The Digital Signage Insider
WireSpring's blog featuring tips and analysis from a team of industry experts

YouTube gives Google a killer app for digital signage displays

Author: Bill Gerba on 2006-10-12 07:25:39

As you've probably heard, the big news in the media world this week is Google's acquisition of YouTube, and like every other blogger on the Internet, some strange force compels me to write about it. Actually, it's not that strange at all, since there are certainly implications and opportunities for those of us working on in-store and out-of-home media networks. And while it would be pretty funny to see a whole bunch of bikers (and biker wannabees) standing around watching LonelyGirl15 clips on TVs at a Harley-Davidson store, that's not what I'm talking about at all. For Google, YouTube, and anybody involved in at-retail media, the name of the game is going to be ad inventory, though not necessarily in the way that term is normally used. (Unrelated, if you found this article because you're looking for cheap digital signage systems for smaller networks, you probably want to check out our Digital Signage EasyStart page.)

First off, let's get something out in the open: the Google-YouTube acquisition (GooTube? Tooble?) is not likely to have much effect on large, homogeneous in-store media networks (like the ones found in nearly every Wal-Mart and Target store) or single-brand merchandising networks (like the kind you see in high-end clothing retailers). In both of these cases, the retailers take the store experience very seriously and need to impose strict controls on the content segments that get displayed. For these groups, a brandtailing model -- combining long-term brand building with short-term sales goals -- seems to be the best fit.

However, things start to get more interesting in less homogenized environments (where one particular brand doesn't need to dominate) or in environments where the experience can be enhanced with unbranded entertainment content. Mall concourse advertising -- the longtime domain of AdSpace Networks and others -- could be an ideal application. While AdSpace and relative newcomers like the OnSpot Digital Network (a partnership between Simon Property Group and media conglomerate Publicis Groupe) have focused on some creative ways of expanding and improving the in-mall experience with digital signage, the addition of cheap, plentiful and readily-available content from a massive Google-powered network could go a long way towards improving things even further. Likewise, I've noticed a recent trend of putting screens at a seemingly random sampling of local venues in certain towns or regions, in the hopes of selling ads to other local or even national vendors. Much like the army of websites that run AdSense, these smaller (or at least less consistent) networks would also seem to be prime targets for YouTube-sourced content.

It's not too hard to envision a scenario like what I described in an earlier blog on Google and digital signs, with some new twists based on leveraging YouTube's vast collection of content:

• Advertisers upload video ads into a new Google Video AdSense service, and tag it with relevant information, like product name, target demographic information, and the like.
• Other content producers upload entertainment content in much the same way, also tagging it appropriately.
• Some poor sap at Google reviews any content marked as "ready for public consumption" to make sure that it isn't obviously objectionable and fits the description and tags that were assigned. Once approved, it would go into a public Video AdSense ad pool.
• Meanwhile, digital signage network owners configure their screen schedules to include some amount of time for pre-selected content (the venue's ads and messages, public service announcements, etc.), and another block of time for the AdSense pool. Each screen would of course need to be assigned the same sort of tags as the content files.
• At playback time, each screen goes through its playlist as usual. Now here's where it gets interesting: when selecting an AdSense ad to play, Google supplies a spot based on its algorithm, using the data attached to both the video files and the screens. Depending on how desirable the screen location and audience is, this could initiate a real-time auction to decide which ad gets placed on the screen, with revenues shared between Google and the screen's owner.
• Similarly, when selecting YouTube content that doesn't fall into the realm of straight advertising (such as music videos), Google selects content appropriate to the venue and offers it to the network for some nominal cost per play. The network owner could then decide on the fly (presumably with the help of some software) whether to purchase the content playback rights and show it, or opt for some less expensive or free content. If nothing appropriate or cheap enough is found, the digital signage software could simply fall back to its pre-stored or venue-specific content.

Things get even crazier when you factor in the major licensing deals that both Google and YouTube have been working on for the past several months. With Fox airing episodes on MySpace and CBS signing up with YouTube, it seems that the networks are becoming more comfortable with expanding their content distribution channels. How long before they craft a pricing model where a public venue -- perhaps a diner or a hair salon -- can purchase episodes of CSI or Survivor to show in the waiting area? The content could even be supplemented with additional AdSense spots that were optimized specifically for it, perhaps making for a cost-neutral (or even profitable) public display. (This is basically how the pre-roll model of AdSense music videos on the web is slated to work.) And if episodes of top-tier content are too pricey for some locations, they might make due with thematically-appropriate low budget productions, which seem to be the hallmark of the pre-Google YouTube (we'll see what happens to that, of course). Being able to sell through some kind of Google AdSense program might also make more brands, marketers and agencies comfortable with using retail media, since this integration would simplify the media buying process and let them work with an established company whose product has been in use (albeit in a slightly different capacity) for years now. Another interesting question is how this might affect the companies whose bread-and-butter is licensing music videos and other entertainment spots for retail playback, since Google could soon become the clearinghouse for nearly every video ever made.

Unfortunately, what's missing from this model is an appropriate measurement metric that allows for the improvement of content selection. Sure, we can expect that network and venue owners may be willing to do some extra work to tweak content selections over time, but without AdSense's current capability of measuring media relevance by detecting clickthroughs, it could be very slow going. On the other hand, marketers will have access to reactive effectiveness data, since they'll be able to look at every playback instance of a particular spot (by date, time, location, etc.) and correlate that with sales activity in the area. Even that will be a tall order, though, as we've talked about in past articles including "measuring traffic on the sales floor" and "bringing affiliate pricing models to the retail space."

Given the proliferation of digital signage in all kinds of public places, I can envision a significant demand for this kind of offering in the not-too-distant future -- especially for the small-to-medium sized networks. However, before that happens there are a number of business, legal and technical issues that need to be worked out. For example, even with online distribution agreements with Sony/BMG, CBS and others, Google may need to acquire additional licensing and relicensing rights in order to be able to profit from public display or exhibition of the content. On the tech side, they'll need to modify AdSense and create a interface that digital signage software vendors can use to post their location info and pull the relevant content. From a business standpoint, will Google even want to offer such a service? The core of their experience is based on the web, and despite many rumors we haven't yet seen them step away from that model in any significant way. Still, even Google must cater to the law of supply and demand. With the acquisition of a massive video repository and the blessings of major media companies, it's safe to say that they now have the supply. What we don't know is whether there will ever be sufficient demand for this content from those who own and operate digital media networks, and if so, whether viewers will be responsive enough with their wallets to make the model a success.

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