What Customers Want

Earlier this year, I sat on a panel that was scheduled to discuss, “How to sell advertising on your place-based network.”  As I pointed out at that audience, what we “want to sell” has no bearing on our success, the real question is, “What do customer’s want to buy?”  As always, the answer to this question is influenced by many factors, but today, the largest factor influencing buying decisions is still the economy. 

Take for example, a real-life purchase decision that all of us make nearly every day, the decision of what food products to purchase and to consume.  One of my colleagues from AC Nielsen estimates that a 10 percentage-point change in unemployment will cause both a 60% increase in pasta consumption and a 60% decrease in Sushi consumption.  Why?  Because Pasta is a tried and true product with a strong value proposition…whereas sushi can be a somewhat “risky” product with an often poor value proposition. 

In today’s media buying economy, the same motivations are playing out, as buyers are reverting to media that is more “known” and to media with more established value propositions.  The question that faces all of us in emerging media is, “How do we become the ‘pasta’ of our clients’ media plans vs. the sushi?”  The answer is to give our clients what they want…and today, our clients want: Reach, Response and Captive Audience…in that order”

First off, let’s dispose of the myth that TV is dead or dying.  A simple analysis of Jack Myers’ most recent media forecast, www.jackmyers.com, highlights the fact that TV, is doing just fine thank you.  In fact, TV spending for 2009 is forecast to be $77.8 billion, or 36% of all media spending.  This compares to 2006 spending of $77.4 billion…basically the same spending as today.  Yes, TV is a harder business for the networks than it was 10 years ago, but it is still the best way to quickly reach a mass audience and marketers understand this.  On the flip side, Consumer Print Magazines, the darlings of the 90s, are down 20% vs. 2006.  As times get tougher, marketers are now turning away from a media that was once heralded for its “targeting”, but is now thought of as “less relevant”, and “less rigorously measured”.  What does this mean for how you position and sell your place-based network?

Almost as strong as the demand for “Reach”, is the demand for “Response”.  To date, the Internet has done the best job of delivering on this demand, especially for products sold on-line and for local products and services.  Since, 2006, Internet spending has risen 44%, while spending on other direct response and local media (such as Yellow Pages and Newspapers) has decreased shockingly.  Since 2006, Newspaper and Yellow Pages revenues have decreased by over $16.9 billion USD.  That’s a $16+ billion loss in just 3 years!  This said, however, the Internet is not necessarily “invincible” and has yet to prove itself indispensable for a variety of different client types.  According to TNS 2008, the top-10 spenders on the Internet invest > 65% of their dollars on-line, and < 5% of their dollars on TV.  At the same time, the top-10 spenders on TV invest < 5% on-line and > 65% on-air.  Why is this?  Simple, the top internet advertisers sell their products on-line and the top TV advertisers sell their products in traditional brick and “mortar locations”.  What could this mean for networks that are portable to the point-of-purchase (retail and /or mobile)?  The implications for size of addressable market…and positioning seem pretty clear.

Then there is Digital-Out-of-Home, which is often asked to deliver “Reach”, “Response” & one more additional ingredient, “Captive Audience”.  In a recent study by PQ Media (PQ Media, 2008), marketers and advertisers chose “Viewer Engagement” and “Time Spent with the Network,” as the two qualities they most value in a DOOH Network.  No other network qualities were even close, not “Reach”, not “CPM”, not “Targeting.”  As a result, it is no surprise that National CineMedia, Screenvision and Captivate continue to be three of the largest and most thriving companies in our industry.

On top of the need for Reach, Response and Captive Audience, our customers have one additional, equally compelling need….the need to keep their jobs.  Last year, in the month of December alone, nearly 20 thousand people lost their jobs in the advertising and media industry (Bureau of Labor Statistics, December 2008).  That’s 20,000 jobs lost in 1 month.  Now, more than ever, it is imperative that our media is a SAFE buy.  To this end, the OVAB (www.ovab.org) has worked with Agencies, the ARF and the Research Community to develop and publish the “OVAB Audience Metrics Guidelines”.  These guidelines are designed to make it easy for buyers to evaluate our networks and to compare them to traditional media properties with known value propositions.

