Friday, November 30, 2007

Network CN raises $50 million

Man, these Chinese networks have been going gangbusters lately. Forget about Focus Media's unbelievable IPO or AirMedia's recent stratospheric valuation. Today we get news of Network CN, who have just raised $50 million from Och-Ziff Capital Management Group (and there's another $100 million waiting in the wings in the form of exercisable warrants), according to CNN Money.

The company has remained relatively noncommittal about what they'll be doing with the money, only noting that it will go partly towards accelerating their work in Beijing International Airport's Terminal 3. The company hopes to become the "market leader of outdoor digital media" in China, which is going to be pretty tough given the number of large, aggressive networks operating over there today.

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Thursday, November 29, 2007

Is Thomson getting ready to start more in-store TV networks?

CNN Money notes that, "French media and technology services company Thomson SA (TMS) is in talks to launch in-store TV networks in France and other European
countries, a company executive said Wednesday."

There's not a whole lot of information aside from that, other than a note that the company's PRN division (of Wal-Mart TV fame) was expected to produce $150M in revenues in 2006, which by my measure would be more than half of the total US digital signage advertising market for that year.

So Adrian at the Daily DOOH thinks JC Decaux might be on the verge of picking a tech partner to start going after digital out-of-home deals in a big way, and now we hear this tidbit about PRN, particularly with regard to European (and other) markets. Where will these giants collide? Will they try to work together, with JC Decaux lending their ad sales and media planning experience to the current kind of in-store media? Or will they battle it out, since they're likely to be going after the same deals? Given that JC Decaux is looking at software options, I'm inclined to think it'll be the latter, but as these deals grow larger, there's enough money involved and enough existing relationships in place that you'd have to imagine the two firms working together in some capacity at least some of the time.

It'll be interesting to watch how this one plays out...

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Wednesday, November 28, 2007

VM+SD grades digital signage deployments

I somehow missed this article that came out last month at VM+SD Magazine, where Sean O'Leary, the magazine's technical editor, marks off 10 years of covering the digital signage industry by taking a look at some of the current over- and under-achiever networks out there today. Looking at retailers like Anahi, American Eagle and FYE, O'Leary generally feels that digital signs have come a long way since the late 90s, though they still have a ways to go before becoming adopted as a standard part of any retail interior. One of the more interesting parts of the piece was his admittedly non-scientific survey of the local retail landscape, where he noted the following breakdown of stores that had digital signage networks:
  • department stores: 1 of 10
  • home furnishings: 0 of 10
  • book stores: 1 of 2
  • jewelry stores: 2 of 28
  • women’s fashion: 0 of 45
  • men’s fashion: 0 of 25
  • electronics: 3 of 14
  • beauty and health: 0 of 19
  • shoes (all types): 3 of 24
  • games: 0 of 4
  • sports/memorabilia: 1 of 5
  • youth fashion: 4 of 10
  • outfitters/extreme sportswear: 2 of 2
While we're so often focused on the major new deployments going out, from this simple survey it's clear that there's still an enormous amount of growth potential left in our little industry. Since he is writing for VM+SD, O'Leary focuses mostly on the visual impact of digital signage and its overall effect on the in-store experience. For example, he notes that the, "composite of young, edgy fashion shops (such as Metropark and D.E.M.O.) and action “outfitters” (such as American Eagle and Oakley)" are ahead of the curve when it comes to digital signage, probably owing to the, "age and coolness level of the target audience[s]" that they appeal to. His ultimate conclusion:
when I see great concept and execution – such as in the Anahí store – I become inspired and want to revisit Woodfield to share my great digital signage ideas. Think of it: If you’re stuck with a small storefront on the third level, why not invest in some eye candy to pull in customers from right across the mezzanine? Wouldn’t Lego increase sales with some videos of its robot kits? I wouldn’t be able to get my kids out of there. I wouldn’t be able to get me out of there.

During the first years of the slow-moving digital signage revolution, there were bottlenecks in almost every phase of the technology. But now, flat screens are dirt cheap; networking and delivery systems are reliable; and software abounds for scheduling and managing programs. All that’s lacking now is the will, the vision and the budget to tap into the power of this medium.
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Tuesday, November 27, 2007

Final reminder: POPAI digital signage contest webinar tomorrow!

