TargetCast Stands Out from the Pack Again

Guest Contributor, Bill Collins, DecisionPoint Media Insights

TargetCast Networks, a fast-growing U.S. advertising-based Digital Out-of-Home network focused on casual-dining restaurant chains and coffee shops, ended the 3rd quarter by announcing a USD 6.5 million capital raise from two venture capital (VC) firms.

jmStLogoThis was the third big announcement by TargetCast during September 2009, following the announcement of its acquisition of Ripple TV and its advertising-sales partnership with Premier Retail Networks (PRN).

The $6.5 million is TargetCast’s second formal round of VC funding from two firms, Claremont Creek Ventures and Draper Fisher Jurvetson. According to the TargetCast press release, “TargetCast previously raised $6.3 million in a Series A investment led by Claremont Creek Ventures in September 2007. To date, the company has raised $12.8 million.”

The new funds will reportedly be used to expand TargetCast’s sales team and for other purposes designed to achieve growth.

The company also announced that John Fisher, a managing director of Draper Fisher Jurvetson, joins the TargetCast board of directors. The other members of TargetCast’s board include:

  • Nat Goldhaber, a managing director at Claremont Creek
  • Paul Straub, a principal at Claremont Creek
  • Dr. Peter Sealey, CEO and majority shareholder of The Sausalito Group, Inc and former chief marketing officer of Coca-Cola
  • Jerry Hall, the CEO of TargetCast

TargetCast Stands Out from the Pack

In the U.S. Digital Out-of-Home sector, some thoughtful observers feel that TargetCast is one of the networks that should “make the cut” during the next few years as many smaller, weaker networks fall by the wayside.

For those who are betting on TargetCast, they cite two main reasons for their sanguine view of TargetCast:

  1. TargetCast holds an important business-methods patent

    VC firms love patents. TargetCast’s patent, which the U.S. patent authorities granted in June of this year, covers the combination of a digital signal with a video signal, on television screens, for marketing to consumers.

    The patented system enables venue operators (bars, restaurants, etc.) to create and post their own branded messages directly on the existing TV screens (showing cable-TV channels such as ESPN and CNN) that customers are already watching in those venue.

    As the DailyDOOH reported in June, “These 15-second venue promotional spots alternate with national and local ads approximately every two minutes, delivering a Nielsen-measured audience with an exceptional advertising recall” and with what TargetCast calls “exceptional . . . purchase-influence scores.”

    “Purchase-influence scores” is a market-research term which suggests that bar/restaurant patrons have reported to market-research interviewers that the advertising shown on the screen had a significant impact on their intention to buy the products advertised on the screens.

  2. Jerry Hall, TargetCast’s CEO, has deep experience and credibility in the Digital Out-of-Home market

    Hall is one of just a handful of U.S. media executives who has had extensive experience leading Digital Out-of-Home networks over a period of about two decades.

    From 1994 to 2001, Hall served as senior vice-president of sales and marketing at PRN, where he, “was responsible for launching the company’s advertising sales on satellite television networks,” the TargetCast website reports.

    Hall has also worked for Convergent Media Systems, a communications-services firm that provides the satellite infrastructure for Channel One.

    From January 2004 to November 2007, Hall served as regional director for sales and marketing solutions for XM Satellite Radio.

    During the early pioneer days of the Digital Out-of-Home medium, Hall worked for Whittle Communications, the creators of Channel One. Founded in 1989, Channel One continues to beam news and advertising into middle-school and high-school classrooms across the USA. In 1994 – the year that Jerry Hall joined PRN – Chris Whittle, the founder of Whittle Communications, sold the networks to Primedia for a reported price of approximately $250 million.

2 Responses to “TargetCast Stands Out from the Pack Again”

  1. Bill Collins Says:

    Good morning. This is Bill Collins. I wrote this article about TargetCast

    One of my sources for this piece told me that the new patented technology mentioned in this article is really quite a breakthrough. Obviously, if TargetCast is the only U.S. Digital Out-of-Home network operator that has the technical and legal capability to insert private venue-specific content on to the screens that are already playing standard cable-TV fare at bars and restaurants, that IS a big deal, at least here in the USA

    I would like to invite readers of the DailyDOOH to comment on this question. Specifically:

    Do you know if this TargetCast patent is is as strong as it appears to be?

    Is this type of technology being used outside North America (where this patent apparently has no force of law behind it) by any other Digital Out-of-Home operators?

    Are you seeing any other patented technologies being deployed around the world by Digital Out-of-Home network operators that appear to be significant enough to erect barriers to entry that would keep competitors out of specific types of Digital Out-of-Home venues in some national markets?

    Thanks in advance for your input.

    Bill Collins
    LinkedIn profile:

  2. Weston Hedley Says:

    I’ve studied the TargetCast patent extensively – yet while I did focus on intellectual property law while attending Stanford Law School, I’m a businessman now and not a member of the bar. So I will caveat my opinions as being that of a layman, not a lawyer:

    Q1: Is TC patent as strong as it appears to be?
    A1: The claims do read quite broad – though do not seem to extend to either closed-captioned situations (e.g. DOOH installs at a baseball stadium where only the local baseball game is being shown non-remotely) or to a broadcaster’s ability to integrate squeeze ads into their broadcast stream. But for the vast majority of DOOH applications that most people are thinking about, it is one of two ways to get the job done if you’re trying to get a digital display to serve “double duty” as both regular TV (showing content) and DOOH display (showing ads).

    Why one of two ways?

    The major limitation to the TC patent is clearly stated in the initial claims: it is for placement of squeeze/ancillary ads alongside broadcast content in a manner that is completely “independent” of the viewer’s choice/control of the primary content.

    The other approach is to have the placement of ads be “dependent” upon the viewer’s choice (namely channel selection). This requires media-detection technology to understand what channel is being watched (e.g. a slightly different application of what Nielsen Media Research does to understand channel tuning for audience measurement purposes).

    Based on experience from my strategy & technology consulting at Nielsen – with a focus on new approaches to audience measurement – I invented a means of doing the “dependent” approach to DOOH squeeze ads.

    For some situations, I believe that my “context dependent” approach will be more valuable, as it permits better targeting of ads (e.g. if bar is watching ESPN then sports ad is shown, but if watching CNN then financial ad is shown).

    But, frankly, whether TargetCast’s patented or my patent-pending approach is more valuable/appropriate will vary by specific venue. (For example, a gym may want to show only energy drink ads, regardless of what channel is being watched, such that TargetCast’s approach is preferable).

    Q2) Being used outside of North America….where no force of law.
    A2) I’m not aware of either the “independent” or “dependent” approaches being used outside US. But I would not assume that TargetCast has not filed for patent coverage in other countries — perhaps they did and simply haven’t disclosed it yet. There can be significant lag times between different countries’ issuance of patents.

    Q3) Other patented technologies?
    A3) I’m only aware of TargetCast’s and my own (both my original invention and the improvements, including those that I’ve discussed with the CTO of a strategic partner/licensee). However, I believe that some of the larger juke box companies (like TouchTunes and Rowe) have large enough R&D budgets — and are familiar with the role of IP in competitive strategies — that they might have some pending patents up their sleeves. However, my guess is that any such inventions are probably narrower in scope compared to TC’s or my own.

    It is my belief that patents will be a huge driver of competitive dynamics in the DOOH space over the next few years – in terms of recruiting venues, satisfying both viewers and advertisers, and obtaining price premiums / economic rents that will make a huge difference as the DOOH industry consolidates.

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