Simply considered, we are an emerging “product” in a market of large established products.  These established products have very specific, known value propositions…and we must compete and win on these value propositions.  We will not be successful if we continue to talk about ourselves and set ourselves apart from other solutions simply to set ourselves apart.  We must put ourselves in the place of our constomer…understand how she feels… know what she needs…and help her make the best decisions for today.

And today, the decision is between “Pasta and sushi.”  You choose.

Summer Reading List – Future Media and Marketing

A lot of you have been asking what I will do when I leave PRN.  My simple answer is that I will find a young business with great potential and help it grow.  Finding this business in today’s environment, however, is not as obvious as it might have been a few years ago.  That said, I am starting to see a number of opportunities that have great potential over the next 2-5 years.  These high-potential opportunities include:

• Advanced marketing analytics…that truly measure how marketing works to build business value
• Monetization of social (gaming) applications…vs. the monetization of social networks that “host” them
• Mobile finally utilizing full-motion media to its fullest…enough said on this
• Cable fighting back at mobile…utilizing a more reliable and standardized platform than its rival(s)
• The transformation of the traditional media network…in ways that give consumers more control and programmers more ownership over the delivery of content
• Rapidly scaling, low capital, place-based media…leveraging personal devices & existing infrastructure
• A resurgence in Hispanic and local marketing…more important and more under-served than ever before

What does this mean for Digital OOH?  I think it means that we (soon to be “you”) need to look outside (far outside) of the current industry to learn what is working in emerging media and to understand the needs that are being met by winning solutions. 

If you are looking for a Summer reading list I might suggest ”cramming” on the following companies: M-Factor, Zinga, Pandora, MobiTV, Comcast Digital, CBS Interactive and TargetCast.  I know I will be studying up on these companies and on the companies / industries they abut.

Enjoy your reading.  I will see you on the beach.  

Michael

In the Future, There will be No Networks

As you saw in my last post, Broadcast TV continues to be the dominant media for brand advertising.  This fact is fueled by two major trends: (1) More consumers are watching more TV than ever before, and (2) Marketers understand that TV is still the quickest way to build reach and awareness for their products.  Why then, are so many industry experts and pundits forecasting the demise of “TV”?

In a nutshell, the two biggest issues facing traditional “Networks” are Business Model and Consumer Demand. 

Let’s start with business model.  Every day, hundreds of millions of people (in the US alone) watch almost one billion hours of content on their TVs.  In effect, these people are consuming a “product” that is “manufactured” by content providers.  In some cases, consumers pay for this content (think HBO, or ITunes), but in more cases than not, consumers are getting their content for “free”.  Enter the advertiser.  In effect, advertisers are funding the expense of consuming and /or producing content and are underwriting the marketplace.  In an overly simplified view of the marketplace, consumers are paying content producers to view their content, and advertisers are paying consumers to watch their ads.  So, what is the role of a network?

Simply put, the “Network” is a marketplace that passes products and money between parties.  Today, the most successful media networks are those that create the most robust marketplaces…marketplaces that bring together the most desirable consumers, the most desired content, and the most willing advertisers.  In a strange way, networks are like retailers.  Their long-term success is driven by their ability to reach a large number of eager consumers, with great product selection, delivered in an enjoyable shopping experience, at a competitive “price”.  It’s these last two areas “shopping experience” and “price” where traditional networks are at risk.

Let’s talk about “price” first.  Like all businesses, the ability to deliver a competitive price starts with an ability to operate with a competitive cost structure.  With that in mind, let me ask you, “What value does NBC’s investment in ‘the Peacock’ provide to consumers in the simplified marketplace we described above…and what value does a skyscraper full of $1 million+ advertising executives provide to the Marketer?”  This is an “exchange” and the most effective exchanges rely on transactional efficiency and financial transparency.  That is why “Craigslist” (www.craigslist.com) is killing an entire industry (newspapers) and why traditional media networks are similarly at risk.