As I've mentioned a number of times before, POPAI is going all out to make sure that the 2008 Digital Signage Awards contest attracts the best and brightest from the field. I wrote about how we built the contest entry form and rules in last week's entry on the WireSpring kiosks/digital signage blog, and as noted, there will be a webinar on the subject tomorrow. It's free, it'll be less than an hour long (and you don't have to do anything, just listen), and if you want, you'll have the opportunity to ask questions.

What you should do, however, is register. It's non-binding, doesn't obligate you to enter the contest, and did I mention it's free??

If you can't make the webinar either because you're busy, traveling, or in a time zone that would force you to be awake at 2am in order to participate, send an email to dscontest2008 at wirespring dot com and I'll get a copy of the presentation over to you.

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IBN to install digital signage network in Subway QSRs?

Or so Joe Mandese at MediaPost says in this little blurb. The article is light on details, noting that, "the agreement is believed to be system-wide, and would bring IBN's advertising and video content into nearly 30,000 subway restaurant franchises operating in some 85 countries worldwide, making it one of the biggest video advertising networks in the world."

I had actually heard that several companies were pitching Subway in the past 18 months, some large some small. Additionally, I had also heard that Subway was only interested in those networks where somebody else would foot the bill for the build-out. While it's all rumor and speculation at this point, I wouldn't be surprised to hear that IBN was raising a massive amount of capital in the very near future (if this all turns out to be true, of course).

30,000 is a lot of locations. If they went with a bare-bones approach and used 32" LCD panels (so you could get away with a one-man install team at each site), you'd still probably be looking at a minimum of $1,500 to install, which works out to an up-front cost of $45 million. Figure in the operational costs, content production, etc., and you've got some pretty serious money on the line.

John Morgan, are you out there? Any comments?

[UPDATE] First, Dave Haynes scooped me, here's his take on the tiny blurb of MediaPost quasi-information. Next, John Morgan from IBN came through and has commented on what is (or isn't) going on. Check it out :)

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Monday, November 26, 2007

Clear Channel Outdoor plans large scale cell phone campaign for 2008

As reported by AdAge, Clear Channel Outdoor has set in motion plans to greatly increase the effectiveness of its cell phone based advertisements in 2008.

Clear Channel will make this possible by delivering ads to cell phone users in specifically targeted networks (such as bus stations). According to the article, "Once a phone is in a network, it will be made "discoverable" by vibrating or ringing, giving the user the option to respond. If there is no response after several times, the phone will stop sending alerts."

There's something about it stopping after several times that doesn't quite sound too appealing to me. Honestly, it sounds like a telemarketing company telling consumers that after several phone calls without a positive response they won't be bothered anymore. I think once or twice should definitely be the max. It seems like there is a very thin line between a helpful ad and outright nuisance that Clear Channel could cross here if they aren't careful.

Granted, we live in a world where we live and die by our cell phones, iPods, Blackberrys and whatever else we carry around with us to stay plugged in to the world, so it's not surprising that advertisers are trying to find a way into these devices. Yet those same advertisers need to remember that almost every user of these technologies expects a certain amount of privacy. Too much invasiveness on the part of ads can result in a serious backlash. I might even see a scenario where the wireless companies start to offer two versions of phone/service: regular and "ad-free", with different fee structures for each.

The key to making these ads a welcome diversion instead of an irritating distraction is creativity. How can advertisers successfully integrate themselves with cell phones while not annoying customers? The first step may be offering promotions in the various networks. If an ad is going to pop up, maybe it can include a trivia question that if answered correctly give the consumer a code that can be redeemed for a free song download. But it's really anyone's guess. I hope there's a way to opt-out altogether.

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Ad Age looks at metrics for the Out-Of-Home video industry

Ad Age has put together a nice article on the attempt to come up with metrics for the out-of-home video industry. One sentence in particular sums the whole situation up nicely as far as I'm concerned: "Double-digit growth means it's time for organized metrics -- no easy feat for a market that includes everything from elevators to urinals." In short, everything always comes back to the fact that potential is there, but the concrete definitions are not.

