Archive for September, 2008
The Audience Metrics Guidelines that the Out-of-home Video Advertising Bureau (OVAB) has been working on for the past year are now ratified and will be presented at the OVAB’s Digital Summit on October 29 in New York. The event will bring together major players on Madison Avenue with members of OVAB, which today include some of the largest digital out-of-home networks and vendors in North America.
Although I was involved in the reviewing of the Guidelines and provided some input as well, I cannot disclose any details of the document until the official presentation. Essentially it is a set of principles long-used in mainstream media buying that are applied to standardize the DOOH ad space and make it easy to plan and buy. The result is a simple formula to calculate the audience metrics in a way that would make sense to media buyers and their clients. The ultimate goal of OVAB is to turn DOOH from an alternative media option, an innovation, into a commodity, i.e., a line item on the media plan, with appropriate budgets allocated ahead of time, and not as an afterthought.
 
As Suzanne Alecia, President of OVAB, explained, the Guidelines are not the actual standards yet, but once adopted by members, they will lay the foundation for ‘best practices’, which will then gradually evolve into standards by way of wide-spread usage by the selling and the buying parties.
It is interesting, though, that the OVAB event comes at a time when a financial crisis urges advertisers to look away from overpriced and not-so-accountable TV and into more pragmatic and sales-oriented media like DOOH. Before, we have seen a lot of upward pressure from networks trying to reach out to advertisers through the barricades of reluctant agencies. Today, as several sources indicate, the pressure on the agencies is also being exerted from above, from the advertisers themselves, who increasingly instruct agencies to explore the digital out-of-home opportunities and report back.
Against this background, the OVAB Digital Summit comes in handy, as a facilitator of relationship between sellers of the new space and potential buyers.
Media Post’s Digital Outsider newsletter shed some light on the forthcoming event: “…the main reason for Alecia’s visit with the Digital Outsider was to update us on plans for OVAB’s Oct. 29 Digital Summit, a day-long event in New York designed to help marketers, and agency media planning and buying executives, understand the state of out-of-home video technologies and advertising issues.
The day will be structured around three key issues: Creative, research and planning, and will feature a variety of case studies from some recent successful out-of-home video ad campaigns. The day caps off with a panel of client-side executives sharing their views, hopes and aspirations for out-of-home video, as well as any pitfalls they’ve encountered along the way.
But the highlight of the summit will likely be the official release of the just ratified OVAB guidelines for audience metrics and measurement. Draft versions of the guidelines already are being circulated among the OVAB membership, as well as key stakeholders in the advertising and research community, and Alecia says they’ve already gotten the tacit blessing of key bodies like the Media Rating Council and the Advertising Research Foundation.” Read the full article: Digital Outsider Taps Madison Avenue Insiders.
September 30th, 2008
“Madison Avenue is bracing for the worst ad slump since 2001 as a drop-off in consumer spending is likely to lead marketers to rein in their budgetsâ€, reports New York Post on September 21. “The anticipated drop in spending in 2009 comes on the heels of a slight decline in 2007 and a more noticeable dip so far in 2008, according to industry data,†writes New York Post’s Holly M. Sanders. Most major press relayed a similar sentiment in the wake of last week’s meltdown on Wall Street.
New York Times quoted the CEO of WPP: “In the last couple weeks, you could smell the fear in New York,†said Martin Sorrell, chief executive at the WPP Group, which owns agencies like Grey, JWT and Ogilvy & Mather, as “institutions that were regarded as invincible have gone down or had to be bailed out.â€â€
The downturn in ad spending had started well before the “Black Sundayâ€: “… the Nielsen Monitor-Plus division of the Nielsen Company reported last week that ad spending in the first half of 2008 fell 1.4 percent compared with the same period a year ago. The laggards included ads in national magazines, down 3.1 percent; national newspapers, down 8.1 percent; and spot radio, down 10.1 percent,†says New York Times.
Reports forecast that traditional media is going to be the segment worst affected by the financial crisis, followed by online display advertising, which had already suffered a 6% drop in the first half of 2008, according to Nielsen. Display ads on the Internet have been largely dependent on financial and insurance advertisers.
New York Post writes that last week’s turmoil triggered memories of not-so-distant past: “No one wants a repeat of 2001, when the dot-com bust and an economic slowdown caused ad spending to plunge 9.8 percent, according to figures from ad researcher TNS.
During that recession, widespread cutbacks led to layoffs at many agencies, including some closings, shrinking budgets for many TV and cable outlets and the failure of several print publications,†(New York Post, September 21, 2008)
However, in 2001 the media landscape was quite different. Internet’s paid search advertising was not yet as proven and accountable as it is now, thanks to Google AdWords. Outdoor was less prominent and not yet regarded as ‘the only true mass medium left’, and the digital out-of-home ad space was almost non-existent. There are clear indications that these media may benefit from today’s difficult times, as marketers will cut budgets and look for more cost-efficient media placement options.
