While I'm certainly impressed with NBC's aggressiveness and confidence in their ability to sell their digital screen space just like TV, I dislike the idea of trying to squash our shiny new medium into a decades-old framework invented when there were only three significant sources of inventory (namely ABC, NBC and CBS), and it took months and tons of cash to produce an acceptable-looking spot that tied into an existing campaign. Further, having to buy space upfront, while nice for padding NBC's coffers, does little for advertisers who might not know exactly when or where they want their out-of-home spots to run. After all, one of the biggest benefits of advertising on digital signs is that they let advertisers deliver content to the right audience at the right place and at the right time, but even the best marketers can't always predict what the right time is. With our medium they don't have to, since screens can be updated virtually instantly, giving advertisers the ability to respond to changes in product demand or consumer opinion faster than they ever could on TV. Likewise, content for digital signs can take advantage of new technologies like Flash, HTML and dynamic data sources that allow for quick revisions and favor last-minute insertion.
I do think that getting media buyers and planners interested in our sector is a good thing, and I certainly appreciate that NBC is one of the few companies that can virtually force that rather stalwart group to change direction. At the same time, I have a bad feeling that a purely supply-driven model won't work to our industry's favor in the long run, and this could be the event that starts us down that path. I would have much preferred to see NBC adopt a more open bidding system (maybe through eBay's ad auction) that better unlocks the "timeliness value" of digital signage content. In fact, Motomedia's David Weinfeld left a comment more or less in agreement with this perspective. His take on NBC's position is that despite lots of chest-thumping, nobody else has gotten the digital signage ad sales model right, so they're merely falling back on what they know:
"The reason that large media companies, such as NBC and, arguably, PRN, are choosing how this media is being sold initially is that many screen networks are still struggling to monetize their viewership. NBC has the size to be, what is known in the financial industry as, a market maker. They have the relationships and the clout to make a digital out-of-home upfront profitable, even though it is not the correct advertising sales model for our industry.In our free market economy, everyone's free to compete, but he who makes the most money wins. The problem in our industry is the corollary to that rule, which basically says that he who starts out with the most money is probably going to make the most money, especially when there's a huge gap in spendable cash between him and the next guy. That's essentially the situation that we have right now. After all, NBC's parent company is GE, #6 on the Fortune 500. Of course, that still leaves five spots for bigger companies, and a certain retailer in that group is pretty heavily invested in digital signage advertising :)
The digital signage industry does not yet include enough seasoned advertising sales professionals to direct the ship toward bountiful advertising revenue. Many networks, both good and bad, grew from entrepreneurs who identified the potential growth of our space. These individuals, however, lack the advertising sales expertise to effectively position their networks. Large advertisers want metrics and a national footprint before agreeing to make an investment in a digital out-of-home network. There are numerous networks in our industry that I believe were started with the 'if you build, they will come' mentality toward advertisers. This, of course, has proven to be a faulty string of logic.
NBC is calling the shots because they are the elephant in the room. It's the job of network owners, unified network groups, such as Seesaw and Adcentricity, and digital signage industry associations to stand up and come up with a better model. Because if we don't, big media will come in and take over control of our industry. The question comes down to: is this what network owners want? Do they want to build out networks and sell to the likes of Clear Channel, CBS, etc.? Or would they rather decide the direction of an industry they have put in the time and energy to build?"
The discussion certainly didn't end there. Fellow blogger Rob Gorrie felt that even the small companies working on solving the ad sales problem could have been more successful had they merely listened to what ad buyers were asking for:
"Behind the scenes, the major Outdoor players are all saying that if we (Networks, organizations and associations) don't dictate standards (for sales, measurement, content, etc) THEY will because they feel we're screwing this medium up by stagnating it and not making decisions/squabbling.Cooperation between technology providers, agencies, industry organizations and the networks themselves is certainly a big challenge these days. It's a frequent topic of conversation for POPAI's Digital Signage Advocacy Group, though admittedly we've made little progress in figuring out how to solve it.
Forcing a sale model does not a medium make but it IS a start....especially for getting attention.
One of the problems I run into regularly on the Network side is that this medium has been sold a particular way for 5+ years by the Network Vanguard/The 'adults' in the playground. Understandably, they don't want to change how they do things (you wouldn't either if you did something a certain way for 5 years and were just starting to see some success).
The agencies have been saying what they want for 3 years and we haven't been listening...or at least it doesn't look that way to them. I've seen a lot of lip service given to media agencies by some major Networks but very little change in how the Networks actually do business."
A third argument came from Ben Caswell of BannerCaswell Productions. He suggests that we might be looking in altogether the wrong place, since:
"Targeted entertainment will drive the industry.I certainly like that notion from a "purist" perspective, but the capitalist/pragmatist in me feels that advertising will drive the content on many of these networks, and not the other way around.
It is not driving it yet so the 'up fronts' or -- in Rob's case -- pitches to media buyers are selling ad time on Networks that until very very very recently was a medium strictly for advertising.
Content in the DS space meant moving ads. Until the last 6 months, very few were thinking NBC/CBS/ABC content, least of all those companies themselves...
So when an ad buyer says 'when it gets like TV' -- and to complement Rob's ad sales interpretation -- what I hear is 'when there is a reason to think that people want to watch the network,' i.e. when there is targeted entertainment, then we will buy time. Because content drives eyeballs and where eyeballs are the advertisers will be sure to follow.
The 'moving ads'...or 'poster plus' networks will continue to thrive on remnant buys. Go Seesaw.
However, the premium buys will come only for networks with enough of a dwell time to entertain with programming that is not flash, powerpoint, adobe photoshop or simply OTHER ads."
NBC will soon know the results of this experiment, since the upfront is scheduled for January 16th. But unless they sell 100% of their inventory on the first try, we probably won't hear much about how successful it was except for the usual rumors and gossip. One thing's for sure: with NBC making the first big move, everyone else -- and I mean everyone -- is now in a reactive mode, not a proactive one. The other TV networks, the big media conglomerates and even those retailers who have secret desires to become media companies will either have to step up and play by NBC's rules, run with a model set forth by one of the smaller companies in our fledgling industry, or forge their own path. Indeed, there's a tremendous opportunity for inter- and intra-industry cooperation that could yield a more cohesive set of offerings, better compatibility between networks, and stronger buy-in from agencies. But there's also a chance that every company will decide to do their own thing, fostering the fragmentation that seems to define us nowadays.
So, what do you think...
- Is NBC's upfront good or bad for our industry?
- Will it have a major impact on future events, or is it just a one-off deal?
- Which companies (if any) will respond, and how?
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