large issue for retailers today, as readers of Storefront Backtalk would attest. HIPAA regulations loom over all medical environments. So encryption is not necessarily the panacea; proper device management and network design may be more important to help assuage fears of the real estate owners.
Examination of the Table of Contents for Aima’s 69-page report reveals what appears to be a thorough examination of market drivers, potential restraints and trends, some of which are noted above. She includes a list of 16 “key players” towards the end of the report, and here she may have revealed a bit of naiveté with respect to the landscape. (Objectivity disclaimer: Aima did not include RDM on her list.) Of the sixteen “key players”, I count no less than eight that simply do not qualify for the adjective “key”, never mind the noun “player”. I see one that has already exited the space. I do not see the major turnkey providers who made their bones in retail, PRN and CBS Outernet, I do not see a couple of other worthy competitors who have claimed fairly major victories at significant venues, or one who’s largest retail install provides an instructive case study in failure. I do not see RDM. Since a research report is generally purchased, the contents of it are often regarded as beyond reproach. By deigning to identify a list of vendors, the writer implies that this is the relevant field for buyers to consider. Clear oversight of several important players in the space, as well as succumbing to hype, self-promotion or search engine results to include others dampens the impact of what appears to be some very good work. Give me a call, Zippy. We can discuss.
In the article, Aun leads with ABI’s assertion that retailer adoption of digital signage technology is being boosted by “reduction in prices for data storage and electronic goods in general”, and would ramp even faster if not for “data security concerns”. One can not argue that prices of electronics tend to decline over time, and indeed they have, especially on the big ticket digital displays critical to digital signage deployment. The concept of declining prices as a driver of adoption is hardly new (guilty!), but as the market has evolved, it seems clear that effectiveness of digital signage has become the biggest driver. I have to take issue with her case for storage costs being a driver of adoption however. Data storage is such a small component of the cost of operating a digital signage infrastructure that declines in costs of big disk (e.g. server level RAID arrays, NAS or even cloud storage) or small disk (media player hard drives) are not noticeable. The cost of data transport is far more relevant to adoption than data storage costs.
Aima goes on to forecast a 33% increase in the U.S. digital signage industry for 2009, although she appropriately hedges a bit based on the timing of the report (4Q 2008) and the subsequent implosion of the economy. Oddly enough, our own evidence here is that demand is amazingly strong despite the gloomy economy, so props to Ms. Aima on taking that stand.
An interesting tidbit follows in which Aima postulates that the abundance of technology vendors may actually be working against adoption, as it tends to confuse potential buyers. It is hard to argue the concept that the market is over-vendored. The economic cycle may do more to thin the herd than the long-predicted consolidation. I would make the case, however, that the source of confusion is really a lack of semantic resolution and general clarity regarding the various models of digital signage and how it is deployed. Hopefully, through the work of analysts like Ms. Aima, Nikki Baird, Janet Sherlock and others, a common understanding of the structure of the marketplace and the various technology models will emerge.
The next topic of discussion, security concerns, seems to have more to do with entering Ms. Aima’s personal comfort zone than any reality we have encountered in the marketplace. She points out that “connectivity is IP-based so networks become prone to being hacked when delivering content”. She asserts that encryption is essential. While we agree that security is always vital, our experience in the marketplace, especially with retail and health care venues, reveals that the security concerns do not center on the media players being hacked and bizarre or inappropriate messages being displayed. The security challenges arise when the digital signage network piggybacks on any element of the venue’s LAN/WAN backbone. The primary fear is that somehow the media players or other digital signage devices could be compromised to gain access to private data, especially credit card information at retailers, and patient records in medical venues. PCI compliance is an incredibly large issue for retailers today, as readers of Storefront Backtalk would attest. HIPAA regulations loom over all medical environments. So encryption is not necessarily the panacea; proper device management and network design may be more important to help assuage fears of the real estate owners.
Examination of the Table of Contents for Aima’s 69-page report reveals what appears to be a thorough examination of market drivers, potential restraints and trends, some of which are noted above. She includes a list of 16 “key players” towards the end of the report, and here she may have revealed a bit of naiveté with respect to the landscape. (Objectivity disclaimer: Aima did not include RDM on her list.) Of the sixteen “key players”, I count no less than eight that simply do not qualify for the adjective “key”, never mind the noun “player”. I see one that has already exited the space. I do not see the major turnkey providers who made their bones in retail, PRN and CBS Outernet, I do not see a couple of other worthy competitors who have claimed fairly major victories at significant venues, or one who’s largest retail install provides an instructive case study in failure. I do not see RDM. Since a research report is generally purchased, the contents of it are often regarded as beyond reproach. By deigning to identify a list of vendors, the writer implies that this is the relevant field for buyers to consider. Clear oversight of several important players in the space, as well as succumbing to hype, self-promotion or search engine results to include others dampens the impact of what appears to be some very good work. Give me a call, Zippy. We can discuss.
