Monday, December 31, 2007

Palisades finds DVR usage has small impact on advertisers

According to this article in AdWeek, DVR usage is not yet having a significant impact on viewing commercials or time- and season-specific messages. According to the article:
"The study by the Santa Monica, Calif.-based media agency determined that more than half of prime-time programs recorded were played back within the same day of recording. By the end of the next day of airing, nearly three-quarters of all programs have been viewed.

"According to the study, time-shifting habits increase viewing more than 16 percent.

"The study was conducted from Sept. 24-Oct. 21 by NPower, which like Adweek is a unit of the Nielsen Co. The survey polled more than 8,000 television viewers.

"Fewer than half of the people watching a DVR recording said they fast-forward through ads, meaning that DVR use does not significantly impact ratings. 'Nielsen estimates DVR penetration to be at 20 percent, up 12 percent in January of this year,' said Susie Thomas, svp, director of research and insights. 'While this is a
good-size increase, the impact on viewership remains minor.'

"Thomas said that there are program-to-program fluctuations, but 'overall DVR usage is not dramatically cutting into live viewing.' She added that among the top 10 programs most likely to be recorded, CBS's Survivor: China measures as high as 58 percent watched on the same day of airing, compared to 27 percent for CW's Reaper)."
On top of that, of course, is the fact that only 20% of US households even have a DVR after over a decade of said devices being on the market. Granted, that's an insane growth and penetration rate for any other product on the market, but in our case it means that 80% of the US populace is still watching TV commercials the old-fashioned way, whatever that is (for me, it's a time to flip to other channels, get a snack from the kitchen, or turn off the TV because I've woken from my stupor and realized I've lost interest anyway).

DVR usage has been one of those things that has really scared advertisers in the past few years, and I and others have written about it being a growth catalyst for the out of home market (and particularly the digital signage market). In fact, way back in 2004 I took a look at the potential impact of TiVo on the digital signage market, and while it was purely speculative, I think it's safe to say that while TiVo has caused some sleepless nights on Madison Avenue, it hasn't caused a big shift in advertiser spending habits. And if this news is true, it probably won't in the near future either.

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Friday, December 28, 2007

HSBC France rolls out digital signage

I had heard some rumors about more regional bank branch signage activity by HSBC, and Teller TV seems to confirm it's true, at least in France. According to their post,
"HSBC, and its subsidiary Societe Marseillaise de Credit, have
embarked on a networked digital signage rollout to their 160+ offices
across France. HSBC's premier banking offices in Paris will be the
first to receive the networked solution, and the remainder of the
network will receive treatment as branches are built and/or renovated.

has long maintained an in-branch TV network, distributing bank
advertising content via dvd's to screens located behind the teller
counter. According to an SMC marketing manager, the decision to move
forward with a networked solution was made based on the continued
reduction in technology costs, the need to simplify distribution, and
the desire to feature more time-sensitive information such as branch
It's encouraging to know that they've decided it's worthwhile to upgrade an existing DVD-based network, since it implies they understand the incremental value to using a networked and centrally-managed solution. I'm looking forward to learning about the types of time- and location-specific messages they plan to send out, since there has been a lot of interest in the financial sector lately, yet nobody seems to have a clear idea of how to most effectively use in-branch digital signage for marketing and merchandising.

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Friday, December 21, 2007

The battle over electronic billboard regulations continues

MediaBuyerPlanner has a as a nice and concise overview of the current round of regulations and legislation that has cropped up to handle the growing popularity of electronic billboards. Worth a read for anybody thinking of getting started in that side of the biz, or even for those folks who have (or manage) existing static billboards and are pondering the jump to digital.

The bottom line: the Feds aren't going to help you here, though they're unlikely to cause harm either. And even if the states to pass encompassing legislation that permits the use of roadside electronic displays, local municipalities will always have the ability to put the kibosh on digital billboard projects in their neighborhoods that don't meet their approval.

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Thursday, December 20, 2007

eMarketer says digital signage advertising growth looks strong

I know Haynes already beat me to it, but this data from eMarketer and PQ Media bears repeating: new projections show the US outdoor video advertising market growing from about $1.3B in 2007 to over $2.3B by 2011, indicating a compound annual growth rate (CAGR) of well under the 20% that has been thrown around so frequently. For reference, they calculate that in 2006 the market grew about 28%, and in 2007 it was about 25%. All the way out in 2011, apparently the market starts to stabilize and enter its "mature" phase, with single-digit projected growth of 8.4%.