It's important for everyone in this industry to scrutinize measurement techniques developed by companies that have a financial stake in the results. While organizations such as Ideacast and SeeSaw Networks are pushing things along by advancing research into metrics, whatever results they reach can never be seen as completely unbiased and can be therefore be attacked by rival advertising venues. The best way to solve the metrics issue is for an independent and well trusted research group to come along and take control.

Also at issue right now is that most sponsored studies tend to come off too optimistically, and can stir up some doubts for outsiders (think about the OTX study released in October). An independent group would be more able to head off some of those concerns, as would some additional research conducted by more 'traditional' media companies. People that are involved in an industry, no matter what it is, are going to inevitably carry with them certain biases, so it often takes outsiders to paint a more realistic picture. Just as it can be jolting for researchers to under-estimate a market's potential, it's also important for them to not over-estimate the market, or else there will be lots of problems when we don't live up to the expectation.

So I guess I'll throw a question out to our readers...How long (years, months, etc.) before we'll be able to better measure the reach of out-of-home advertising?

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Friday, November 16, 2007

Gas Station TV puts screens into convenience stores

It seems as though gas stations in general are making a big move towards integrating kiosks and digital signage systems into more and more into their business.

Within the last two weeks we've reported about both pay-by-touch kiosks and ones that offer directions being implemented in gas stations across the country. Now, comes this story in Forbes about Gas Station TV's plan to place screens inside gas station convenience stores in addition to ones they already have at pumps. According to the article, "GSTV's large-format LCD panels are positioned in high-traffic areas inside the convenience store and feature GSTV's well-balanced mix of news and entertainment from ABC television, sports highlights from ESPN, AccuWeather forecasts, brand advertising and c-store product promotions."

The way to make this most effective is to sync the screens to provide the most appropriate content at the right time. For example, the screens at pumps would play ABC, ESPN and the weather updates along with advertisements for products and special deals at the c-store. This way customers can watch useful/entertaining content while they fill their tanks but still be informed of deals happening just inside the store. Inside, the screens should be focused entirely on reinforcing those advertisements and promotions to hit the customer at their point-of-decision. This one-two punch minimizes the chances of annoying customers at the pump, but still provides motivation to go into the store. Once there, the digital signs can work their magic, improving awareness and driving sales.

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Thursday, November 15, 2007

Ikea wins award for in-store signage

Ok, it's not digital signage news, but it is signage news in general, and the fundamentals are the same. As this article from the Boston Herald (brought to my attention by this post at AdverLab) notes, Ikea won the highest award from the Massachusetts Association of Retailers thanks to their innovative and creative use of signage to communicate with customers:
Swedish retailer Ikea, which has a Massachusetts store in Stoughton, manages to keep the shopping experience surprisingly intimate for a store that measures 346,000 square feet.

Much of that intimacy is created through Ikea’s omnipresent signage, which starts outside in the parking garage and continues throughout the store, from the entrance to the checkout lines....

“They’re eons ahead of any other retailers in communicating with their customers via interior signage,” said Rick Segel, a retail sales consultant, association member and judge, and author of “Retail Business Kit for Dummies.” “They’re communicating in a way that’s not just a hard sell. It represents an educational point of view and an entertaining point of view.”

The retailers association’s award to Ikea marks the first time that its advertising and promotion honor was given for interior signage, according to Segel.

“It’s a different approach, and something many other retailers can learn from,” he said.
My list of "many other retailers" starts with Home Depot and Wal-Mart, where I have a hard to very hard time finding what I'm looking for a good two thirds of the time. Ikea, on the other hand, is generally quite easy to navigate, though I still have a hard time pronouncing the names of most of their products (though it's fun trying :)

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Wednesday, November 14, 2007

Neo Advertising and POSTV, together at last

I can probably imagine how it happened... Neo put on a little Barry White, lit a fire, maybe opened a bottle of the bubbly. Then it popped the question: will you merge with me?

As Adrian and Dave had pointed out, the merger of Neo Advertising and POSTV represents the first large network M&A to happen in Europe. Given that their technical underpinnings (Broadsign) and business models (ad-funded retail networks) are similar, the roll-up makes a lot of sense, and in fact if it goes well I'd fully expect them to continue on with more in the future.