Saturday, March 07, 2009
DOOH Provides Some Hope in Glum Ad Market
Sir Martin Sorrell, CEO of WPP, appeared on CBNC yesterday, to review 2008 results and talk a bit about prospects for 2009. Despite slightly missing analysts’ expectations for revenue and margins, WPP shares reacted positively in the market. Sir Martin tempered expectations for 2009 in his comments. As is the case with virtually every business worldwide at this point, WPP is feeling pressure from the reduced budgets of current customers and fierce competition for new business. A couple of tidbits worth noting from his comments and analyst reaction:
• Sorrell noted that traditional media, especially television, has become relatively inexpensive in the current environment. This would appear to indicate that the migration of advertising dollars out of TV, radio and newspapers to new media has resulted in rate cutting on the traditional side in an effort to stop the bleeding. While predictable, this may have the effect of slowing that migration that is so important for digital out of home network owners. The guess here is that rates will fall on the new media side, at least in the next quarter or two.
• Analysts were bullish on WPP for two specific reasons. First, their push into emerging growth markets worldwide; and second, their strategic entry into the digital space, which most certainly includes DOOH. Analysts believe that WPP’s presence in these faster-growing areas and disciplines will serve to mitigate some of the impact of price and spending downturns.
• Overall, it sounds as though WPP is looking at about a 2% revenue decline in 2009, while its main competitors are positioned for larger declines.
From a DOOH perspective, we could certainly not expect a rosy ad spending outlook in this economic climate. Impressions that we got talking to people who should know at DSE and since indicate that the first quarter will turn out to be rather difficult, and that there will be new money released in our sector beginning in April. Clearly, a lot of network plans will rest on that activity for the next 9 months, and network owners may have to moderate expectations in terms of holding to their rate cards in order to compete. From all accounts, there is strong belief that new media is where the action is, we just need to increase our industry’s share of a pie that is shrinking.
• Sorrell noted that traditional media, especially television, has become relatively inexpensive in the current environment. This would appear to indicate that the migration of advertising dollars out of TV, radio and newspapers to new media has resulted in rate cutting on the traditional side in an effort to stop the bleeding. While predictable, this may have the effect of slowing that migration that is so important for digital out of home network owners. The guess here is that rates will fall on the new media side, at least in the next quarter or two.
• Analysts were bullish on WPP for two specific reasons. First, their push into emerging growth markets worldwide; and second, their strategic entry into the digital space, which most certainly includes DOOH. Analysts believe that WPP’s presence in these faster-growing areas and disciplines will serve to mitigate some of the impact of price and spending downturns.
• Overall, it sounds as though WPP is looking at about a 2% revenue decline in 2009, while its main competitors are positioned for larger declines.
From a DOOH perspective, we could certainly not expect a rosy ad spending outlook in this economic climate. Impressions that we got talking to people who should know at DSE and since indicate that the first quarter will turn out to be rather difficult, and that there will be new money released in our sector beginning in April. Clearly, a lot of network plans will rest on that activity for the next 9 months, and network owners may have to moderate expectations in terms of holding to their rate cards in order to compete. From all accounts, there is strong belief that new media is where the action is, we just need to increase our industry’s share of a pie that is shrinking.
Monday, March 02, 2009
Obsessing About the Right Things
They say good things tend to happen in threes. This was certainly the case last Thursday at the DSE in Las Vegas. I had a breakfast meeting scheduled at one of the restaurants at Planet Hollywood. I arrived early, and wandered through the empty casino. My cell phone rang, and it was my wife letting me know that my long awaited Kindle had arrived. Needless to say, I was excited. With time to kill, I threw a $5 bill into a slot machine. On the fourth dollar, the bells started ringing. $360 later, I had two out of my three good things in the bag before 8:15 AM! Breakfast and the day at the show were both very good. My third good event came in the form of an insight, and was related to the Kindle once again. But it didn’t occur until late that night, after some interesting intelligence came our way.
During the day, as often happens during trade shows, information concerning competitors, customers and prospects came to us at our booth. As a very competitive individual, I tend to react strongly to that type of business intelligence, simply because I want to win… always. Who doesn’t? At any rate, one piece of information was particularly astounding. One of the well-known SaaS digital signage providers has apparently decided that out of the famous five P’s of marketing (Product, Price, Place, Promotion and People), they can only win new deals based upon price. They may be right. As such, they were offering to undercut their own famously low ball “rack rate” by 28% to total strangers, with a clear willingness to go 40% off if pushed. I had two potential customers that I consider friends share this with me on consecutive days, so it is far more than a rumor. How does one respond to that kind of clearly desperate sales effort? We chose to stand our ground, and emphasize that Product and People, plus another P-word, Partnership, contribute greatly to a deal and a relationship’s overall value. Value can not be measured by price alone, as so many people have learned the hard way. Both prospects agreed, and will ultimately make their own decisions based upon their own priorities. I felt like our response was appropriate, especially since any customer investing in a strategic relationship with a software provider has a stake in the ongoing health of their new partner.