“It’ll be more pragmatic. More measurable. More digital.” — Nick Law, exec VP-chief creative officer North America of digital agency R/GA told Ad Age (“How Creativity Can Carry Your Business through a Recessionâ€).
If we look at the categories falling under ‘more pragmatic, measurable and digital’, and I would add, ‘targeted’, they all continued to grow at an impressive rate throughout the economic troubles that began in early 2008.
“Despite the overall decline, ad spending for cable television, syndication TV, and outdoor advertising remained fairly healthy. Cable TV grew 8.1%,†writes crainsnewyork.com. Paid search was growing too, according to Nielsen Online. Outdoor was boosted by digital billboards, and in-store digital media (digital signage in retail) was expanding, notwithstanding the lack of standardized buying criteria and measurements.
Online display ads, although digital and targeted, were an exception from the above group due to their exposure to financial ad budgets, and, some say, their intrusive nature. A good example of the exception that proves the rule.
Ad Age’s analysis of what the meltdown means for the advertising industry included this abstract:
For agencies: “… there will be further retrenchment in the financial-services and automotive sectors, with some expecting telecom budgets to be hit hard, too. Across the board, the pressure on shops will intensify to prove return on investment. Expect less-brand-based and more-sales-led metrics.
For media: “…By now, if you are in the media, you know the story: fewer dollars to broad-scale media and more for targeted, accountable media and other marketing disciplines, such as direct and customer-relationship management. Some marketers will double down with their most trusted media partners to create big, provable multimedia programs…†(Ad Age, September 22, 2008, bold and italics mine)
Although it is a fast-growing sector, digital signage is still a minor portion of the Outdoor/Out-of-home media which, in turn, is a modest part of today’s media mix. But that is changing.
The recession will inevitably force marketers to scrutinize ad spending and eliminate a lot of marketing waste. At the same time, it presents a rare opportunity (that occurs only once in every few years) for digital out-of-home networks to demonstrate their unique value as the most flexible, targeted, cost-efficient and accountable medium. The medium that closes a sale.
September 23rd, 2008
NBC Universal and Google announced a strategic partnership that would give the largest search advertising company access to cable TV ad space inventory, Ad Age reports.
The move, if successful, could enable smaller marketers, who have been using Google’s paid search ad engine AdWords and who have not been able to afford TV ads before, to buy air time on a number of NBC’s cable outlets, bypassing traditional media sales channels.
According to Ad Age, when the system is in place, it would allow ‘non-traditional’ advertisers to upload their own content and target it to cable TV households based on the desired geographic markets and viewer profiles using an online interface, thus avoiding agency overhead and media buyer commissions.
In addition, these new advertisers would be able to receive high-tech metrics via Google TV Ads application, which can report second-by-second set-top-box data, says Ad Age: “That measure has become more popular as companies such as Starcom USA, TNS and Nielsen have offered plans to help advertisers get more precise data about how viewers watch TV, skip across channels, and use digital video recorders.” The network TV ad space will not be affected by the deal, Ad Age reports.
This collaboration could give NBC Universal a much needed edge against its “Big 4″ rivals amid continuing fragmentation of TV market, while providing Google with a revenue stream from traditional media.
Mainstream agencies and research companies are likely to perceive the NBC-Google agreement as a threat, as it contributes to the erosion of their control of TV ad space and has the potential of taking over at least part of network TV sales in the future..
Many attempts of creating online ‘media space exchange’-type of enterprises since the early 90s have been thwarted, not without efforts by the traditional media establishment.
If the collaboration works, I don’t see any obstacle for Google to start making inroads into digital signage (judging by company’s reported patent applications it is already working on it), as there would not be too much difference in the ad sales set up. It would make more sense, though, when digital signage ad space is more aggregated.
September 14th, 2008
In recent years, many business owners have made a leap of faith and ventured into installing a digital signage network in their real estate. Many of them failed, some succeeded, some – succeeded big time. The prospect of boosting one’s business with digital signs is so enticing that digital signage suppliers are being overwhelmed with inquiries from small, medium and large-size enterprises. While the general idea is pretty simple – install screens, attract attention, promote-upsell-cross sell, the actual business models, content strategies and implementation tactics are still being tested by trial and error, causing a lot of entrepreneurs to sit on the fence until clear cut recipes for success are easily available. Â
Ken Borusso of Visual Incite published a very useful article in digitalsignagetoday.com on why should a business consider digital signage and how it is different from TV.