The merged entity will have a European footprint that encompasses the Netherlands, Spain, Germany, Belgium, Switzerland, giving them an excellent reach across the continent. Whether that will impact ad sales remains to be seen, as does any synergistic potential (I could see reductions in operational expenses perhaps, but the people who buy screen time in an electronics store probably aren't going to be too interested in grocery). That'll be the part I look forward to learning more about.

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Tuesday, November 13, 2007

VisionChina Media (VISN) files $100M IPO

Hot on the heels of the successful IPO of AirMedia, a digital signage network company focused on airports and airplanes in China, comes news of yet another gigantic network getting ready to go public. According to StreetInsider:
VisionChina Media (Nasdaq: VISN) filed a registration statement with the SEC for an initial public offering of its common stock. The proposed maximum aggregate offering price is $100 million. The company plans to list on the NASDAQ under the stock symbol "VISN."

The offering is being made through Credit Suisse, Merrill Lynch, CIBC World Markets and Piper Jaffray.

VisionChina Media operates the largest out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China based on the number of displays. VisionChina operates its advertising business in China through its consolidated affiliated entity, China Digital Mobile Television Co., Ltd., or CDMTV, due to PRC regulatory restrictions on foreign investments in the advertising and mobile digital television industries.
To give you an idea of what the "largest out-of-home advertising network... to deliver content and advertising on mass transportation systems" means when you live in China, there are about 13,000 screens under the network's control, which gives the company access to millions of middle and upper-middle class people in the country's largest cities every day.

Anybody know of a huge network in China that either a) hasn't been bought up by Focus Media, or b) isn't going public on a US exchange yet? I'd like to know how many (if any) are still left.

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Monday, November 12, 2007

What we can learn from Wireless Ronin (RNIN)

For anybody that hasn't been following the saga of Wireless Ronin, they're a small digital signage company noteworthy only because they managed to go public on the Nasdaq about a year ago at an improbably high valuation. In early November of last year (2006), we took a technical look at the company's SEC filings and came to the conclusion that for every $1 that came in, a bit more than $4 went out, for a net loss of $3 for every dollar of revenues. Despite this, they did manage to complete an initial offering and even a follow-on offering later this year that put a ton of cash into their coffers. At one point this year, their stock traded at over $10/share, giving them a valuation of over $100M.

Unfortunately, what they failed to mention to their investors was that lots and lots of potential clients in the digital signage industry are little more than start-up companies with lots of hope and good ideas, but little ability to execute. What's more, even good-looking projects with great prospects can get delayed, for months, years, and sometimes indefinitely. That has hurt RNIN, since they had to drop their earnings estimate for 2007 from the initial guess of $18-20M, to a much more modest $4-6M. Worse, looking at their third quarter numbers, RNIN committed one of the cardinal sins of digital signage: extending a large credit line to a small company. When you're selling software, it's easy to get lulled into the trap of extending a much larger credit line than a customer might be worthy of. After all, software doesn't often carry that high a cost of sale (unless you're licensing lots of components, have to pay royalties, etc.) But in RNIN's case, "for the third quarter of 2007, year-to-date gross margins averaged 38.6 percent, compared to a gross margin of 60.1 percent through the first three quarters of 2006. Gross margin levels in 2007 continue to re-build from 2006 as a greater percentage of higher-margin software revenue continues to get added into the product mix." So they fronted hard assets (hardware) as well as billable person-hours ("services," probably content creation or project management), which is a much more aggressive stance to take, since if your clients don't pay you, it's hard to reclaim the former and basically impossible for the latter.

And that's more or less what has happened. Earlier this year RNIN announced an agreement with a small company called NewSight Corporation to roll out digital signs to 2,000 doctors offices across the country as well as a network of large displays in shopping malls. From earlier earnings calls, it sounded like RNIN would be supplying everything -- hardware, software, content and logistics -- to make the networks happen. But we're now guessing that they "sold" some units to NewSight, gave them generous terms, but have not been able to collect. That leaves RNIN in the uncomfortable position of having a very large accounts receivable (it's nearly 3/4th of their YTD sales), most of which is in the hands of a company that may well never be able to pay them.

The only upside is that the company still has nearly $30M in the bank which will allow them to recover from the mistake should NewSight default on the debt, and it's enough that RNIN could even deploy and operate the network themselves if they wanted to.

