In the first installment of a new feature, entitled “CEO Spotlight”, we welcome Christian Vaglio-Giors, CEO of Neo Advertising, Geneva who answered 10 questions that you put to him…
- Neo Advertising has been very aggressive in expansion and acquisition in the last few years, what is your strategy for more growth going forward?
Neo operates at the moment in 5 European markets and Canada. The company is naturally growing at a low three digit rate but is aiming at a mid three-digit rate. To achieve this we need not only to recruit the best talent to strengthen Neo sales and business development teams but also to be able to implement an inorganic growth strategy. We expect Neo to enter 3 or 4 new European markets by acquisition during the year and therefore further establish its leadership.
- Is there anything specific that Neo Advertising will be focusing on in 2008?
Our primary objective as a Group is to implement synergies, share knowledge and establish an international advertising sales platform. At the same time we would like to help establish a European digital signage organization / association aiming at institutionalizing digital signage across the continent. Initiatives like OVAB in North America are definitely useful and would speed up the establishment of digital signage in some conservative European markets.
- Neo Advertising’s deal with Traffic in Canada was ground breaking, do you think their will be other digital – traditional deals within the industry?
Media is a very competitive market with high entry barriers. As a new player with new business proposals it takes three to five years to establish a new media proposal. As a digital screen network we don’t have that much time since one needs to achieve a two to three-year pay back period. As a consequence one has to explore any strategic development that would help a network reach the next level and achieve decent occupancy rates. Merging with traditional media owners, as long as we cover the same ground, will definitely help any transition from traditional to a mix of traditional and digital and is definitely a very sensible business decision.
- Does Neo Advertising have an exit strategy? Trade sale or IPO?
There is no exit plan at the moment. The vision and energy of Neo management team can drive the company much further. Neo has a solid shareholding which is supporting the development plan and firmly believes that as an independent company Neo can grow much faster than being part of a larger Group. Going public is an open option that would be seriously reviewed when Neo decides to enter the US market.
- What does Neo Advertising think are the biggest challenges facing the Digital Out of Home industry?
Although the merits and relevance of digital screen networks are recognised, as a media it is not accepted yet. To establish digital screen networks in the media-mix one definitely needs to improve the reach and the penetration whilst making it easier to buy and improving on its standardisation. Digital out of Home is much too much fragmented with no real prevailing standards. Planning and purchasing Digital out of Home is more complicated than any other media. It is our role as pioneer in Digital out of Home to set the rules and make sure any network adopts the same standards in terms of format and selling strategy.
- The UK is perhaps the second largest market for signage in Europe and yet you are not represented there. Do you have any plans for the UK?
The UK market is top of Neo’s to do list. Over the last 3 years we have met with and analysed several UK companies. The UK is an extremely expensive and wild market. I am a strong supporter of a market situation where competitors openly discuss and collaborate together in order to establish a stronger offer resulting in overall higher margin. When I look at the financial consequence of the fierce competition that many UK companies are engaging in, I am afraid not many of them will survive over the mid run unless a strong player takes the lead to organize and consolidate the UK market. Neo is keen to do that and be that player.
- Your software supplier BroadSign’s ASP / SaaS Business Model means that they probably have to have, say 5,000 nodes in order to reach profitability and we understand that they would want that before themselves doing an IPO. Neo Advertising are probably BroadSign’s largest customer (and may remain so for sometime), what do you get out of them doing an IPO?
I am not privy to BroadSign’s financial records and funding plan. BroadSign provides Neo with a scalable and reliable solution at a fair price. I am personally a strong supporter of BroadSign ASP model as it makes Neo’s life easier. I see many opportunities and challenges in the near future for software suppliers for ad-driven Digital Screen Networks – consolidation will intensify and a turnaround in the revenue model may take place in the next two years. By going public BroadSign would strengthen its capital base while having access to fresh cash to capture the opportunities that will materialise in the near future. Should BroadSign decide to go public I am pretty sure they have good reasons that would benefit Neo one of BroadSign key customers.
- What does Neo Advertising think about automated audience measurement and the various systems and solutions that are on offer at the moment?
I am very enthusiastic about audience measurement and the opportunities offered by such systems. However as of today we face two major issues that stop us in our will to roll them out. Firstly no one is willing to pay for it. Neither the Digital Screen Network, nor the advertisers are willing to invest in such systems. Secondly, which is more problematic, our partners, the retailers forbid these systems as they don’t have any ruling with regards the protection of the personal data. Although we see the merits of the automated audience measurement systems I am of the opinion that it will take some more years until they become a standard.
- Digital Screen Networks are noticeable by their absence at any of the Digital Signage shows around Europe at the moment, what would it take for Neo Advertising to be at a show and what sort of show should it be?
- Will any of the Digital Screen Networks ever rival the traditional outdoor media owners in terms of size and power?
I am extremely happy to see that our market is gaining more and more momentum as illustrated by the growing number of shows and events that are taking place every year. Even though we do not participate actively in the shows, we encourage and support them by participating in discussion panels or knowledge sharing sessions. As a Digital Screen Network our job is to convince media agencies and advertisers of the merits of Digital Screen Networks. The ideal show is the one that could gather under the same roof, media planners, media buyers, advertisers and retailers – not easy an assignment.
In very specific areas one can decently compete. But when you look at it from a wider perspective we are still far behind the traditional outdoor media owners in terms of return and penetration. I am however convinced that the coming years or months will be very interesting as one will see not only traditional outdoor media owners but TV channels and Internet players entering Digital Screen Networks or the next media Eldorado.