The end of analog broadcasting is exactly a year away in the US and everyone
from The Commerce Department’s, National Telecommunications and Information
Administration (NTIA) to Best Buy are looking at ways to help the 14 million
US households that still depend on an analog signal. Vouchers will be mailed
out to households so they can purchase discounted government-approved
converters. According to USA Today this will be “the boldest technology
conversion ever attempted†but something is troubling in this picture. When
the transition to digital was planned no one in their wildest dreams could
have predicted that by the time of the switch TV would be in such a poor
shape, with its audience fragmented, shows undermined by the recent writers’ strike and the annual upfront ad sales event in question.
Ironically, it appears at this point that the conversion to digital, instead
of launching the TV industry into a new level of efficiency and prosperity,
might become another factor contributing to its current crisis. The TV is on
target to lose a large chunk of existing viewership. “About 42% of those
who’ll have no TV signal after the transition have no plans to do anything
about it,†says Consumer Union Senior Counsel Chris Murray, citing a
December survey by Consumer Reports (a quote from USA Today). That survey
also found that 36% of all consumers don’t know about digital TV conversion.
Most of the people who are aware misunderstand what it’s about or how it
will affect them, reports USA Today.
Even if the government campaign manages to raise awareness and improve the
numbers mentioned above, it is fair to assume that both the audience numbers
and the ad revenues will still be affected 12 months from now. We know TV
will not die; it will transform itself in order to survive. But while it
does, the advertisers’ trust in it will be further undermined.
When the magnitude of potential negative consequences of the conversion
sinks in, advertisers will have another good reason to have a closer look at
the alternatives, including Digital Out-of-Home (aka digital signage). By
the fall of 2009, I dare to predict from my backstage vantage point, this
medium will be considerably more mature, wide-spread, accepted and comparable in value
to any other media.
February 20th, 2008
The current economic downturn, call it recession or not, forces marketers to re-prioritize their media spend in favor of more measurable vehicles. Ad Age has talked to some top media buyers and sellers about how they expect to survive through the slowdown. I tried to summarize it below.
Network TV’s share will most likely keep shrinking in favor of cable, which offers lower CPM and better targeting.
Digital categories such as email and search will continue to be strong, regardless of the economy, with search marketing being the most recession-proof channel, because it is more measurable than other media and because it’s so closely tied to sales (especially in case of e-commerce). “Digital, in general, does not feel the effects initially because in tough economic times, there is a flight to measurable media,” said Bryan Wiener, CEO of digital agency 360i, in his interview to Ad Age.
Local radio spending will remain stable and might even benefit from the difficult times. Rex Conklin, media director of Wal-Mart Stores, said Wal-Mart already has started using radio for more efficient media spending in the wake of economic recession. “Particularly in a down economy, the advantages of radio are significant in that it’s very local and very flexible, which is incredibly important, especially when you’re talking about pricing.”
Newspapers face some pretty grim business trends, but the outlook will darken further in recession. “It will cut both ways,” said Jason Klein, president-CEO of the Newspaper National Network, a partnership of 24 newspaper companies that helps marketers place national buys. “It clearly is bad news for classified, which is not a good story in any economy for newspapers.” Help-wanted and real-estate listings in particular, which are already bruising papers by migrating to the web, will become scarcer in an economic downturn.
Magazines might need to rely on their web sites, according to Ad Age: “…web sites that can attract ad revenue even in tough times, partly because of low rates and partly because digital remains sexy to advertisers.”
Out-of-home — thanks to new digital and video technologies — has started to take a larger percentage of media budgets, beyond just a portion of what marketers set aside for nontraditional media. However, the potential economic downturn could leave the fate of some of those budgets in limbo. “I hope this recession doesn’t cause clients to exercise cancellation clauses,”Jack Sullivan, senior VP-out-of-home-media director for Starcom told Ad Age.
So-called shopper marketing already was booming, with Deloitte Consulting and the Grocery Manufacturers of Association projecting growth of 20% or more this year, but the downturn may not bring any extra boost, reports Ad Age.
“As consumers get more frugal, CPGs will shift their media to things that have a more immediate return on investment,” Mr. Garga said. “Shopper marketing is a captive audience in the store with an immediate effect. … Online is a medium, too, that supports more value-oriented messages.”
I would add that overall, digital signage, being the driver of growth behind both Out-of-home advertising and shopper marketing, is well-positioned to weather the storm. Such factors as slow but steady aggregation of digital signage ad space and development of standards and metrics are adding to its strength and will eventually make it easier for marketers to divert budgets from network TV and newspapers to this new medium.
February 19th, 2008
Digital signage network operators that depend on ad revenue are leaning towards becoming media companies, rather than being technology providers. Today’s battle for a piece of the advertising pie forces networks to allocate much more effort to finding a viable business model, building their ad space, training an ad sales force and breaking into advertisers’ media plans. Therefore, having to deal at the same time with in-house software or issues related to running an ‘on-premise’ software application is becoming too much of a burden.
In this respect the maturing digital signage industry is following the path of traditional broadcasting, where most of the technical and IT responsibilities are outsourced, leaving networks ‘leaner and meaner’ in their competition for ratings and ad revenue.
Software as a Service (SaaS) model that has become popular lately in industries like accounting, CRM and sales performance management, is appealing to many operators of ad revenue-driven networks, especially in retail as it can satisfy their demans for rich functionality without being cost-prohibitive.
I spoke to many networks who came to our booth at the Screen Expo Europe 2008 in London, and a vast majority of ad revenue-based companies appears to be looking for an outsourced, hosted solution. At the same time, there is a large number of closed networks (such as those in banks or corporate environment), for whom an ‘on-premise’ solution is a better choice.
BroadSign has published a white paper on the subject: ”Grow Your Digital Signage Business, Not Overhead: How a SaaS Solution Can Help. You can download it here.
February 8th, 2008