In the past couple of weeks, we have witnessed the apparent demise of highly visible SeeSaw Networks (no hyperlink, as the web site no longer resolves). Not long before that, the CEO of a minor player, Digital AdTech, resigned and moved on. Coincidence, trend, or just the tide going out on a business model? I think that perhaps it is a combination of all three, and the biggest obstacle might not have been foreseeable when these and other aggregation businesses were cooked up years ago.
The idea of aggregating the many DOOH networks, segmenting them as necessary and selling cross-network campaigns in an easy manner to advertisers has been around since the second network launched, whenever that was. If one is confident in their ability to package networks and then sell advertising, the commissions typically charged (30% seem to have been the norm) would support a nice business that could be expected to grow at a rate at least as fast as the industry in general. Those assumptions look nice on a business plan, but they were never validated. Ask ten people why, and you might get ten good and different answers. In the end, the biggest challenge for aggregators has actually been the biggest challenge for the industry as a whole.
Simply put, DOOH networks are managed by a dizzying array of software platforms, a surprisingly large percentage of which are homegrown. There are few, if any real adopted standards for terminology, network performance, data collection and reporting. To-date, the few industry platform providers of significance have failed to move the home brew crowd over to the world of known APIs and quasi-standards. Network operators displayed a tendency to over-report actual installations, often counting planned and dormant sites as installed when providing network overviews to aggregators. Detailed, reliable reporting capabilities vary widely, and if you haven’t heard a story about an advertiser going to a paid-for network site only to see a non-functioning display or a playlist that does not include their ad content, then you haven’t been listening. Aggregators learned quickly that having lots of networks did not help their credibility in the sales process when a large percentage of them could not perform or report reliably. They responded by pruning away the worst offenders, beefing up the toolsets for taking deep dives on the remaining networks, and attacking niches of specialty networks. But that was apparently not enough. Advertisers crave predictability, and ad buyers do not like to bank their credibility and jobs on what they do not feel comfortable with. Sadly, predictably variable performance and spotty reporting does not create comfort with ad buyers. As a result, big DOOH ad buys gravitated to larger networks providing wide reach and one-stop shopping. Issues with measurement, reporting or performance were simply elements of price negotiations. It was just easier, faster and generally more effective from the buyers’ perspective.
With the aggregator channel seemingly fully disrupted, the industry is left with media planners and DSPs providing cross-network platforms and services for DOOH ad buyers. Because they are not actually selling ads, the economics of their business are different. The use of technology provides some opportunities to mitigate the Tower of Babel that DOOH networks represent. That said, the variation of technical capabilities across networks still remains. Presumably, these companies have watched the ascent and descent of the aggregation business model, and can apply lessons learned. As for the networks, some of the homegrown folks may have to take the tumble for industrial strength and trusted software platforms. Others may have to take a look at their first generation platform and determine its viability going forward. The aggravation suffered by the aggregators is not an isolated case. Change is upon us in all aspects of the DOOH ecosystem. Don’t blink, it isn’t going to stop any time soon.
Nice article and spot on, but I would add a few additional issues to the mix. First, from the perspective of aggregation and selling, it’s important to recognize that getting buyers (advertising agencies) to agree on a single ad buying platform is the equivalent to herding cats. There are cultural issues within the agency world that will prevent this from happening anytime soon. Second, no platform will find success without building in cross-platform buying efficiencies—you have to make it easy to buy DOOH with mobile offerings (including in App and text-based offers). No one has achieved this yet, and my guess is that it will need to be done through partnerships via JumpTap, JiWire or similar providers. And lastly, going to your point about software platforms, I would argue that all fo the software developers are going to face some serious growth issues in the no too distant future because it’s getting easier for companies to build their own systems through open standards. I would look at the way Timberland built their current in-store pilot just by way of example. They built their own open-source, cloud-based HTML5 content system to drive their digital signage network. I think this is the wave of the future and will only lead to more fragmentation of standards going forward. I think most of the aggregation schemes will fail with the exception of Nielsen because they’re already on the buyer’s desktop, and they’re not going to give up the high ground anytime soon.
Lionel:
Thanks very much for the comments, and I think you make some excellent points. Cross-platform buying efficiencies have to happen, as do cross platform content distribution capabilities. I am betting (selfishly) that you are wrong about homegrown being the wave of the future. But even if it is a ripple and not a wave, it does add to the fragmentation of standards… which may be why many CIOs and CMOs might shy away from that in the first place. As for Nielsen, they need to be aware that there may be metrics coming that render some pretty good insights. Can’t wait to see what is next!