That said, traditional networks have some major advantages on their side: Broad consumer distribution, access to excellent content, and inertia (especially in the advertising marketplace).  For a new network model to emerge, it must provide a superior experience to one of the major players in the marketplace…and the most likely player to tip the marketplace…is the consumer.  

Needless to say, a lot has been said about the need for consumers to be able to select the content that they want, when and where they want it…but before we skewer the traditional networks on this front, it is important to acknowledge a few key facts: (1) Traditional networks (in aggregate) already offer a lot of choice, (2) Many consumers don’t want “unlimited” choice, and (3) There will always be a demand for “first run” entertainment events that we can all enjoy together and relive at the same time…be that a sporting event, an episode of American Idol, a news event, etc.  In my opinion, the real risk for networks is their inability to aggregate all the information and entertainment that I want on 1 screen.  Let me ask, “How many consumers really need 3-panels of the Weather Channel playing on their TV screen at the same time?”  What I want is first run entertainment in the main panel of my TV screen, an ESPN ticker in the lower banner of my screen and the Weather Channel in a side-bar.  In fact, I want the side-bar of my TV screen to cycle between the Weather Channel, and the landing pages for my Facebook, my Linkedin, and my Tweets.  “Impossible,” you say.  Not true, it is already starting to happen today.

Take for instance, this blog page.  It contains the content in this post, links to half a dozen web sites and live RSS feeds from 3 content providers that are updated all day, every day.  I built this site, in 1 hour, using a drag and drop interface developed by WordPress (www.wordpress.com).  Now I grant you, that a blog is an outwardly facing publishing tool, but I have also been playing around with my new Chumby lately  Yes, my Chumby (www.chumby.com).  A Chumby is a $199 wi-fi device that operates on any network and plays multi-stream content that I authored on line…again in less than 1 hour.  The channel that I am playing right now has (1) Dave Letterman’s last top-10 list, (2) Tomorrow’s weather forecast, (3) News from the NYT, (4) My tweets, (5) My Facebook, (6) A live traffic-cam feed, and (7) My personal Pandora music channel (www.pandora.com).  Let me ask again, “How many streams of Weather information should I have to watch on my TV screen at the same time?”  Which brings up an interesting point, I don’t even have to watch my Chumby channel on my Chumby device.  I can watch it on-line from anywhere.  How long do you think it will be until I can get this channel…MY CHANNEL…on my phone…and how much longer until I can get it on the set-top-box provided by my cable company in my home? 

Indeed, it is possible that the “cable company” may be the platform where the concept of a Network first changes in a huge way.  My cable company already has an addressable devise in my home, they are already connected to an enormous pool of content, and they have conditioned me to the fact that is worth money to watch quality content.  Indeed, the cable companies, before the cell-phone companies and the internet companies, have the potential to operate an efficient and transparent media “exchange” with all of the tools required to be successful media marketplace.  My cable company is probably the best place for me to build the ultimate MIKE’S Channel…and once I build Mike’s channel, my cable company may help me transport that channel to my cell-phone or to any other personally addressable devise.

For years, the TV industry has bemoaned what they call, “the multi-taking consumer”.  This is the consumer who watches TV, surfs the internet and listens to their IPod all at the same time…basically everybody under 30.  Well guess what?  It is time to stop moaning and let consumers do all of these things, all at the same time, all on the biggest screen in their home…the TV.  When this happens, I promise (sample of 1) that I will never turn off my TV and that I will stay glued to that screen because it gives me everything I want in a neat and easy package.

Yes, the role of the “Network” will change.  In fact, it could be exponentially further reaching than it is today.  There will just be a lot less Peacocks and a lot less $1 million a year advertising executives running around.