The moral of the story? Even the best-intentioned companies can fail to execute, and even the best-laid plans can be put on hold forever. Unless it's your business, don't go loaning out money, goods or services to untested companies unless you and your investors all understand the industry well enough to estimate the true risk of doing so.

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Note: The information contained in this blog is to be used for entertainment purposes only. I'm not a lawyer, accountant or financial professional, nor am I qualified to pick stocks, set prices or give any kind financial or stock market advice. Disagree with something I've said? Let me know why in a comment.

Thursday, November 08, 2007

The future of advertising and retail digital signage

I'm cross-posting with retail media news, which I know is a big no-no, but these links are pretty darned useful to folks in the digital signage community:

Adrian Cotterhill, editor of the Digital Out of Home Advertising Networks (DOOHAN) directory (published in the UK by The Screen, an industry body devoted to digital signage in Europe), posted a PowerPoint presentation on his blog, the Daily DOOH, focused on the status of retail digital signage in the UK, and where it might be headed.

The first few slides are pretty parochial and are obviously geared towards people as industry-savvy as the average reader of this blog might be, but the rest of the content is quite good. In particular I was pleased with his requirements for success (including such remarkably elusive things as clear strategy and vision and good content), and several pages of slides trying to convince the audience that digital signage really isn't like television. I wish people would get that.

On the heels of that presentation comes another, this time from IBM. Titled "the end of advertising as we know it (PDF link)", the 28-page report looks at the current state of the advertising industry and predicts that there will be more disruption to advertising in the next 5 years than there have been in the past 50.

The IBM report looks at a number of trends, like electronic inventory management, user-generated content and of course the rise of out-of-home advertising. In general, it's an excellent summary of where a big company sees the industry headed. They're not actually involved in the advertising industry, mind you, but with their fingers in so many pies and so much of advertising going towards high-tech these days, I found more than a few insights while reading it over.

If you have a few minutes today, do yourselves a favor and download these two reports.

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Tuesday, November 06, 2007

Starbucks and PepsiCo produce drama exclusively for Shanghai's subway

The Wall Street Journal reports that Starbucks and PepsiCo are debuting a feature film in Shanghai's subways. According to the article, "tailored for an audience of 2.2 million who cram onto China's biggest underground railway each day, the full-length feature film will be shown in daily segments of a few minutes each over 40 weekdays, soap-opera style. Subtitles in Chinese will help commuters follow the dialogue over the subway noise, and multiple daily rebroadcasts and tie-ins on the Internet are designed to ensure no one misses any of the cliffhangers."

Product placement in movies has been standard fare for a long time now, so a production created by a product-centric team really doesn't come as too much of a surprise. But while it may seem ho-hum for Hollywood (even Burger King was pitching a movie about "The King" a few months ago), it's a pretty exciting development for the digital signage industry. Not only does it raise the bar for the production value of advertising content and concepts on digital signs, but with it's tie-in to the Internet it's a prime example of how signage can combine with other forms of media in order to increase effectiveness.

The key to making this project a success is that Starbucks and PepsiCo will need to find a balance between pitching their products in a meaningful way and just using the whole film as a giant ad vehicle. The film's creators are going to have to work really hard to draw viewers in with an engrossing story that does more than just glorify the products, although my guess is that will be a stretch considering anybody making a movie for Starbucks and Pepsi isn't likely to be Spielberg-caliber.

One issue that I do have with the project is the way they are cutting it into "daily segments of a few minutes." To me, 8-9 minutes would probably be more effective. I could be wrong, but it seems like if something lasts "a few minutes" then it's easier to ignore. If this film is on screens for a semi-prolonged period of time, viewers will almost be forced to take notice. And if they have to leave the train just as they start taking notice then they may be more likely to visit the corresponding website. On the other hand, I don't know how long the typical person rides a subway for in Shanghai, so maybe a few minutes is all they really have to work with.

Either way, it'll be interesting to see how people react and whether or not something similar will makes its way to the States. I hope Starbucks, Pepsi or whoever else is behind the project gives us some follow-on info once the project gets underway.

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Friday, November 02, 2007

What's that OOH media worth?

Got two minutes? Check out this cool little video from about some of the rates for different forms of out-of-home advertising in New York City (if the video below doesn't show up in Bloglines, just click the link above.... I really wish they'd fix that).

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