Bill Collins post earlier this week ‘A Watershed Moment For DOOH Media [1]‘ has certainly polarised folks in the industry – especially analysts and a number of well known commentators.
David Weinfeld wrote a superb piece over on his blog ‘Is Gerba or Collins Right? – Further Examination of the Danoo-Ideacast Deal [2]‘ ostensibly in reply to Bill Gerba’s post ‘How Significant is the Danoo-IdeaCast-National CineMedia Deal? [3]‘
All this debate and discussion is excellent and we agree with Bill Collins; he told us yesterday “It’s good, I think, that people are thinking about what this means for the industry. Because of this Great Recession, people have time to stop and think about where were are in this industry and where we’re doing, just as people in the broader political economy are asking the same questions”
Anyway, in our usual style, here’s our take…
- IdeaCast was in a bad way – there is no doubt in our mind that it had a ‘challenged economic model’ at the very least. Folks like Credit Suisse had poured USD 20 million or so into the business, the former CEO and a bunch of other investors had also ponied up a few million more.
- When companies go bad and are forced to be subsumed by someone else that is the market telling you that something is WRONG!!
- Kurt Hall (appointed President, Chief Executive Officer and Chairman of National CineMedia LLC back in May 2005) basically bought the debt from Credit Suisse for USD 7 million and all previous equity holders were effectively wiped out.
- NCM did not swoop in to say “hey guys! we cannot wait to get in here – give us a little piece of the action” they got in to save some level of investment!!
- Even after that original NCM cash injection IdeaCast was in bad shape. IdeaCast had little or no idea of what networks and what venues (customers) it actually had and was often paying good money after bad on a number of ‘minimum guarantees’ (it then proceeded at one point to write to all its fitness centre customers and say “sorry deals off, we are not paying you anything any more”)
- IdeaCast was close, we believe, to being put into Chapter 11 during NCM’s stewardship
- Kurt had been shopping IdeaCast around for a while with little or no luck
As a side-bar, NCM itself is fighting its own battle – movie going is becoming less and less relevant out of home in the US.
HOWEVER the deal with Danoo is good for Kurt, good for National CineMedia and good for Danoo and here’s why….
- Kurt’s NCM has ended up with 20% of Danoo going forward AND as we firmly believe that Danoo will IPO in 3 years time that is a nice piece of equity to be holding!!!
- Danoo has ended up the biggest winner. The Jet Blue (airport) business now joins Danoo’s other foray into airports [4] which is a much nicer piece of digital screen network business to have than corner shops and convenience stores!!
All the accounts and blog postings we have detailed here are worth a read (or a second read). It’s also worthwhile detailing below a number of other points that Bill Collins added to his story which he believes will help the new entity be successful…
- Danoo have a very well-planned workflow to recruit, process and post user-contributed content (Manolo Almagro has also written at length on how good he sees the system they have put in place [5])
- Danoo also have a very well-planned and apparently well-executed workflow to enable content creation to be done via a cross-Pacific collaboration between creative folks in California and creative folk in East Asia,
- Danoo have a degree of localization that extends to hiring editors in the various cities (Boston, Chicago, etc.) to make sure that local culture and local mores are reflected on the screens (this is similar to how Captivate Networks operate and it has proven useful there too)
- There is now a link between the most profitable ad-based network in our industry (NCM) and a newer entrant (Danoo) that has very deep VC pockets (courtesy of Kleiner Perkins) and process innovation propelling it,
- Collectively the two organizations (Danoo and NCM) will emerge as leaders in our industry in the integration of Digital OOH screens with the web and mobile phones.
Whilst Danoo are likely now down to their last few million, Kleiner Perkins have deep pockets and with this latest investment / acquisition there’s no reason to think they won’t be pumping more money into their latest DOOH-baby !!!
Our final word on the subject is that Kleiner Perkins / Danoo have thought big, acted big and whilst they have effectively bought a ‘dog’ (i.e. IdeaCast) they have managed to work a great deal (really out of very little). Going forward, they now have the makings of a pretty good network.