While such growth is certainly nothing to sneeze at, I have to wonder if we're really that close to leaving the growth phase and entering the maturation phase, or if we might be on track to squeeze out a few more years of double-digit growth before that happens. My money is actually on the latter, which I know comes as a surprise to everyone who just automatically assumes that I'm a big pessimist (I swear it's not true - I'm a realist). The article makes all of the usual arguments for our current aggressive growth:
"While other traditional advertising sectors are struggling to adapt to increasingly fragmented audiences and changing media consumption patterns, the out-of-home advertising sector is actually reaping the benefits of the evolving media landscape."

Unlike TV or radio, out-of-home advertising is immune to channel or Web surfing and digital and video technologies are making the medium more compelling and effective.

As an example of the opportunities that new technologies are opening up, out-of-home video advertising networks will comprise the largest component of what is described as the "alternative" out-of-home advertising sector.


The falling costs of flat panel LCDs, combined with the emergence of IP and wireless Internet technology are driving the out-of-home video advertising market.

"Another significant driver of the out-of-home advertising sector is that US consumers are spending more time outside their homes, shopping, dining, walking, traveling and waiting," says Mr. Macklin.

According to Veronis Suhler Stevenson, US consumers spend twice as much time away from home than they did 30 years ago and the average daily commute has doubled to about an hour.

"New delivery and measurement tools are also giving advertisers the confidence to embrace the emerging new creative possibilities that out-of-home offers," says Mr. Macklin.
So there's not much new to learn there. But if you take a closer look at the numbers, the company estimates that the outdoor advertising market will grow about $3B from $7.4B today to about $10.2B in 2011. While that means the digital market will grow to capture about 20% of the total out-of-home market (which seems reasonable), overall growth in the sector is expected to lag far behind online spending, which doesn't seem too realistic. Actually, I'll qualify that -- it would only seem realistic if online spending starts cannibalizing TV spending in a major way, since that seems like the most likely source of new ad dollars in the near future.

If I had to speculate, I'd say the US digital out of home advertising market has probably four or five years of 20%+ growth left, after which the rate of change will slow, but not in the dramatic 5 or 6 point drops that this study indicates. Given how long it can take for new large digital networks to gain traction (and how much longer it can take for them to achieve a reasonable fill rate of maybe 30 or 35%), networks that are already being deployed will contribute to the growth rate for several years to come.

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Monday, December 17, 2007

Focus Media (FMCN) to join the Nasdaq-100

In what's certainly an industry-first, Focus Media, the gigantic Chinese digital signage network (among other things now), has announced that they will be added to the Nasdaq-100 index. The Nasdaq-100 is basically the list of 100 of the largest domestic and international non-financial securities listed on Nasdaq (based on the company's market capitalization). Focus is not only the first digital signage company to make the list, they're actually the first Chinese company to do so (but probably not the last, considering how things are going over there).

Today the company operates nearly 140,000 digital screens and 170,000 static posters, mostly in elevators and building lobbies. They also have a network of 200 LED billboards, and they recently purchased a mobile/web advertising company.

What does this mean for the industry in general? Well, probably not a whole lot, if last October's Strategy Institute conference on investing in out-of-home media was any indication. From what I could make out at that conference, apparently the Wall Street guys have absolutely no interest in the growth potential of the market outside of what the big players -- currently Clear Channel, JC Decaux and Lamar -- are doing. Presumably they'll be forced to add Focus to their list of companies to watch, though considering they operate 100% inside of China, obviously they won't have much of an impact on the US market in the near future.

If you're an investment analyst new to the digital signage industry, we have a simple, straightforward introduction to digital signage written up that you might want to check out.

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Friday, December 14, 2007

Tesco Screens RFP on the way

Ah, Tesco Screens (formerly Tesco TV). It's gone through every stage of the digital signage lifecycle*, from hey-let's-try-this-out to this'll-be-the-next-big-thing to drat-it's-still-not-working to why-are-we-doing-this to wait-we've-been-doing-it-wrong to ok-I-think-we-figured-it-out-now.

