In this space and in other articles and blog posts, the increasing signs of industry acceptance and maturity have recently been trumpeted and applauded. Most of the discussions have centered on flow of capital, corporate interest, technology advances, and consolidation of network and technology players. For an industry whose future is so highly dependent upon its acceptance as a legitimate competitor for advertising dollars, relatively little time has been spent looking at the mechanics of that side of the business. The same level of noise that exists on the network and technology sides exists in the advertising side of DOOH. Changes are inevitable if we are hope to win the hearts, minds and wallets of agencies and brands.
On a trip to New York City last week, I had the opportunity to meet with two people who work for digital agencies, both of whom have had significant exposure to the digital out-of-home space. A good conversation starter was Lyle Bunn’s timely piece, which conservatively estimated the number of unique ads playing on DOOH displays at 1,080,000. My opening position was that a million unique ads would seem to indicate that we have some serious traction and mind share. Both agency types responded the same way: the number may in fact be conservative, but it is hardly reason to pop champagne corks just yet. The issue, they said, is that from their perspective, the vast majority of the unique ads playing on DOOH displays today are actually local ads rather than national ads. The big national dollars that can flow to an entire network with the stroke of one pen are just beginning to look at DOOH in a serious way. We are talking about the brands that we all see on TV, on the web and in print, and these are the brands represented by the agencies, and they are still treading carefully. Media buyers are not risk takers by nature.
When pressed as to why the big brand dollars are flowing slower than anyone hoped, three themes became apparent: network profiles, channel conflict and execution. The addressability and targeting capabilities of digital signage networks is a two-edged sword. The fact that advertisers can buy, as Mr. Bunn puts it, “based on demographic profile, Designated Market Area (DMA), geography and even the activity in which they are involved (shopping, transit, café, workout, attending a game, etc.),” means that savvy media buyers are able to cherry pick venues even down to the zip code levels… and they do. Networks with locations of varying quality and value are finding that they can’t sell the whole network. In fact, they are finding that the incremental locations they deployed just because they could are actually becoming overhead rather than revenue generators. Networks need to consider what they are selling when planning their deployments. More is not always easier to sell. Quality DMA coverage, identifiable (and desireable) demographics and sustainable traffic need to be part of any decision to deploy to a specific location. Operators need to have a strategy as it relates to location selection, and some may have to rationalize what they already have to get maximum ROI. It is better to “own” a region, DMA, neighborhood or demographic than it is to shotgun several. Without doubt, the network aggregators have served a great purpose here. They are able to present multiple networks (or segments of multiple networks) efficiently to the buyers, which reduces the potential pain of making dozens of individual buys. But they have their own pain, as we will see.
The second theme is that of channel conflict. In their urgency to generate ad revenue, many networks have enlisted both direct sales teams and multiple aggregators and rep agencies. The major aggregators, Adcentricity, SeeSaw Networks and rVue, are joined now by PRN, which is clearly repositioning as an agency of record (AOR) for DOOH, leveraging what is left of their now-ravaged model. Other rep agencies, such as Immersion OOH are making progress, and we are seeing some attempts at venue-specific alliances, some with value and others that are actually loose affiliations of the damaged, dying and desperate. The result of all this is that some networks have four or more people representing them, often to the same prospects. The value proposition, sales approach and often the prices are different. Buyers become confused, and confusion drives them back to the comfort of existing traditional channels. Somehow, this channel conflict needs to be resolved. All of the reputable aggregators will be very quick to tell network owners that they are not designed to be the “go to” sellers of ad inventory. In fact, their job becomes easier if the networks create some scarcity (and price firmness) by selling a good percentage of their inventory directly. Networks who try to go direct after an account is opened by an aggregator ignore the fact that the original sale was in the context of a multi-network buy. But there are cases when a buy is network specific, and the appropriate action is to go direct. So the answer is not to dump the direct sales force or the aggregators, but to communicate, work together and even team sell when appropriate. It will make everyone look better to the buyers.
Even with better communication, the time is drawing near when networks will have to choose one aggregator or rep agency and grant them exclusivity in order to reduce the potential for channel conflict and media buyer confusion. Very much like the networks and the solution providers, this would be a driver for the consolidation in the aggregation business, or at least the clear definition of winners and losers. The ad buyers want this. Ignore them at your own peril.
The third theme is execution, which falls back upon the networks themselves. Graeme Spicer recently posted a series of observations on the Adcentricity blog, and echoed the sentiments I heard in New York. He noted that “(Agencies) have high expectations of the DOOH industry to deliver campaigns as contracted, and they are becoming increasingly vigilant in ensuring that they are getting value. This means physical venue audits by the agencies are now becoming commonplace, and the results aren’t always casting DOOH in a favorable light.” What this means is that agencies are unlikely to simply accept location counts and playout affidavits at face value. They want some assurance that the displays are properly placed, functional and turned on. We will see agencies auditing network locations before and after campaigns in order to create assurance of value beyond affidavit numbers. Media buyers see this as a requirement for their own credibility and job security, and you can’t blame them. Networks will need to be able to demonstrate high levels of compliance, not just playout records. Compliance means that displays are on when they are supposed to be on, content plays when it is supposed to play, sound is on and audible where appropriate, and errors are corrected before they have material impact on a campaign. This goes well beyond reporting playout data in a vacuum.
One of the challenges the agencies see, and clearly a pain point for the aggregators as well, is the huge disparity in the technical and operational capabilities of the various networks. Large numbers of networks run on home-grown applications of varying sophistication. Others run on any number of commercial applications, again with varying ability to support ad-driven networks, especially to the satisfaction of ad buyers. At the same time, the ability of network organizations to execute campaigns and manage their assets varies widely. Just as agencies are auditing venues to see what they are actually getting for their ad dollars, so too will they (and the aggregators) go through a process of vetting networks and software providers for accuracy, completeness and compliance. Dollars will flow to where there is confidence.
When the industry deals with rationalizing networks, channel conflict in ad sales and technical execution of ad campaigns, we will be a lot closer to the comfort zones of ad buyers. That evolution of this critical facet of our industry has to take place. We already know DOOH works. Now we have to make it easy for ad buyers and brands to invest with confidence. All three legs of the DOOH stool: networks, solution providers and ad sellers will need to work together. Those who remove the pain points for ad buyers will see more ad revenue sooner.