Next on “Real DOOH”

Vote on what you want to see next on “The Real DOOH”:

1. “Social Media…Where People Socialize”:  A lot of time has been spent talking about how mobile can “enhance Digital Signage Networks”.  It’s time to flip the paradigm and elevate our conversation.  Isn’t one of the most important questions, “How can place-based-networks extend and enhance the consumer’s social networking experience…where those consumers socialize?”  A few companies in our space, have the potential to answer this question.  Learn who…and how.
2. “It’s a Buyer’s World, We Just Live In It”: During tough economic times, consumers are becoming even more selective in how they spend their hard earned money.  This is no less true with our “consumers”, those who buy media.  It’s no longer enough to ask, “How do I sell my place-based-media?”  The real question is, “What do today’s Media Buyer’s want from their marketing solutions?”  A simple analysis of media buying trends since 2006 provide insight into what it takes to be relevant in today’s market-place.
3. “It’s the Economics Stupid”: In 1992, Bill Clinton focused his campaign on a simple message (attributed to James Carville) to reframe the Presidential debate and and to upset GWBI, who was previously thought to be “unbeatable.”  The message…”It’s the economy stupid.”  Learn how a new entrant into our space: TargetCast Networks, may be reframing the “debate” in our industry by cracking one of the biggest economic barriers to growth…Cap Ex.
4. “In the Future, There Will be No Networks”: In the world of traditional media, one of the biggest questions revolves around the role of the “network.”  Many believe that “consumers” will continue to purchase more of their media directly from “content providers” radically changing the roll of the “network”.  Learn more about the implications this will have for “traditional networks” and for our customers “the advertiser”…and understand the potential implications for the future of place-based media”.

User Generated Place-Based Media

What is it about DANOO http://www.danoo.com/ that I find most interesting?  It is the user generated content.  Every morning I get the same coffee and bagel at our local “Lee’s Deli”…and every morning I am engaged by a new piece of local, user generated content playing on a Danoo screen at this deli.  This content ranges from art work produced by SF Academy of Art students, to a video clip of a 5 year old “ping pong prodigy.”  The Danoo experience always feels engaging, authentic and local to me…and a little bit “edgy” as well.  A great example of this is the occasional “parkour” clip that keeps the people at Lee’s glued to the screen.   Check out Parkour below and checkout Danoo at your local deli in Boston, Chicago, LA, NY and SF.

http://www.youtube.com/watch?v=jquXcwooV6A

Clarity and Communication the Most Important Challenges Facing our Industry: Excerpt from DSE Question of the Month

One of the unique characteristics of our industry is the complex relationship that exists between venue owners, marketers, agencies and digital network providers. These relationships, like many others, are best served by frequent and open communication…and the basis of communication is language. Unfortunately, as an industry, we have made very little progress when it comes to speaking the same language.

When I started in our industry 13 years ago, the biggest concern of clients and partners was “cost”. As costs came down that concern morphed into “compliance”. As compliance improved, attention turned to “content”. Now that we have handled the basics of becoming a real and reliable industry, our current challenge is “confusion”.

As we talk to our clients and partners today, their number one challenge for the industry is to become less confusing. This is particularly true among marketers and agencies who meet with multiple vendors every month, where no two meetings ever use the same language.

Nearly every client tells the same story: “I meet with dozens of companies in your space every year they all use different terminology to describe their networks. If our meeting is scheduled for 30 minutes, we invariably spend 29 of those minutes just trying to understand and agree on the terms they are using to describe what they deliver.”

Let’s face it, any relationship where you spend the majority of your time arguing about what words mean, is not destined to become a healthy relationship.

To that end, over 30 companies (along with agency and client advisors) have joined together to form the OVAB (Out-of-Home Video Ad Bureau). The simple mission for this group is to “make it easier for clients to evaluate, plan and buy OOH Networks”. If you have not looked into the work of this group, I urge you to do so. Although we all have differences in how we sell, position and talk about our networks, we must strive for some level of consistent terminology regarding the basics of what we deliver to our clients. Visit www.ovab.org

The only way we will improve our communication within the marketplace is to improve the communication among ourselves.

4 Examples of Exceptional Digital Signage: DSE Question of the Month

Recently, I was asked to cite 3-4 exceptional examples of placed-based digital signage.  As an employee at PRN, I was tempted to answer, “The Walmart Smart Network, PRN’s TV Wall Network, and PRN’s Checkout Network.” After all, these networks are widely deployed in over 6,500 stores and reach consumers where they make over $300 Billion in purchase decisions every year. Visit www.prn.com.  That said, I recognize that this opinion may be a “little” biased, so I have decided to highlight 4 of my favorite non-PRN VANs.