That night, laying in bed, I scanned the channels, and landed on a PBS interview with Jeff Bezos, CEO of Amazon. Jeff of course was proudly holding a Kindle2, and the conversation centered on the new product. When asked directly about certain competitive products, both for Kindle and Amazon’s core eCommerce business, Bezos responded (and I paraphrase), “We choose to obsess about our customers, and not our competitors. If we do right by our customers, and focus our energies there, the competitive aspects will take care of themselves.” I smiled. Bezos had nailed it for me: our response to the competitive intelligence was the correct one. We should continue to obsess about partnership, product and people, and ensure that price reflects value. We should focus energy that may have been wasted on worrying about a competitor's moves, and use that energy instead to delight a customer. And we will. The calmness with which Jeff Bezos responded gave me a similarly calm feeling. Thanks, Jeff. You provided two out of the three good moments for me that day, as well as a guiding thought that will serve us well.
Side notes:
My first Kindle book purchase was Pirate Coast, by Richard Zacks, recommended by colleague Dale Johnson. It downloaded onto the Kindle in well under a minute. A good read. Thanks, Dale.
My breakfast meeting was with Nikki Baird, co-founder of Retail Systems Research, who really understands the retail space and digital signage’s past, present and future within it. She was speaking on a DSE panel that morning regarding measurement. We talked a bit about that, and she provided the insight that what agencies seem to be clamoring for is a measurement system for DOOH that is completely analogous to the broadcast model, and that we really need to revisit that kind of thinking. Hopefully, we will. It will be better for everyone.
During the day, as often happens during trade shows, information concerning competitors, customers and prospects came to us at our booth. As a very competitive individual, I tend to react strongly to that type of business intelligence, simply because I want to win… always. Who doesn’t? At any rate, one piece of information was particularly astounding. One of the well-known SaaS digital signage providers has apparently decided that out of the famous five P’s of marketing (Product, Price, Place, Promotion and People), they can only win new deals based upon price. They may be right. As such, they were offering to undercut their own famously low ball “rack rate” by 28% to total strangers, with a clear willingness to go 40% off if pushed. I had two potential customers that I consider friends share this with me on consecutive days, so it is far more than a rumor. How does one respond to that kind of clearly desperate sales effort? We chose to stand our ground, and emphasize that Product and People, plus another P-word, Partnership, contribute greatly to a deal and a relationship’s overall value. Value can not be measured by price alone, as so many people have learned the hard way. Both prospects agreed, and will ultimately make their own decisions based upon their own priorities. I felt like our response was appropriate, especially since any customer investing in a strategic relationship with a software provider has a stake in the ongoing health of their new partner.
That night, laying in bed, I scanned the channels, and landed on a PBS interview with Jeff Bezos, CEO of Amazon. Jeff of course was proudly holding a Kindle2, and the conversation centered on the new product. When asked directly about certain competitive products, both for Kindle and Amazon’s core eCommerce business, Bezos responded (and I paraphrase), “We choose to obsess about our customers, and not our competitors. If we do right by our customers, and focus our energies there, the competitive aspects will take care of themselves.” I smiled. Bezos had nailed it for me: our response to the competitive intelligence was the correct one. We should continue to obsess about partnership, product and people, and ensure that price reflects value. We should focus energy that may have been wasted on worrying about a competitor's moves, and use that energy instead to delight a customer. And we will. The calmness with which Jeff Bezos responded gave me a similarly calm feeling. Thanks, Jeff. You provided two out of the three good moments for me that day, as well as a guiding thought that will serve us well.
Side notes:
My first Kindle book purchase was Pirate Coast, by Richard Zacks, recommended by colleague Dale Johnson. It downloaded onto the Kindle in well under a minute. A good read. Thanks, Dale.
My breakfast meeting was with Nikki Baird, co-founder of Retail Systems Research, who really understands the retail space and digital signage’s past, present and future within it. She was speaking on a DSE panel that morning regarding measurement. We talked a bit about that, and she provided the insight that what agencies seem to be clamoring for is a measurement system for DOOH that is completely analogous to the broadcast model, and that we really need to revisit that kind of thinking. Hopefully, we will. It will be better for everyone.
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