Even with two skilled journalists and writers (err, and Adrian) covering last week’s Strategy Institute Digital SIgnage Investors’ Conference in New York it’s impossible to do an in-depth article on all of the speakers or indeed, do full justice nothing beats being there, Ed – on the event and how great it was.
However, we couldn’t help but make notes on numerous comments that stood out and here are our key takeaways for you from many of the illustrious speakers…Matthew Stoudt, CEO, Outcast, noted various things that have hampered the digital space: that traditional media is considered safe; there has been no standardized measurability; low barriers for entry; high fragmentation that adds to confusion for advertisers; and lack of scale or scope.
“The recession is one of the best things to have happened because it has made every advertiser ask for measurability, targeting and ROI,” he said. “Now we’re going to see scale and scope, and a streamlined playing field.”
Stoudt said that the joint venture of Outcast and PumpTop TV has helped reduce confusion for advertisers and has put the screens in a position where advertisers can see that what they are getting can equal what they’d get on a TV buy of ‘Grey’s Anatomy’ or other top-rated show.
Stoudt also announced that his company was severing its relationship with SeeSaw Networks.
Alan Schulman, chairman and CEO, U. DIG> The Digital Innovations Group, whose company develops new ad units for emerging media platforms, said bluntly that any agency that tells you they are a full service agency is lying. No one can do everything well.
He also stressed that the strategic side of business is where you build relationships, and added that the digital signage industry has to sell on CPMs that show how the product offered compares to TV and other traditional media.
Stuart Jacob, president of programming and creative services at CBS Outernet, who noted that passive media is evolving to meet today’s new market conditions and audience lifestyles, said of the digital signage industry, “We’re one step away from being ‘too much white noise’, so be invasive, but be careful.”
Suzanne LaForgia, OVAB president, said that the new industry Guidelines have been written in response to having agencies saying, “How many people are watching your network? Give us audience numbers.” The Guidelines answer with audience metrics allowing comparison of digital with other media.
“Agencies don’t want to know how many people are walking by but how many are actually watching,” she said. “All networks have to do this in a consistent way. Other figures can be provided, but you need the basic building blocks.”
Dominick Porco, chairman and CEO, Adspace Networks, who outlined the 34 studies his company has done – “necessary to convince Madison Ave.” to use his company’s offerings – stressed the need of good content to engage the customer.
“We sell the ‘place’, but content must complement the place,” he said.
Ken Sonenclar, managing director of media bankers DeSilva+Phillips, said that global mergers and acquisitions reached $1.94 trillion in the first half of 2007, and $.96 trillion in the first half of 2008, but that private equity basically left the market in the past 18 months.
“Pricing in general has declined,” said Sonenclar. “There’s been no leverage out there to do a deal. In the out-of-home sector, the marketplace came to a standstill. Not just equity has been down, but business itself.
“However, there’s no longer a panic. There’s a little money out there, whereas a few months ago, all media were holding on to their cash. It’s now possible to make a deal, but price is a big tug-of-war between buyers and sellers.”
Sonenclar noted several factors that investors look for in making a possible deal:
- Is the company expanding geographically?
- Is it looking for talent?
- Does it reach high value demographics?
- Is it participating in evolving categories?
- Will it strengthen offerings?
- Will it acquire technologies?
On the other side, if you are planning to sell, it will be difficult if you are dependent on one or two clients. Among the things you should have are deep and diverse client relationships. Further, buyers are going to want to see growth; a smart management team, multiple revenue streams; recurring revenues; realism in evaluation terms; and an understanding of the buy vs build equation.
Echoing similar points was Kevin Covert, president of Covert & Co., who listed points that investors and buyers are focused on:
- profitable business models;
- attractive valuations from the investor’s side;
- repeat advertising clients;
- synergies with an existing digital OOH portfolio or other media assets;
- flexibility in controlling costs;
- low capital requirements (equipment is already installed);
- current financial perfermance vs that projected;
- proven management teams.
“And buyers want acquisitions that ‘move the needle’,” says Covert, adding that recent merger and acquisition activity points to industry consolidation. He also said that buyers/investors are guarded about their interest in space; that financial markets have slowed down dramatically; there is continued pressure on valuations; and there is heightened focus on current metrics vs projections.
Marci Ryvicker, vice-president, Equity Research, at Wachovia Capital Markets, says that the market seems to have bottomed out and stabilized, She forecasts a 2% outdoor advertising growth in 2010.
Ajay Chowdhury, CEO, EnQii, said that, if you are in investment negotiations, don’t be afraid to take something off the table if it is hampering the go-ahead.
“Be creative,” he said. “Most venture capitalists don’t think Digital Signage is sexy, so it must be seen in the best possible light.”
Ana Stewart, CEO, i-design Group, whose advertising on ATMs in the U.K. has expanded five-fold in the past 12 months and has already expanded to Greece, says that the company is now looking at expansion into France and Canada.
“Canada has a similar banking system as the U.K., with a few big banks,” Stewart told DailyDOOH. “It would be an easier market to develop than the U.S. where there are dozens of smaller banks. And most of the technology is compliant and able to deliver advertising.”
Laura Davis-Taylor, founder and principal, Retail Media Consulting, said that one of the barriers to getting good digital signage in retail outlets, is that “there are often too many cooks in the kitchen.” If the departments could all get together on what they want and need, take one model and use it for everything in the store, similarly to how everyone makes the one model of the Internet work for them, it would be better, she said.
Beth Ann Kaminkow, president and COO of TracyLocke, talked about today’s changed consumers, what they need, and what are the touch points when they are on the path to make a purchase.
“Understanding that path-to-purchase will shift marketing and media priorities,” she said. Budgets will increase for search, comparison shopping and in-store shopper marketing. “It’s the role of the marketing services company to help the supplier win in-store.”
“There’s huge mistrust in brands (trust fell from 51% in 1997 to 21% in 2008). Some of those who held onto their equity (eg. Starbucks) are now experimenting with new media as they fight for survival. Brands who do well with new media create excitement in the marketplace.
“Marketers are spending and messaging at the moments of maximum influence. Many consumers haven’t decided what brand they’ll buy. They may have a loyalty to a brand but will consider others during the active decision stage. But a lot will go to a store with the intention to buy and they don’t.
“Advertisers should be aware that the Superbowl gets 96 million viewers once a year, yet Walmart, in 2008, had 140 million potential viewers of its screens every week,” Kaminkow said.
Thanks to DIgital SIgnage Universe for the pictures shown here