A few days ago USA Today published an article on out-of-home media company RippleTV, who places free digital signs into regional/local chains with a focus on local advertising. The firm is up to about 300 locations all in the southern California region right now, mostly consisting of about 200 Coffee Bean stores and 100 Jiffy Lubes, though the article noted that the QSR Jack in the Box just joined, which could increase their footprint considerably.
Demonstrating somebody's lack of understanding about the out-of-home advertising market (and it's unclear whether it's USA Today's or RippleTV's), noted competitors include, "Gas Station TV, which puts TV ads on gas station pumps... Wal-Mart TV Network lets advertisers run messages in the retailer's stores... [and] Captivate, [who] shows news and information to workers in lobbies and elevators." It's a pretty big leap to assume that your spot for a local dry cleaners running in a selection of Coffee Bean stores is really in direct competition for advertising dollars with a nationwide spot for some P&G product running on Wal-Mart TV, but there you go. Actually, that idea might deserve a bit more explanation: it's easy to assume that alternative out-of-home media compete with each other for ad dollars. However, this isn't really the case at all. Today, when a dollar gets spent on some funky out-of-home promotion, a digital signage campaign, or anything else nontraditional and below-the-line (in marketer speak), that dollar is almost certainly being taken away from TV or print ads, both of which have shown declining effectiveness in recent years (TV more so than many print publications).
That nitpick aside, I thought the most interesting part of the article was a description of Ripple's business model:
The idea of scaling price structures with the number of screens is obviously not new, but the article almost makes it sound as if individual locations become more valuable when other same-branded locations are added to the available pool, which doesn't make any sense. More than likely I'm just reading that wrong, or it was incorrectly described. That would make sense if customers were buying chain-wide and were paying on some kind of CPM basis, but it sounds like the ads are being paid for more like POP displays or posters, which is on a per-location, per-use basis (which certainly makes the most sense to me).Ripple offers advertisers a self-serve set-up. Companies register at Ripple's website — rippletv.com — then create or upload their image ad. The process is similar to posting videos or pictures at sites such as YouTube and MySpace. They can also can manage campaigns online, choosing stores where they want to advertise.
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Advertising rates start at $18 weekly for a local Jiffy Lube to $40 weekly for a single Coffee Bean. They rise when more locations are added. Unlike on TV, the ads are guaranteed to run every five minutes.
Ripple's deal with businesses promises a free 50-inch LCD flat-screen TV and entertainment for customers. The Ripple network shows information from CBS, E Entertainment Network, ESPN and Yahoo.
The businesses also share in the advertising revenue, and dictate which kinds of companies can be promoted in their stores. For instance, Jack in the Box asked that rival hamburger chains be excluded.
Ripple's challenge is making money. The company isn't yet profitable, and its rates are so low, it will take some time to turn a profit.
Has anybody used this network? Can anybody clarify the payment schedule and any anecdotal performance metrics?
Tags: Ripple TV, digital signage, out-of-home advertising
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12 comments:
I suspect it's just badly expressed and means that when extra locations are added, the total cost (not per-site cost) goes up - naturally.
We ran a story on aka.tv a little while ago on a company called RedPost doing a similar thing on a smaller scale in Indiana. Next big thing or next bandwagon...?
I suspect you're right about the cost per site, it just doesn't make sense any other way.
WRT RedPost, I've seen/heard about them, though from what I gather that project has slightly different motivation, implementation and execution. Ripple has pitched their network as an alternative advertising vehicle from the beginning, while RedPost seems to be more focused on the social aspects of the network (just my pov, of course).
I did a hit on this thing a few weeks back and was also very curious about the model.
I get the value of proximity advertising (ie a local dry cleaner advertising in a nearby c-store) but much of the model escapes me.
The rate card may seem low if you don't know much about this game. But the costs of spots per location are very high --- $40/week is $160 a month. A network buy at, say, $30 a week is at 300 sites way more than $100K a month.
Good luck finding many national accounts that will buy in to that.
Totally agreed. This model only works for local advertising; as you note it breaks down pretty quickly after that. But I'm sure Ripple would also be willing to discuss price breaks for regional or national advertisers. The benefit isn't going to be as strong, and Ripple would rather have more ad space sold than not, so there's most likely room for a deal.
As for the local mom-and-pop dry cleaners or bookstore (are there any of those left?), $160/month is pretty cheap if you know the venue you've selected has good prospects.
Sorry for deleting the comment, but seriously, no adspam!
Using just the Coffee Bean locations, at $40 per location per week, and 200 locations total - a network wide would be $32,000 for the month - expensive, but not as high as Dave indicates. Additionally, i would be surprised if an advertiser wasn't able to negotiate a discount for volume.
If we estimate (and all the following are estimates, I have no specific data on Coffee Bean or RippleTV) that each store has 1,000 customers per day, that is a total of 1,400,000 people per week for the 200 stores. Using an awareness based impressions calculation, and an awareness percentage of 34% (a generic average awareness number for oohdm), would therefore yield 476,000 impressions. The $24,000 in CPM would therefore be $16.81. Not cheap, but not significantly overpriced either.
Ripple is well funded and beginning to be well deployed, so it will be interesting to see how they develop on the national advertising sales front. For the local ads side, I wonder just how 'self serve' it can really be. Local advertising has a history of requiring a 'man on the ground' - if Ripple doesn't invest in that local based sales force, i wonder how much pick up they will really have.
Louis-David Mangin
SeeSaw Networks
//Deleted prior versions to edit
Hi there, my company is Video Billboard. We are located in Canada and have a similar model to Ripple. We to provide the equipment and sell third party ads with in a chain situation. We have a 15 minute rotation of 10 second ads and guarantee 1440 ads per month per display for $16. I too would consider the Ripple fees to be high but the business model is great. Jim Hickman videobillboard.net
Does any1 know which software they are using on the backend to run their system?
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