To that end, I’d like to recognize four networks I think do a great job meeting the different needs of the various constituents of a place-based network:
o Consumers
o Venue Owners
o Advertisers
o Network Providers

I have arranged these examples in this order of “priority” — from consumer, to venue owner, to advertiser, to network operator – because if the consumer’s needs are not being met, then the venue owner will not invest in the network. If the venue owner will not invest in the network, then there is no media to sell to the advertiser. If there are no advertisers (or source of monetization), then the network operator has no business model. If the network operator has no business model, then the industry cannot grow.

In terms of meeting consumer needs, one of the “coolest” networks I have ever seen was in Hollister, a clothing retailer for teens. This retailer used two banks of TVs on opposing walls to display live video from Hermosa Beach, CA (one wall showing images shot looking north up the beach and another wall showing images looking south). Ironically, the first time I saw this installation was in the middle of winter in a mall just north of Chicago. I parked my car in the middle of a icy parking lot, hustled into the giant mall, and made my way to the Hollister store which was located on the basement level, sandwiched between dozens of other retailers. The second I entered the store, I knew I was somewhere different. Everything in the store felt authentically hip, young, and alive…and backing up the experience were vivid images of sunny Hermosa Beach, CA…delivered to Chicago, IL…in January…complete with real beach sounds and colors, broadcast live all day, every day. By observing the clientele, it was clear that this was the best place within miles to be a teen. Visit http://www.hollisterco.com/hol/flash/club_room/clubroom.html

When it comes to meeting the needs of the venue owner, nothing can touch the variety of networks at play in the Airport. Today, imagining an airport without digital media is almost impossible, but 10 years ago, the airport was about as sophisticated as the bus depot. In my most recent trip to the airport (in Oakland, CA), I took the opportunity to count the number of screens used by the venue owner(s) to communicate with customers. This is the kind of exercise I do in my free time that makes my wife raise her eyebrows. In total, I counted 340 screens. Three hundred and forty screens in an airport that barely cracks the top 40 in most traveled airports in the US! There were screens behind every check-in counter (40), screens that helped you check-in on your own (74), screens that displayed all the departures and arrivals (82), at the TSA bag check (4), in various retail venues in the concourse (40), at the gate (69), on the ATMs (23) and at baggage claim (7). On top of that, I counted 448 personal screens in use (PDAs, laptops and personal media players), as well as 197 screens used by workers at the airport to order your McMuffin or assign you a seat. In all, this accounts for 985 screens, networked and displaying information in a 32-gate airport. Interestingly, I counted the most screens in the Southwest Airlines terminal, a company known not just for its frugality, but more importantly for its efficiency and understanding of today’s consumer.

In a recent poll among advertising planners, “Captive Audience” and “Targeting” were selected as the most two important factors in the evaluation of out-of-home networks. Is it any wonder, then, that “Captivate” continues to be one of the most successful advertising networks in our industry. This network targets hard to reach business decision-makers in their place of work while they are riding the elevator 8 to 10 times a day, 5 days a week, 52 weeks a year. Delivered in 7,000+ elevators, in 1,000+ Class-A office buildings, Captivate continues to be a network that our clients mention when I ask them about their favorite vehicles. Captivate also has the benefit of high awareness, due to the fact that its clients often work in Captivate office buildings. That said, high awareness is only a good thing when you deliver on your promises every day…and Captivate has. Visit www.captivate.com

Last in the equation is the network operator. In this area, there are two types of networks that consistently interest me, those with increasing levels of “intelligence” and those with reduced costs. On the “intelligence” front, I am particularly proud of the “Walmart Smart Network,” a partnership between Walmart, PRN, Studio2 and DS-IQ. This network utilizes an end-to-end IPTV network, custom programming, and real time POS optimization to deliver a learning network for shopper marketing. That said, I promised to avoid promoting PRN in this response, so let me highlight an interesting network delivered by “TargetCast Networks”. TargetCast utilizes the existing TVs in bars and restaurants to deliver its messaging. It does this without interrupting the programming already playing on these TVs and, as a result, Targetcast is able to dramatically reduce not only Capital Expense, but also Operating Expense. TargetCast is still a very young enterprise and has to clear many of the hurdles we have all had to surmount, but I’ll bet those hurdles look a lot “lower” when you have taken out a huge percentage of your costs. Visit www.targetcastmedia.com

