The Digital Signage Insider

When Will Advertising Agencies Understand Digital Out-of-Home?

Published on: 0000-00-00

Legendary bank robber Slick Willie Sutton is probably better known for a clever quote than his lengthy criminal record. When asked why he robbed banks, Willie answered "Because that's where the money is." With a slight twist, we might apply Willie's wisdom to the digital out-of-home (DOOH) world and pose the question: Do advertising agencies think DOOH is where the audience (money) is? And the logical follow-up: how important is it to the long-term growth of the industry that the agencies jump on board?

Nearly five years ago, as a wide-eyed attendee at my first DS show, I heard this same question asked over and over. The response was always the same: "Unless the agencies get involved," one DS veteran told me, "this business is going nowhere." At that show, you could have fired the proverbial shotgun, repeatedly, on the trade show floor without hitting an agency person (though hardware and software sales teams would have suffered heavy casualties). Now, five years later, the scene has changed but the song remains the same. The question is as topical, and top-of-mind, as ever.

How important is agency involvement?


Image credit: Stephanie Carter
"It is critical," says Virginia Cargill, President of CBS Outernet, one of the largest DOOH networks. During my interviews with industry leaders I decided to play devil's advocate: "What if the agencies don't increase their involvement beyond the current level?" I'd ask. But none of the industry experts I spoke with took the bait. Rob Gorrie, President of Adcentricity (one of the top DOOH buying/planning/strategy groups) voiced the typical response: "The agencies are getting more involved and I think that will continue. But media is a wacky world." Wacky, complicated and lacking clear direction.

If you were to judge the market's health solely by the daily industry headlines, you might expect to see an agency stampede toward digital signage and DOOH. In just the past few weeks, Ad Age has declared a "Boon for Billboards" as DOOH is one of the few media "experiencing real growth." And ADWEEK weighed in on the fast growth of retail media, claiming that "retail has become a big media buy." It is worthy to note that there's significant research behind both articles.

So as Bill Murray might say, "We got that goin' for us, which is nice."

But that's the view from 30,000 feet. Dive down into the trenches today, and you'll hear a different story. Agency buyers and planners are clamoring for reach, frequency and measurement. DOOH executives counter by asking for more focus and energy from their agency counterparts. The frustration on both sides is palpable. "At the agencies, the out-of-home people understand the space but don't have the money," says Cargill. "The network people have the money but don't understand the space." The importance of measurement can't be overstated. DOOH business managers admit that they're struggling to provide it in a form palatable to the agencies. "What I hear a lot," Gorrie says, "is 'prove to me that the audience you say you are giving to me you are actually giving to me'."

Sensing little urgency to invest in DOOH, many agencies continue the legacy of buying TV, especially since large chunks of network time are drastically discounted due to economic conditions. But those old habits don't sit well with Ashley Swartz, a former VP at media firm PHD, and now the CEO of Ag8, a boutique "trans media" shop in London. Swartz knows whereof she speaks. 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." Thus the onus is on the DOOH industry, Swartz believes, to make the process more user-friendly through standardization of the buy and (here it comes again) improved measurement.

What about Marketing at-Retail?

Retail digital signage, unlike purely ad-driven networks, feature a mixture of marketing, branding and product content married together. So that sector of the industry faces a combination of the agency-related ills and some problems all of its own. Fortunately, there are some experts guiding the way in that sector, like one Laura Davis-Taylor. If they ever build a digital signage hall-of-fame, Laura will surely be one of the first inductees. Coming from an agency background, Laura has been working the retail digital signage beat tirelessly for years. Ask her about the relationship between retail DS and the agencies and she'll tell you it's still very much a work in progress. One big stumbling block, Laura believes, is the lack of knowledge about the space. "The agencies know broadcast but they don't know retail," she says. "You don't learn retail unless you live it, and they've shown little desire to do that."

Another player in the retail digital signage game is Paul Flanigan. Flanigan produces the Best Buy in-store network, which touches virtually every aspect of the chain's operations, including collaborating (or cajoling) with multiple agencies on creative and content. Flanigan sings the praises of Crispin Porter + Bogusky, an agency that he says has become a great partner. Crispin made the effort to learn what works and what flops on retail screens, and has produced content specifically for Best Buy's in-store network rather than re-purposing existing broadcast content. That is a revelation unto itself, and, according to Flanigan, still the exception to the rule. "I have seen, first-hand, major agencies balk at wanting to engage in this space," Flanigan says. "They don't get it and they don't care." On more than one occasion, Flanigan says Best Buy's suppliers, the major electronics manufacturers, have gone around their agencies and requested that his in-house team produce content promoting everything from computers to cameras on Best Buy's in-store TV network.

