Thursday, January 03, 2008

NBC Universal to hold an "upfront" presentation for their digital signage networks

Rob Gorrie picked up this story before I did, and even after reading his take, I'm still stumped. According to AdAge, NBC Universal will be staging an upfront for their digital out-of-home media inventory. The article notes:
The media company is hoping to get more advertisers to consider NBC for placing ads on TV screens in supermarkets, near gas-station pumps, in taxi cabs and arenas, among other places. Set to be held in Studio 8H, the NBC presentation will address approximately 200 advertisers and media buyers.

NBC's out-of-home upfront, however, is seen as a testament to the growing interest advertisers have in reaching consumers more closely in places where they intend to make an actual purchase.

"The concept has been there for a while, and people are still trying to perfect it," said Steve Kalb, senior VP-director of broadcast at Interpublic Group of Cos.' Mullen. "There's something intriguing" about reaching a consumer at the moment they are interested in buying products, and have money in hand to do so, he added. Ads that run on TVs in particular places could remind consumers about certain goods or even make offers relevant to their shopping experience. Mullen has talked to NBC about its digital out-of-home assets, he said, and "there is some interest [from clients]. We need to do a deeper dive and see how it fits into the plan."

3 billion impressions predicted

NBC has established partnerships that allow it to place its video content in more than 10 different kinds of venues, said Mark French, senior VP-general manager, NBC Everywhere, NBC Universal's digital out-of-home media unit. In 2008, he said, content on the screens -- and the ads that run adjacent to it -- should reach people more than 3 billion times. "There are very strategic, thinking agencies right now that are looking to do deals basically right after the event," Mr. French said.
Of course, media buyers are still asking for better measurement techniques, a more thorough understanding of the audience, and all of the other things we've come to expect from them, but the real questions are...

NBC: do you really think this is going to work? Are you so convinced that the writer's strike will continue that you can bank on advertisers' fears that there'll be no place to put their funds to use? Or do you really have that much confidence in the performance of their out-of-home networks that you believe you can actually demand a premium?

Advertisers: are you really going to go for this? An upfront seems to have no one's best interests in mind except NBC's. Granted you're more or less forced to abide by the networks' rules for TV, but c'mon, do you want to let them set the same precedent for new media as well?

Industry folk, don't get me wrong -- getting media buyers and planners interested in our sector is a good thing. But I have a bad feeling that supply-side economics will not work to our industry's favor in the long run, and this could be the event that starts us down that path.

[UPDATE 2008-01-13] In the interest of furthering this discussion, I wrote another article on WireSpring's weblog ("NBC's out-of-home upfront: Good or bad for digital signage?") and summarized many of the comments found here.

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14 comments:

Ben Caswell said...

Bill, we have yet to meet but I am an avid reader of yours and Rob's and David's blogs. You three are the holy trinity for an industry that needs vocal leadership. It is indeed an exciting time. And I appreciate your cautiousness but sometimes it reads like a rigidity born from holding on too tightly to an old paradigm.

Content will drive this industry. And by content, I mean "targeted entertainment," not video billboards, not catchy ads, not power point or photoshop or flash. The future of out-of-home networks will be based on a broadcast TV model. The P&G announcement mid-summer and CBS's purchase of SignStory in September and now NBC treating closed networks as broadcast networks...

The writing is on the wall, no?

Bill Gerba said...

Hi Ben,

Thanks for your perspective. While I think it's the "academically correct" one, from a pragmatic standpoint it has yet to prove true. The real-estate owners are still driving the deals these days, and I haven't seen any signs of that waning, as much as I'd like to.

My cautiousness in this particular case stems from one of the last comments in the article - NBC U is taking advantage of the old-school mentality held by many media buyers. While this might produce more revenue for them in the short-term (and perhaps even at the expense of other OOH media owners), I think it belies the true value of these networks. A more egalitarian bidding system would be harder to set up and get accepted right now, but could theoretically produce bigger benefits for all involved parties (real-estate owners, advertisers and buyers) by essentially floating the screen real estate in a market of similar "properties".

I'll admit that I haven't fully fleshed out my concept of an "ideal" bidding network, but I'm quite certain that the antiquated, single-vendor upfront is the wrong one for our industry.

As you mentioned, we haven't yet met. But if and when we do, I think you'll immediately understand why I find your statement "born from holding on too tightly to an old paradigm" to be quite entertaining :)

David Weinfeld said...

I could not agree with you more that NBCU is purely thinking in the short-term. They will certainly make money from a digital out-of-home upfront, but at the expense of a greater long-term reward. These networks must be cultivated outside of the sales framework of the television industry to fulfill their full potential.