As you can see, when networks meet the unique needs of their customers, then the venue owners are willing to invest the substantial capital costs required to build and maintain these networks. With an engaged customer base and a robust network in place, advertisers are willing to spend the money necessary to reach and connect these customers. With a solid business model in place, network operators will profit and reinvest in their networks and in the industry at large, while also encouraging, directly or indirectly, others to do the same. And with this, the industry will continue to grow.

Verticle vs. Horizontal Content: Excerpt from DSE 2008

Panelists: Dan Hong, Gordon Montgomery, Michael Quinn (Chief Strategist, SVP Research @ PRN)

Moderator: Mike Fowler

Why do some networks use a vertical screen orientation?  Is that a more difficult content model to work with?

(Michael Quinn) We utilize both vertical and horizontal orientations.  For us, it comes back to the shopper’s mind-set and mode.  For example, an application focused on Apparel shoppers who are in a “browsing” mode might be vertical.  In this instance, we need to deliver quick, iconic images that enhance the “apparel” credibility of the retailer.  To do this, we will borrow from the structural and creative architecture of the #1 medium in Apparel…print…which is a vertical medium.  On the other-side of the spectrum, an application focused on HDTV shoppers who are intently focused on the content we are showing has to be 16X9, 1080i and horizontal.  The content also has to resemble the content they will most likely watch on these sets in their own homes (sports, movies, nature and gaming). Visit www.prn.com/homeelectronicsnetwork.html.

In both of these cases, orientation is driven by the shopper, which actually makes each content model the easiest to work with since our partners (who are also focusing on these consumers) are working in the same orientations as we are.

User Generated Content: Excerpt from DSE 2008

Panelists: Dan Hong, Gordon Montgomery, Michael Quinn (Chief Strategist, SVP Research @ PRN)

Moderator: Mike Fowler

Are there now ways to get content for “free,” especially with the rising presence of such sources as YouTube and all kids of amateur operations?

(Michael Quinn) One of the coolest “networks” I ever saw was in Hollister, a clothing retailer for teens.  They had a huge bank of TVs on one wall and another bank of TVs on the opposite wall.  One bank of TVs had live video from a camera that was pointing North up Hermosa Beach.  The other wall played video from a camera pointing South down the beach.  The first time I saw this was out-side of Chicago some time during the winter.  I parked my car in the middle of a huge cold parking lot, walked into a giant mall and then made my way to the Hollister which was on the basement level, something like 15 shops on the right.  The second I entered that store, I knew that I was some-where different.  Everything in the store screamed hip, young, alive teen-ager.  Backing up this experience was Hermosa Beach…in Chicago…in January…with beach noises pumped in….real beach noises and real beach images, live from Monday at 11am to Sunday Afternoon….Always evolving….Always real.  By observing the clientel, it was clear that was the best place within miles to be a teen.

Nobody came up with that idea by thinking about “free content”.  They started by thinking about what their brand stood for and how they could truly enhance the shopping experience for their core customer.  Similar, powerful uses of free content will start with the same thinking.

Frequency of Content Updates: Excerpt from DSE 2008

Panelists: Dan Hong, Gordon Montgomery, Michael Quinn (Chief Strategist, SVP Research @ PRN)

 Moderator: Mike Fowler

 How often does content need to be updated?

(Michael Quinn) Topical content such as news and weather is updated daily, or even multiple times a day.  Content related to merchandising calendars (ex. Back-to-School) is updated in-synch with each client’s calendar.  The remaining “general interest” content is updated depending on the visit frequency of the customer.  For example: A retailer that is visited twice a week might have this content updated weekly and a retailer that is visited twice a month might have it updated monthly.  This frequency can even vary within a retailer.  For example, content at a retailer’s Checkout www.prn.com/checkouttv.html update more frequently than in their Electronics Department (based on the frequency of customer visits to those unique areas).