Well Paul, I met Peter, your German brother-in-arms. While working as Germany CIO for Daimler, the car and truck behemoth, Peter Muller-Bruhl created a digital signage network in Mercedes-Benz dealerships throughout the country. He then moved on to a venture capital firm investing in the digital signage space. Now, he is at fischerAppelt tv media, a division of a large German ad agency. His primary responsibility: digital signage business development. "Is there anyone else working at a German ad agency devoted solely to digital signage?" I asked him. "I am one of two in all of Germany," Muller-Bruhl replied. "And it's not much different throughout Europe." An admitted DOOH evangelist, Muller-Bruhl doesn't worry that the agencies will fail to engage our medium. He predicts they will increase their involvement out of necessity. "Their clients will force them to jump on the bandwagon," Muller-Bruhl believes. "The agencies will claim to understand DS but will go for a quick fix using their existing resources. It will blow up and the clients will think DS doesn't work. The agencies will eventually develop specific expertise. But in the meantime, I'm afraid we'll see bad DS execution from the agencies."

But enough with the agency bashing and teeth gnashing!

Cutting through the emotion with a straightforward analysis is Jeremy Lockhorn, the director of emerging media and video innovation at Avenue A/Razorfish. Lockhorn would love to see our medium take off, but says that digital signage and DOOH is currently battling a double whammy: a terrible economy combined with too much supply and not enough demand. "The unfortunate reality for the industry," according to Lockhorn, "is the growth rate of inventory is grossly out pacing the growth rate of ad spend."

What's the conclusion? Our business has certainly come a long way. But we still have a long way to go. As Cargill says, "consumers are as out-of-home as ever," but capturing their attention, and monetizing that experience, remains a challenge for the industry. And the agencies? Well, they have their hands full trying to figure out mobile, social networking, online video, and the changing landscape of broadcast. Add DOOH to the mix and it's little wonder the agency folks gloss over whenever we start trying to engage them. We're working in a new channel. And with new channels, it takes time for everything to fall into place. Nonetheless, there is progress. There is energy. There is talent focused on this space as never before. "There is a recognition," according to Gorrie, "that this could be where the money is."

If Slick Willie Sutton was alive today, and planning his next job, he might take a long look at DOOH. No reason for him to look at a bank... there's no money there anymore.


