The Digital Signage Insider

NBC's out-of-home upfront: Good or bad for digital signage?

Published on: 2008-01-14

About a week ago, a fairly seismic shift occurred in the ad-driven digital signage market. NBC, which already provides content and sells ads on various digital signage networks, decided that they would hold the first-ever "upfront" for digital out-of-home media. Their goal? To sell the majority of their ad inventory in a single session. Citing the TV writers strike and a shift in advertiser interests, NBC representatives suggested that content and ads on their screens will reach people "more than 3 billion times" in 2008, making them an ideal place to spend ad money. Ad Age initially reported the news (here's a copy from Google in case that link stops working), and I wrote an article for Digital Signage News to encourage some dialogue about it. After a week of other folks sharing their opinions, a few clear schools of thought emerged -- each championed by someone coming from a different part of our industry. They're all worth considering, and I'll summarize them below, but ultimately I'd like to leave it up to you to decide whether NBC's move is a good thing for the digital signage community... or not.

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.

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?"
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 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.

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."
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.

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.

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."
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.

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?
I'd love to hear your thoughts on this one! Email subscribers: Click the link below to share your comments. Reading this on the web? Just use the form below -- click on the "Comments" link if you don't see it right away.


Comments   

0 Phil Contrino 2008-01-14 15:30
As someone who works in both television and digital signage, I have a mixed reaction to this news. I think it's a smart move on NBC's part to experiment and stray from traditional ad techniques. As a network, their shows appeal to a younger, hipper audience (they recently picked up a program called Quarterlife that first aired on MySpace) so I'm not surprised that they'd make this kind of decision. I think it's a big step towards better reaching their target audience. I definitely think NBC's actions could cause ABC and CBS to react very quickly and move in the same direction, especially if NBC -- who consistently finishes behind them in ratings -- starts to gain some ground. What'll be more interesting to see, is whether cable networks such as HBO and Showtime -- whose programming is starting to really give the broadcast networks a run for their money -- will invest more money into this platform. If that happens, then we'll know that NBC made a bold move into the future. From the digital signage perspective, I think the idea of having upfronts doesn't really make sense mainly because, as well all know, there is no concrete way of measuring this industry yet. I think NBC needs to make everyone involved aware that digital signage is not black and white and that uncertainty allows for more flexibility which in turn makes it an appealing ad medium. So while I think the general idea is a very smart move on NBC's part, I'd give it a much weaker endorsement on the digital signage end just because I agree with a lot of the negative aspects that have been brought up.
Reply | Reply with quote | Quote
0 Bill Gerba 2008-01-14 18:47
Hey Phil, Obviously you and NBC disagree as to whether it makes sense or not :) On the other hand, while I have no idea what kind of investment it takes to set up an upfront, if it's cheap, I suppose there's no reason for them to NOT give it a shot (aside from looking ridiculous if they can't sell much of the inventory, of course).
Reply | Reply with quote | Quote
0 Rob Gorrie 2008-01-14 20:34
I would love to be able to live blog this upfront as it's generated a ton of good attention. My guess, however, is it's invite only.
Reply | Reply with quote | Quote
0 Jeremy 2008-01-15 16:54
To answer the "good or bad" question, I think we have to look a little deeper into how the space is being sold. Are they selling in terms of a TV-style playlist, where you are buying specific time at specific venues, or is this more like a pre-buy commitment with the details to be filled in later based on other factors? Ideally, NBC would be using the second approach, perhaps even leaving some prime space available for later sale through a bidding process. Marketers who buy a lot of space in the upfront would then get the first opportunity to bid on other inventory when it's made available. Granted, I'm not really familiar with the upfront process in general, so perhaps this whole idea of flexible rates and commitments is impossible. But something tells me NBC is planning to innovate at least a little bit with their digital signage upfront, capitalizing on some of the unique aspects that the medium has to offer.
Reply | Reply with quote | Quote
0 Pat Hellberg 2008-01-15 19:23
There's much to digest regarding NBC's up front. I'm going to waffle, 100 %, by saying that on the one hand, NBC wouldn't waste their time staging an up front if they didn't think digital signage was a viable advertising/consumer communications alternative to conventional media. Which is a good thing. On the other hand, you and others make viable points regarding the big boys, rather than the current players in the industry, dictating the future of the business. It's the golden rule, isn't it: them that's got the gold, makes the rules. Unfortunately, if we can't sort it out, others will sort it out for us. Econ. 101. You know my opinion: shoppers will tune out/ignore a steady parade of broadcast spots. Eventually, nobody watches and nobody wins.
Reply | Reply with quote | Quote
0 David Weinfeld 2008-01-17 22:55
With its recent digital out-of-home upfront, NBC has planted its flag in the sand that is the digital signage industry. While I don't believe that NBC had its upfront to reap any large financial reward, nor do I really think that they expected it to, but what they have done is become the first major media company to have an advertising sales upfront for digital out-of-home networks. And, sometimes, being the first matters more than doing it exactly the right way. In my opinion, this article typifies the primary reason why NBC had the upfront to begin with...to generate exposure for its digital out-of-home assets and to be looked at as a forward thinker in this space by the media community at large. The press exposure that the event has garnered, from the likes of Ad Age, Adweek, Reuters, and the New York Times makes it successful for NBC...regardless of the amount of advertising revenue the event generated.
Reply | Reply with quote | Quote
0 Bill Gerba 2008-01-18 04:07
Pat: way to take a stand :) In all seriousness, you're absolutely right: whether or not there is a group out there who's more "qualified" to set the rules, NBC had both the means and the motive to do it themselves, and now they have, so everyone else will have to play second fiddle. Capitalism is brutal that way. On the other hand, there's certainly still plenty of room for others to participate, and I think there's plenty of room for other formats for ad buys as well. Just because NBC has taken this particular stand doesn't mean that others will have to as well. David: I think you're right, and in particular, if you read some of the commentary at Adweek and MediaPost about the actual contents of the "upfront," it was more of a glorified sales pitch to see if NBC could convince a bunch of advertisers and media planners that their conglomeration of nine different networks (using different screens, different media formats, different content formats and different venue types) could be packaged up and sold like TV. As I mentioned in the blog post, it may be a while (if ever) before we find out how successful they were, but to your point, they made plenty of headlines trying it out.
Reply | Reply with quote | Quote
0 Isabel 2011-11-09 12:36
Hi there! Thanks a lot for sharing this extremely interesting article! This news is definitely a terrific one! Come visit my web site dedicated to free avi to mp4 converter http://freeavitomp4converter.com/
Reply | Reply with quote | Quote

Add comment


Subscribe to the Digital Signage Insider RSS feed


Looking for more articles and research? Our newest articles can always be found at Digital Signage Insider, but there are hundreds of additional research articles in our historical articles archive.


You may also be interested in M2M Insider: our blog about M2M and the Internet of Things.


Questions?  Get pricing  •  Call us at (800) 989-9269 or +1 (954) 548-3300  •  Chat with us online
Copyright © 2016 WireSpring Technologies, Inc. All rights reserved. View our site map, privacy and legal info, and syndication policy.