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Navigating Digital-Out-of-Home with Michael S. Quinn
Greetings…Please visit my new blog by clicking here
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.
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:
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. 😉
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.
Vote on what you want to see next on “The Real DOOH”:
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.
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.