Google wants to run your digital signage network, patent says

Author: Bill Gerba on 2007-01-15 07:35:14

Last week, several people at WireSpring received an unsolicited (but much appreciated) email from a retail media company in the Netherlands. The subject: "Google into digital out-of-home business." The contents: a single link to a US patent application. This patent, titled "Allocating advertising space in a network of displays," would normally be something that most people in the industry dismiss without too much thought. Companies try to patent digital signage and kiosk 'innovations' all the time, and most of what they're claiming is either blatantly obvious or has been around for years prior to the filing date. But this time there was one thing that couldn't be ignored: the patent was filed by Google, which is clearly setting its sights on the out-of-home and retail advertising industries.

Quick, everybody panic!

When a multi-billion dollar technology juggernaut enters your line of business and starts filing patents it can be hard not to get a bit anxious. After all, Google is a smart, sophisticated company, and if there's one thing they know well, it's digital advertising. So should we all just abandon our businesses and wait for the inevitable march of Google?

[Note to any competitors reading this: the answer is "yes", and this is the end of the article. Stop reading now, pack up, and go home.]

If anything, I'm excited by the prospect of working with Google and seeing what kind of services they're going to bring to the industry. AdWords is a fantastic system for managing online ads, and Google has a massive amount of computational horsepower to perform complex analysis of content and locale metadata. With their acquisition of dMarc and YouTube, and their steady march into live ad insertion for local radio and TV, it's clear that Google wants to expand its revenue base beyond pure Internet advertising (which accounts for the vast majority of their 2006 sales). Thus, aside from its small size and fragmented stature right now, retail media would seem to be an obvious complement to their current strategy (and one that we've commented on a number of times before, most recently looking at how YouTube and Google technology might be used in digital signage networks).

Who stands to lose the most?

At first glance, it would seem that we software folks should be the most worried, since Google's patent application might be seen as describing what we do. Of course, in this case that's a good thing for us, since it means that many of the broad claims in the patent application will be narrowed or abandoned thanks to a plethora of prior art. For those software products with a strong API and the ability to pull content from the web, it probably means we'll be able to join Google's forthcoming ad network and allow customers to display syndicated ads. For Google, software is a means to an end, so the more partner networks they can sell advertising on, the better. (In this case, digital signage software providers might offer Google integration features similar to how blog software vendors allow you to embed AdSense ads into web pages.)

Now, as Dave Haynes notes in his sixteen:nine blog, media buyers and planners could possibly miss out on an opportunity in retail media that they were just starting to become interested in. While there will always be those retailers who demand absolute control over their in-store media and the entire store experience, many others retailers and non-retail venues will benefit from Google's ability to sell ad inventory that might otherwise require lots of time and manpower to move.

Another group that could get hurt are the number of startups that are attempting similar ad sales and management networks right now. For example, SeeSaw Networks was in the news recently for raising venture capital to create an ad management network for out-of-home media. If they don't find a way to partner with (or get acquired by) Google, they might have a very tough time in a marketplace that is very new to the concept of third party ad management services -- precisely the type of situation where Google's brand recognition could help them rapidly build market share.

Who stands to gain?

As noted above, I don't see this having a big impact on large retail networks such as Wal-Mart TV. However, I do think Google will provide an opportunity for smaller networks to act as a larger "virtual network," with Google-supplied ads filling out their various time slots. Likewise, software and network management companies who can interface with Google's system may be able to sign more deals with these network owners, especially for the small-to-medium sized networks that might not otherwise be financially viable. But the really big winners here will be the advertisers and content producers, who will have yet another outlet for their supply, and a better way to buy, track and manage out-of-home media on a potentially large and diverse number of different networks.

If Google can bring the same kind of scale and efficiency to the out-of-home ad market as they did for Internet ads, their entrance could mark a significant turning point for the entire industry. Just as the web made it possible for small companies to conduct business on a global scale, so too would an exhaustive network management platform give local advertisers access to global out-of-home inventory (and vice versa, as national and global brands found a new way to efficiently access local markets). While Google's patent application ends some of the speculation about whether they're dabbling in out-of-home media, we're still left guessing as to the exact nature of the company's plans and what form their products and services will take. (After all, no patent filing is a guarantee that the company will ever commercialize the offering.) But given the increasing public awareness of retail media, the greater demand by retailers and advertisers alike, and the growing technical base and number of deployed networks, Google could be primed to step into the market at precisely the right moment -- late enough to avoid all of the pitfalls common to a new industry, but still early enough to become a defacto partner and advertising provider.

Update 2007-01-15: The original submitter turns out to be Hans-Peter Akkerman, who runs a Dutch digital signage weblog. He's written his own take on the Google patent here (in Dutch, obviously).