And now apparently we're now on the way back to hey-let's-try-this-out again! According to Adrian Cotterhill, who's carrying the super-duper, double secret worldwide exclusive info, the creative approach to Tesco Screens is up for review, and proposals to produce the content for Tesco and its advertisers are being requested. No word on if/when any of the other portions of the project will be refitted yet, but I suspect Adrian will scoop us all with the info the moment it happens.

* Those of you who have conducted a digital signage project probably recognized that these aren't the proper names of the lifecycle stages, but it's Christmastime and I'm trying to cut down on my swearing. Damnit.

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Thursday, December 13, 2007

South African network rolls out 4000 screens to 300 locations

I hadn't heard much digital signage news from the Cape of Good Hope recently, but this article indicates that there's at least one big new network in the works right now:
One Digital Media, headed up by CEO Mike Bosman, has installed a digital media network with over 4000 screens in 300 retail outlets around South Africa in the past four months - allegedly making it the largest network provider of its kind in the country. The Spar group was the first major retailer in South Africa to implement the network....

Spar has over 799 stores nationwide with an estimated 66 million shoppers. It also records up to 44 million till transactions every month. The screens are targeted at shoppers in high traffic zones in stores like entrances and till points. They are also hung over aisles, and category sections and product screens are positioned directly in front of the product on the shelf.
The network has already caught the attention of advertisers like Coca Cola, Unilever, Colgate and Cadburys, and the CEO claims to come from a background at international creative and advertising powerhouse TBWA (now TBWA\Chiat\Day here in the US). The system appears to use a conventional setup of 32 inch screens in the main aisles of the stores, though I haven't seen any install photos yet.

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Wednesday, December 12, 2007

The Digital Signage Show makes much-anticipated industry debut

Much anticipated? By whom? Still, I read it in a press release, so it must be true. As it notes:

"The Digital Signage Show debuts in 2008 at KioskCom Self Service Expo in Las Vegas, Nevada. Both shows will be co-located at the Mandalay Bay Convention Center from April 16 – 17, providing attendees with access to like-minded colleagues and thought leaders, new technologies, forums and case studies.

"'The Digital Signage Show is debuting after extensive research over the last 12 months, including meeting with industry leaders, companies that have deployed digital signage initiatives, current attendees and digital signage exhibitors. It became clear to us that our attendees made the final decisions on digital signage purchases, and they requested that we enable them to meet with more of these suppliers by bringing them to the event,' said Lawrence Dvorchik, General Manager, KioskCom Self Service Expo and The Digital Signage Show. 'They are excited about now being able to fill their short list of suppliers and address all of their buying needs under one roof at one time.'
I'll be honest. I really, really, really hate trade shows. I don't like attending them and I don't like exhibiting at them. The return on investment for all parties is questionable at best, and as a source of research and information, even the best trade show will pale in comparison to some heavy-duty research on the web and a couple of well-planned day trips (and if you're the customer, you can usually get the vendor to come over for free, and on your schedule). However, I've been to a number of "The Kiosk Show" shows in the past, and they're fairly well done. The audience is reasonably-well qualified to keep out the riffraff and hobbyists (though some always slip through anyway), and traffic is typically high enough to keep you busy (as an exhibitor), but low enough that well-qualified attendees feel comfortable talking for a while if they want to.

I agree with Dave Hayne's take, though. Do we really need any more of these things? There's already DSE, a bunch of Strategy Institute conferences, more conferences by IntertechPira, an existing slate of kiosk shows, GlobalShop, NRF, Infocomm, etc., etc. I'm thinking of getting out of the software business and starting a calendar of digital signage-oriented shows and events, since there must be a lot of money in it.

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Tuesday, December 11, 2007

Focus Media buys CGEN for $164M + maybe another $182M!