While the upfront will generate significant exposure for our industry in the world of media buyers and planners, is it really worth the cost of clouding the medium's true value? By selling digital out-of-home media in this way, I can only hope that NBC will not be setting a precedent for these types of forums. It is a step forward, but down the wrong path.

Ben Caswell said...

Conglomerates like NBC aren't thinking short-term or long-term, guys. They are simply reacting. They see where it's headed and trying to get their wares in the game. Unfortunately for them, it won't be as easy as applying the old rules to the new game.

I agree with you, upfronts is not the way to maximize the potential of this paradigm shift, long-term. The significance of the move can't be overstated though. It harkens a new day. Let the future begin!

David Weinfeld said...

Trust me. I am ready for digital signage to traverse our fragmented media environment and be embraced as a key driver of our media future. The medium has the power to create true conversations with consumers and reach us with messages that we want, and choose, to hear.

I would not begin to argue that NBC's digital out-of-home upfront is not a good thing for our industry. It most certainly is. The grand gesture, if you will, is one that has not been completely thought through.

For the sake of putting their flag in the sand to clam a piece of our growing industry (Wild West anyone?), NBC has failed to take the necessary time to understand and harness the true power of the medium. Wouldn't it be better if the announcement harkened a new form of media buying to parallel the uniqueness of our medium?

My biggest problem with NBC's upfront is this: (a comment I made in another industry blog)

The thing that bothers me the most is that NBC is attempting to reimagine a TV ad sales platform for digital out-of-home. Looking at digital signage from a TV perspective cheapens the value of the medium. I struggle to accept that it’s flexibility, targeting strength, interactivity, timeliness, etc. will effectively be represented at an upfront advertising sales forum.

Ben Caswell said...

Well said, David.

Not to mention that NBC doesn't have the sort of content OOH Networks are clamoring for, which is the ostensible purpose for "up fronts" in the TV broadcast space.

Bill Gerba said...

Ok, so it sounds like we're all in agreement here, then: The mere involvement of NBC should be taken as a good sign for our market, however the particular mechanics of their involvement, in this case is not the best because it either:

a) trades long-term value for short-term profits
b) leaves money on the table
c) encourages a system that others may not approve of
d) some of the above

It mostly sounds like what we don't like is that NBC may be choosing the path for the rest of the market, and that others will follow the leader instead of trying to implement a better sales strategy.

If that's the case, who SHOULD be deciding how screen inventory gets sold? And why hasn't it been done already? Will NBC's involvement speed up any competing efforts, or will it slow them to a grinding halt?

David Weinfeld said...

The reason that large media companies, such as NBC and, arguably, PRN, are choosing how this media is being sold initially is that many screen networks are still struggling to monetize their viewership. NBC has the size to be, what is known in the financial industry as, a market maker. They have the relationships and the clout to make a digital out-of-home upfront profitable, even though it is not the correct advertising sales model for our industry.

The digital signage industry does not yet include enough seasoned advertising sales professionals to direct the ship toward bountiful advertising revenue. Many networks, both good and bad, grew from entrepreneurs who identified the potential growth of our space. These individuals, however, lack the advertising sales expertise to effectively position their networks. Large advertisers want metrics and a national footprint before agreeing to make an investment in a digital out-of-home network. There are numerous networks in our industry that I believe were started with the "if you build, they will come" mentality toward advertisers. This, of course, has proven to be a faulty string of logic.

NBC is calling the shots because they are the elephant in the room. It's the job of network owners, unified network groups, such as Seesaw and Adcentricity, and digital signage industry associations to stand up and come up with a better model. Because if we don't, big media will come in and take over control of our industry. The question comes down to: is this what network owners want? Do they want to build out networks and sell to the likes of Clear Channel, CBS, etc.? Or would they rather decide the direction of an industry they have put in the time and energy to build?

Rob Gorrie said...

David, I like you! We're gonna have to meet. :)

FYI, Behind the scenes, the major Outdoor players are all saying that if we (Networks, organizations and associations) don't dictate standards (for sales, measurement, content, etc) THEY will because they feel we're screwing this medium up by stagnating it and not making decisions/squabbling.

Forcing a sale model does not a medium make but it IS a start....especially for getting attention.

One of the problems I run into regularly on the Network side (to your point David) is that this medium has been sold a particular way for 5+ years by the Network Vanguard/The "adults" in the playground. Understandably, they don't want to change how they do things (you wouldn't either if you did something a certain way for 5 years and were just starting to see some success).

The agencies have been saying what they want for 3 years and we haven't been listening...or at least it doesn't look that way to them. I've seen a lot of lip service given to media agencies by some major Networks but very little change in how the Networks actually do business.