Here are a couple of insights from the article:
- While some business owners are undecided about the value of digital signage, large broadcast media companies have been acquiring and consolidating network ad space for the past two years.
- The value of digital signage CPM is much higher than that of broadcast media, even though the numbers are comparable. Digital signage delivers viewers who are prequalified by targeting, are less distracted, are near the products advertised, and are more likely to make a purchase.
Ken also explains the difference between broadcast TV, cable TVÂ and digital signage programming models.
This is a great update on the subject BroadSign’s Brian Dusho wrote about in 2005: Loop Vs Playlist: How to target Your Digital Signage Audience.
You can read the full article by Ken Borusso here.
 You can also find the Power Point Show of BroadSign’s presentation on a similar topic at Screen Expo Europe 2006 here.
September 11th, 2008
Ad spending was down on most traditional media in the first quarter of this year, but Outdoor was performing “better than most other traditional media”, and even maintained positive growth, says OAAA’s weekly newsletter Outdoor Outlook, citng Robert Coen’s July 2008 report on advertising expenditures. (OAAA is Outdoor Advertising Association of America, Inc. – NU).
First Quarter 2008
National Medium Percent Change
Outdoor. . . . . . . . . . . . . . . . . . . . . 3.0
Network TV. . . . . . . . . . . . . . . . . .Flat
Magazines . . . . . . . . . . . . . . . . . .-1.5
Spot TV. . . . . . . . . . . . . . . . . . . . -3.0
Newspapers. . . . . . . . . . . . . . . . -9.5
Spot Radio . . . . . . . . . . . . . . . . .-11.0
(Source: Outdoor Outlook)
“Among the hardest hit media forms is newspaper,” writes Outdoor Outlook. “Forbes recently reported daily newspaper circulation fell four percent in the first quarter of this year “and the slide is picking up speed.—
“The Audit Bureau of Circulation has released circulation figures on the nation’s top 20 newspapers, and the overall news isn’t good. Prominent newspapers with declining circulation include: The New York Times, down 3.9 percent (and Sunday is slipping even faster, by nine percent); Los Angeles Times, down 5.1 percent; The Atlanta Journal-Constitution, down 8.5 percent; The Dallas Morning News, down 10.6 percent; and The Washington Post off 2.6 percent. Second quarter results are not expected to be better,” reports Jeff Golimowski in Outdoor Outlook.
Despite the sharp rises in oil price, Out-of-home’s reach and frequency have remained “virtually unchanged”–even as consumers react to high fuel prices by driving and flying less, the OAAA asserted in an official statement. “Regardless of gas prices, most Americans still have to go to work, prompting many to turn to public transportation, which offers equivalent exposure to out-of-home media via buses, subways and commuter rail,” says OAAA.
MediaDailyNews reported that the industry organization (OAAA) “was rebutting an annual report from Vernonis Suhler Stevenson and PQ Media, which found that time spent with out-of-home media slipped in 2008, blaming high gas prices for the decline.”
“Virtually alone among traditional media, out-of-home advertising enjoyed a string of strong years from 2002-2007, frequently posting revenue growth in the high single digits–but the rate of growth slowed to a more modest 3% in the first quarter of 2008, compared to the 8% growth rate in the first quarter of 2007,” writes MediaDailyNews.
“But VSS remains positive about out-of-home advertising, forecasting a cumulative annual growth rate of 10.3% through 2012. At this clip, out-of-home ad revenues should rise from $7.9 billion in 2007 to $12.9 billion in 2012. That’s more than double the projected growth rate for advertising in general, which VSS pegs at 4.3% per year through 2012,” concludes MediaDailyNews.
I would add that factors benefiting Outdoor advertising include:
- Fragmentation of network TV and the growing confusion about how to measure its efficiency. With TV fragmented and newspaper readership shrinking, Outdoor is the only medium allowing marketers to reach mass audiences efficiently.
- Exodus of audiences from traditional radio to satellite radio, ipods and internet (prompts local advertisers to consider Outdoor).
- Competition to newspapers from online media (prompts local advertisers to consider Outdoor).
- The recent ruling by the US Court of Appeals to allow cable TV networks to sell a centralized DVR service that will make ad-skipping “available to many more people, faster, and less expensively,” as Tom Rutledge, COO of CableVision, explained it to Hollywood Reporter.
- The continuing conversion of static billboards to digital, spurred by the last year’s US legislation easing restrictions on digital billboards. Digital billboards allow media owners to place more ads on the same face, change them faster, attract more attention with full motion ads, target ads more precisely and provide more accountability to advertisers.
September 1st, 2008