Yikes, there's a lot of money changing hands in the Chinese digital signage market these days. Focus has thrown down the gauntlet: they want to make sure that they stay the biggest digital signage company in the land, and to do so they've apparently agreed to buy another one of the behemoths in the industry, CGEN. The terms, according to this press release, are a bit complex:
Under the agreement, Focus Media will acquire 100% of the equity of CGEN for US$168.4 million in cash, and an additional payment of up to US$181.6 million, part in cash and part in Focus Media ordinary shares (valued at US$53.42 per ADS, each of which represents 5 Focus Media ordinary shares), contingent upon CGEN meeting certain earnings targets during the twenty four month period from the closing of the transaction. The transaction values CGEN at 17.5 times its expected 2008 US GAAP earnings with certain adjustments.
Focus's um... focus was originally on placing screens in the lobbies of big office buildings in major metropolitan areas, but since their IPO they've expanded into other digital out-of-home venues as well as mobile advertising through an acquisition earlier this year. Oddly, just last year CGEN was suing Focus for using unfair practices to lure away a major client. Guess that's all water under the bridge now :)

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Thursday, December 06, 2007

Once again, video in bars proves effective

We've discussed digital signage in bars at this blog before, but yet another study has come out revealing that patrons respond positively to ads placed on video screens in bars.

According to Marketing Charts, a survey conducted by i-am TV revealed that, "Nearly 70% of the audience in bars where i-am TV operates reported viewing the network’s extreme sports programming, two-thirds of viewers recalled seeing advertising and one-third recalled a brand-specific commercial." i-am TV also claims to reach some of the most challenging demographics, noting that 75% of viewers are between the ages of 21 and 34 with a four-year college degree or better, and 46% have household incomes of over $75,000.

I think the image of a bar as a place where most people go and get completely wrecked and don't remember what happened the night before is a stereotype. Today most people go to bars and might have enough drinks to get a buzz going, but that's all. Gen X and Y made bars and clubs into socially acceptable meeting places, so while there's still plenty of imbibing taking place, it's not unreasonable to think that people are actually remembering the advertisements and video content they viewed the night before.

For advertisers and people who want to put digital signs into bars, there's a line that needs to towed. Right now bars might seem like effective places to advertise, but if they get too filled with ads they'll probably start to bleed customers, especially in places like New York City, where there are plenty of other places to go. The first folks to leave will be the hipper crowds (read: richer patrons on the cutting edge with lots of disposable income) and all of those prime demos that the ads reach will fade away and less desirable ones will take their place.

It's best for ads on video screens to work as seamlessly as they can into the surroundings so as not to affect the overall vibes of any given bar.

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Saturday, December 01, 2007

Digital signage ad market looking good for 2008

Brandweek's running an article about the success of ad-driven digital signage. Being Brandweek, the article still includes the requisite amount of "gee, who'd of thunk it?" introspection about the digital out-of-home industry in general, but it also contributes some speculation-driven industry numbers and info about PRN's Wal-Mart network that need to get republished and recirculated so that they'll become quotable "facts." For example, consider the following:
  • In-store networks are projected to generate $330 million, per PQ Media, Stamford, Conn.
  • That's a 43% gain from $210 million the channel generated last year (2006).
  • Research from PRN shows that that in-store TV marketing generates 56% average recall versus 21% for regular TV spots.
  • More than 66% of content used on the PRN network in the last 12 months was created specifically for the retail environments compared with 50% during the prior year. (hooray!)
That's all new information to me, but it seems believable enough. As I noted just the other day, it looks like the Wal-Mart network still dominates the percentage of digital signage screen time sold in the US, since they were selling $100M worth of spots way back in 2005, they estimated that they'd do around $150M in 2006 (of the $210M estimated to be the total size of the market), and even if they stagnated for 2007 and 2008, they'd still be doing 50% of all the ad sales business that there is to be done in this country.

I suppose it's not too surprising given that Wal-Mart is estimated to have about 20% of the retail grocery and consumables business, 22% of the US toy market, and leading or top-10 positions for a number of other key retail categories according to Wikipedia. Even so, with all the ballyhoo surrounding advertising networks of late, there ought to be either more competition for the PRN network, or else a larger overall market size. To think that every other ad-driven network in the country -- hundreds of thousands of screens -- are only able to garner somewhere between $150 and $180 million in sales is pretty astounding (and not in a good way). If we were to say that there were 300,000 unique "channels" available on which to sell space outside of the Wal-Mart network, that would mean that each screen was only being monetized to the tune of $600/year -- $50/month -- at the $180M number. That's pretty terrible.

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