The Current Reality of Advertising in Out of home & Digital Signage

February 7, 2009 at 11:38 pm Leave a comment

In the past week, it has been my pleasure and honor to read and take in two particular articles that hit straight home, especially considering my background and expertise in these sectors. These articles were Digital Signage Universe’s If You’re Not on the Plan, You’re Not in the Buy & When Will Advertising Agencies Understand Digital Out-of-Home? written by Wirespring’s Pat Hellberg.

Why did they hit so home for me? I have seen and dealt with the realities discussed in these articles everyday at my previous position. I struggled to think about where the core of all the issues lie for several days since I have read them (several times no less) and I finally believe it’s all connected to the simple theory of “DEMAND.”

“Demand” is a funny thing in the advertising and media industries. It can make a media the next “new” and “hot” thing in the media world with a “flick of a switch,” and all of a sudden, everyone is suddenly clamoring to learn and implement strategies and concepts attached to the media. When the “heat index” is up, there is less regard for whether a particular media has matured to the point where the core principles and goals of advertising & marketing are in place; issues such as “measurability,” effectiveness of reach, relevancy, and, yes, Return On Investment. With a few articles, press coverage, and some big early-adaptor ad buys /investments; the belief of “we Must include this media in our strategies and plans, because such and such are using this media right now, and if we don’t do the same; we will deemed less competitive or innovative…” starts to spread like a virus very quickly. In the past decade, we have seen this in the Online media sector, where the phenomenon I speak of occurred. But Online media may not be the best comparison, as the nature of the media and technologies with in that space aligned with the general principles and goal advertising and marketing very effectively and quickly. Simply put, I have yet to see a media that is as measurable and justifiable as Online media. Online media is so sophisticated that it has gotten to a point where people can actually even show “heat maps” in terms of determining what parts of the screen viewers are Really looking at, amongst other methods. From this, some may say, “well, I’m sold!, I’m gonna just dump all my efforts and budgets into the Online space, and call it a day..” If you say this; let me be very clear; You have NO business being in the fields of branding, marketing or advertising whether you are just starting out or have been in the industry for decades. I personally still see some flaws in Online media. Measurable and accountable? Certainly. The “end game”? Certainly not. In this sense, it’s all about intelligent budget allocation; not just focusing on a few “flavor of the week” medias.

I haven’t wrote for a long time, but I have stated my personal belief in what I do couple of times, and it is my general principle and belief that “effective branding and advertising strategies / plans requires an Integrated approach in both the decision-maker / client-sides, as well as on the agency / media deliverer-sides.” My career might be fairly short so far, but I worked everyday with this principle in mind and I don’t know anything else. In this sense, I definitely see Out-of-home and Digital Out-of-home as viable medias to be included in a lot of strategies and plans. Has it matured fully?, especially compared to medias such as Broadcast Television (which may be Overtly matured), or Online (which still has much to innovate and grow)? The simple / quick answer is “No.”

2008, as both the articles touched on, was a period of great evolution for the Out-of-home, and especially, the Digital Out-of-home industry. I know, I know; some companies have been around for decades, and been “leaders” for a long time; a term that seems to be used very loosely in most advertising / media / content delivery industries, as the David Haynes of Sixteen:Nine pointed out. But from what I know; and please correct me if I’m wrong, there has never been such a period as 2008 where so many different organizations within these industries decided to work together to tackle all the issues connected to the industry(ies). If this is so, then it is obvious that maturation as an industry is yet to be here, and as we all know; “Rome was not built in a day…,” or even a year. On the positive side, “why all this activity then?” We go back to the theory of “demand.” It is because there is “demand” that decision-makers are starting to see the relevance of the media and the right questions are being asked. It is also why there is such a feverish attempt these days at answering and resolving these questions; not just as a company, but as an industry.

So why does it seem that brands and agencies aren’t stampeding to Out of home and Digital Out of home right now? Well, I guess it’s partly reality, and partly just bad luck. In an incredibly challenging economy, marketing / advertising budgets tend to be the first to get cut. I discussed this issue with Jon at Bonita Media, and let me state another belief of mine, which is “A bad economy is the Perfect time to actually raise the marketing / ad budgets.” This is because media costs become highly discounted with everything else around the world. The same budget in a good economy can take you a Lot further in a bad economy, so imagine if brand can even increase its budget. This gives brands and advertisers an excellent opportunity to try new and different strategies that they may have been shying away from during the good times, as well as separate themselves from the competition to gain Brand dominance if you are spending, compared to the competitors that are cutting. Unfortunately, I am not in such a high position, although hopefully some day. I digress. The reality is, in a bad economy, budgets for new and emerging media are really the first to go, which I believe is the case we have today. But I think it goes even deeper than this. From the Pat’s Wirespring article, I quote the following:

And she doesn’t mince words: “The agencies are lazy,” claims Swartz. “One of the biggest challenges [DOOH] will face is that people will never get fired for buying a 30-second spot.”