The sale model is slowly being defined but the results of those changes won't really be seen for another 9-12 months

Bill Gerba said...

Rob,

You and I must be talking to different agencies, because I certainly haven't heard an articulate set of requests from them. My conversations have ranged everywhere from "it's not even on our radar, nor is it likely to be" to "talk to me when I can buy it like TV" (which is, of course, exactly what NBC is doing here), to "I'll buy it as part of a package, but not individually."

Perhaps the problem is simply that even combined and cooperating 100%, all of today's network owners wouldn't have the clout to get across to media buyers like big, established and well-connected NBC can.

Or, you could be right, and for all their financial might, their big insight might simply be that media buyers and planners will never adapt or change. If so, selling to them in the current fashion would be the only way to get their attention.

Rob Gorrie said...

When they say "talk to me when I can buy it like TV", they don't necessarily mean "in the exact same way" as TV (Ratings/GRPs/etc). They generally mean, when it's as easy to buy (speed/simplicity) and understand (audience/results), I'll pay attention.

The old saying about "turning the Titanic" remains true here. Getting someone to change how they do things, especially if they've done it that way for 40 years, is nearly impossible. If you fit into existing processes, tactics and planning methodologies and "look like" a medium they can use/digest, they'll spend time.

You make an interesting comment on the "I'll buy it as a package". to David's point, again, selling our medium on the back of another medium is a sure-fire way to devalue our medium...it's like bundling Digital Signage with mobile...it makes us look cheap and undefined. It's a frustration I've had with a number of the ad deals I've seen Networks sign with Outdoor and TV companies...our medium is used as a trailer sell/giveaway to keep Outdoor and TV rates high. I'd probably be doing the same thing if I were them but speaking strictly on the "medium", it's not good for it.

Selling Digital Signage as a silo medium is also pointless. It's how many have approached the sales to date, out of necessity. I've had this conversation with a lot of Networks and it always surprises them that they didn't hear about a campaign before we did but my company (sorry to drop the reference in here - not meant as a pitch) has access to campaigns and media strategies that many Networks would likely never know about because we sell VERY differently than a standalone. We're selling/planning 4-9 months ahead right now because that's how many of these budgets are planned. We're just finishing up a "back to school" sale! Selling as a silo medium is a tactical/execution based approach that ensures no one speaks to us until 4-8 weeks before (a retail afterthought), when the money is already gone. I have a Merchandising background so I'm quite aware how last minute and knee jerk the in-store spending happens WRT traditional displays and merchandising. Becoming part of the advertising/marketing "mix" requires more strategic, up-front execution, coupled with annual Brand campaign requirements and planning.

Last point/Caveat - Based on my conversations, the Canadian media planning scene is about a year ahead of that in the US. That's not to say that there's HUGE differences but many of the conversations I have in the US harken back to the same conversations I had in Canada last year on attitudes, acceptance and integration. I was amazed at how much changed here in a year. The US ad/media landscape is vastly different and compartmentalized, however and we approach it as such. Certain agencies will champion it and others will ignore it. Our job is to pick the right ones.

END DIATRIBE!

Ben Caswell said...

Targeted entertainment will drive the industry.

It is not driving it yet so the "up fronts" or -- in Rob's case -- pitches to media buyers are selling ad time on Networks that until very very very recently was a medium strictly for advertising.

Content in the DS space meant moving ads. Until the last 6 months, very few were thinking NBC/CBS/ABC content, least of all those companies themselves...

So when an ad buyer says "when it gets like TV" --and to complement Rob's ad sales interpretation --- what I hear is "when there is a reason to think that people want to watch the network," i.e. when there is targeted entertainment, then we will buy time. Because content drives eyeballs and where eyeballs are the advertisers will be sure to follow.

The "moving ads"...or "poster plus" networks will continue to thrive on remnant buys. Go Seesaw.

However, the premium buys will come only for networks with enough of a dwell time to entertain with programming that is not flash, powerpoint, adobe photoshop or simply OTHER ads.

(signed --- a toddler in the industry)

Bill Gerba said...

Ben,

I certainly hope you turn out to be right, but so far my research has suggested that people will never look at OOH media the same way as they do TV or the Internet. Ours is a decidedly more "push" medium. That having been said, of course, there are plenty of opportunities to make digital OOH content more enjoyable and entertaining, and that does drive a lot of value.

Considering the activity on this thread, I'm going to sum up the main arguments we've had here and put together an article on WireSpring's weblog, which has a bigger audience than this one. Hopefully a few more people will chime in with what they think the upfront means for our industry.

Anonymous said...

How can I attend the upfront. When and where will it be?