Apparently Pat already received some backlash on his article from agencies (I thinking majorly because of this quote), but I think those who took offence are reading into it way too much at face value. Let me be clear; THIS IS MY THOUGHT, and I don’t want to mis-quote or put words in anyone’s mouth, but this is how I took this quote. Let’s not disregard the hard work agencies like OMD, OMG, UMcCann, etc. put in everyday for this industry. I don’t think Ms. Swartz or Pat meant they are actually “lazy,” but rather, at times agencies are scared to take risks. Is this the agencies’ faults? Again, I go back to demand. Let’s not forget that agencies work for the Brands that commission them and have to justify every cent of the media spending. From this perspective, if decision-makers at the Brands themselves don’t know or understand a media, it is that much harder for agencies to recommend such buys. Can the OOH / DOOH ad industries honestly say that all the questions involving effective measurement and reach can be answered conclusively? Many RFPs /presentations may say so, but the reality is, the answer to this is more likely “No,” or at the most, “we are closer than ever before, but not completely there yet.” I think shot myself in the foot with this statement, so let me just leave with this belief on this particular subject. In observing the immense evolution within this industry in just the past year, I would not be surprised; even expect, that a lot of the underlining questions will be answered with research-based confidence during 2009. Brands and advertisers have to understand that there will always be a period of growing pains with any emerging media, but that also does not mean a media should be deemed “un-buyable.” Sony and Disney, two major and steady brands I have had to fortune to work with over the years understands this fact, and look at them; Dominant! I still rarely see brands taking such an intelligent and integrated approach to marketing and branding as Disney and Sony does… Another small point is if a brand deems Social media as viable, but the OOH / DOOH media as not; that just doesn’t make sense, as both medias have similar challenges today.

Another key point that seemed to echo in the articles is the lack of “knowledge” and / or “interest” in the space. Well, what do you expect? There is a “natural” disconnect going on today. The “old school” decision-makers are still focusing on just TV, Print, and Events (traditional media), and also busy with tapping into, or trying to keep up with Online media. The “new school” is mostly all trying to get into the “hot,” and perhaps, the “future” of media that is Online. Someone should do a survey at the Marketing / Advertising departments at universities. If the question was asked, “Which sector of Media are you looking to pursue as a career?” I would bet my NYC apartment that “Out of Home” and / or “Digital Out of Home” would be one of the last on the options / results; if they even know about these industries at all. The youth have an immense power that they may not even realize, which is the ability to “blow up” or make “cool” a product, service, and even an industry. Decision-makers at brands and agencies all have assistants, and these assistants play a large role in serving as the “eye” for the top executives, which is simple fact. Until an industry can attract the young / smart talents to help get the word out, increasing demand will always be a challenge for this, and any other industry. I feel that the ability to recruit and retain future talent is an issue that is not been covered enough in this space, and is a subject that can have a detrimental effect on the overall industry for the long term.

Another key point and quote from the Digital Signage Universe’s article, which deals with the issue of content quality:

The full impact of the digital out-of-home medium is not always fully realized. Campaigns often use repurposed content from traditional media rather than creating content that is specifically tailored to the medium. It takes about 7 seconds to make a connection with a consumer using digital out-of-home media, so repurposing a 30-second TV spot is not going to be as effective.

Simply put, quality and fit of content in the ads / overall Programming, as well of ad sales strategies / media prices that continues to be aligned with the broadcast TV style (this is a conflict because one has matured and been accepted, the other has not..) must improve and there is no way around this. Have you actually seen the content in these networks? Mostly pretty dry and repetitive to say the least so far… I don’t know the solution to this issue, but it is clearly a critical issue attached to the factor of effective engagement.

Last point I want to touch on is about all the options and duplication that brands and agencies have to sort through in the Out-of-home / Digital Out-of-home. Simply put, there is too much in both cases; even in the software and DS supply industries. I am always all for entrepreneurship and innovation; this is what the U.S. and any civilized economy is all about! But, there are So many options (and “leaders”) within these spaces; which is something I recently realized, that it would makes anyone’s head spin. Look at Digital Signage Universe’s “Directory,” and this is just in the DS space. Include all the OOH suppliers, agencies, what have you; there are hundred, perhaps even thousands of options. I mean honestly; how many companies do we need that offers a “health club” or “bar” network, or ad delivery programs, etc..? Less so with the DS suppliers, as that side of the business has a lot of different applications in every day lives and could require different expertise and needs, but this is certainly relevant to the Ad side of the business. Unfortunately, with this current economy, Charles Darwin’s theory of “Natural Selection” will come into play; not only in these spaces, but most other spaces and industries as well. This is something that no one person / company will be able to stop; just a simple reality of life, and certainly, in business. As I write this, I read the news about “Transit TV” going down, which I really saw as one of the networks that made total sense due to its “captive” audience… Just goes to show; these days, it is not a matter of something being better or more innovative than the other… What happens sometimes just doesn’t make sense, but it happens regardless. Looking from the long-term or macro-view on this subject, we know that the thinning out of the industry(ies) is pretty likely this year and maybe even the next few years, but I personally (and so Very very Sorry to say!, but..), and probably from the brands and agencies’ perspectives as well; mergers, acquisitions, and yes, closings, may actually beneficial in the long run for the Out-of-Home / Digital Out-of-Home industries in order to get more focused, reduce the all confusion, and bring about standardization more rapidly.

Let’s call a spade a spade, move away from playing “defense,” and focus that energy on why it is necessary to play “defense.” When the “why” is fully figured out, I truly do believe that the undeniable solutions will come. I believe in all the intelligent and hard working professionals and friends within these industries that I would not expect any less.