Comments   

0 Bill Gerba 2009-02-05 20:04
Great article, Pat! I'm glad somebody (not me!) took the time to speak with some of these folks and get a truer understanding. There's plenty of gossip and hearsay out there, but very little factual information to back it up. Thankfully (from the sound of it), there are plenty of non-advertising digital signage networks that can hold down the fort whilst the ad guys figure out what's what ;) -Bill
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0 Roi 2009-02-05 20:16
Great... Im agree with you, its necessary more agency planners implication, and we have to work in audience measurement in all the DS projects. Thanks, Roi Iglesias
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0 Stephen Ghigliotty 2009-02-05 20:28
We are doing more and more work with agencies; but I find that actual agency experience is extremely helpful. If you don't have an understanding of that it's hard to get in front of the right people...
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0 Lionel Tepper 2009-02-06 03:08
A big issue for agencies and brands is how to measure the effectiveness of digital out-of-home. There needs to be a clear way for agencies to gauge the effectiveness and compare the metrics with traditional media. Thankfully this is happening through the efforts of OVAB and Nielsen. OVAB in particular has been doing a great job of getting in front of media planners at agencies. I was just at Strategy Institute's Digital Media Measurement and Pricing Summit where OVAB's President, Suzanne Alecia spoke on a panel. She said that they (OVAB) are seeing a big increase in the number of ad agencies that are coming to them for information on digital out-of-home (significantly higher than 2008) and there "is an increased urgency" to learn more about this space. The Strategy Institute meeting had about 50% agency-based media planners in attendance. The Brand Activation Summit held last September also had a significant representation of media planners from the agency side as well. There's an education curve that the agency business needs to go through" and this process will take a time. That's bad news for networks that are ad supported, unforfunately there's no short cut around this process. The good news is that the agencies do "get it" " Just look at the recent announcement by Schering-Plough Pharmaceuticals to spend almost $10 million dollars for a 12 week ad buy across 17 networks. OVAB had a lot to do with putting this deal together, and I think it's a milestone for the industry. Hopefully we will see more of this going forward. PS: We'll have an article out next week on Digital Signage Universe covering Strategy Institute's Digital Media Measurement and Pricing Summit for those that are interested. Lionel Tepper Digital Signage Universe
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0 Christian 2009-02-06 17:30
Hello Paul! Bill might have told you, but I was, and still am So impressed with this article, as it was very relevant in my line of work. Such realistic perspectives and quotes are rare! This goes down as one of the best articles I have read hands down. Thank you so much for this and I'll be sharing my view on this particular article and comments in my next post. P.S. Sup LT! You are all over the place!
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0 howard ziff 2009-02-06 23:51
I've seen, for the last 10 to 15 years, entrepreneurs in the digital OOH industry become road kill because they did not understand what this article and the intelligent and knowledgeable comments I have just read above are saying: No matter how much we,the "industry", may wish it, the "space" is not there yet within the paradigm that currently exists. Until a large enough network covering the ACV hurdle rate acceptable to pkg cos is in place no agency or the pkg cos themselves will spend in the "space" and the capx necessary to construct this "space" will not become available. As someone who looks at this from an investment as well as management perspective, I see the way to start directed at vertical venues. For instance, a system in a particular category of retail that has a specific demographic that advertisers want. Of course, all the critical components like content and measurement must be there. I am open to comments and thanks for the discussion.
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0 Pat Hellberg 2009-02-07 00:24
Appreciate all of the comments. Funny thing. I have received feedback from my ad agency friends that the article is "anti-agency" while my DS/DOOH brethren say they think the article makes our industry sound "whiny". Was not my intent to slant it either way. I tried to approach the topic as a reporter. And any reporter can see that while the industry is gaining momentum, the agencies aren't currently motivated to participate. As Howard said above, "the 'space' is not there yet". What will get the space where it needs to be? Here's where I'll inject my opinion. DS/DOOH needs improved measurement and absolutely needs improved content. We have to give customers a reason to watch, absorb and interact with what plays on the screens. Without compelling content, the audience won't pay attention. And that will lead to the worst measurement of all.
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0 David 2009-02-07 01:29
Dear Goliath, You are a dead man. Love, David
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0 Dean Drew 2009-02-09 10:46
Interesting and relevant article. We have a retail media planning site (planmymedia.com) designed to engage agencies. Its multi-channel (inc digital),multi-retailer and demographic based. Media agencies are still quite fragmented by specialism and media channel but are adapting. With a changing media landscape they (and all of us) have to become more flexible. We certainly have lots of interest but obstacles remain. Regarding the comment above, most of our (retail)media, inclusing digital is measurable (sales EPOS v control stores) and there is no question that creativity is improving. There is some great stuff around at the moment.
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0 Lyle Bunn 2009-02-09 12:46
When children play it is a moment of joy when they move away from "me" and "you" to "we" - joy not just for them but for any observer. DOOH, agencies, brands and retailers are all in the same economic sandbox.. the "we" of it is our (collective and individual) next level. DOOH and agencies form a key relationship - so hats off to anyone who helps agency success. When they win, DOOH wins
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0 Lazar Demisulam 2009-02-10 11:30
We have been promoting Digital signage since the beginning of 2002 in Turkey and we currently have our networks at the major airports, business lounges, shopping malls, hospitals and universities. I have completed my yearly visit to the large media buying agencies and we were very pleased to see their increased interest in digital signage. The main reason is that their customer's expection due to the global crise is more work and also reducing their fees, the same problem with the mass media commissions, they want to reduce the commissions to the media agencies. Their suvival will be in alternative media such as digital signage if they will be able to create succesfull projects and will be helpfull to them and will be able to also pay them higher commissions. I am optimistic for this year and also for the future but we should be in a position to bring end to end succesfull solutions through media agencies to their customers.
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0 David Murphy 2009-02-13 19:23
Pat, great article, this lines up with what we see with our DOOH networks and relations with the agencies, in the 8 years I've been involved with the business I've been saying "this is the year" and learning each year what the new roadblocks are. Now we see the slow maturity of the space and with long term relationships with our retail partners we slowly grow each network organically through relationships with the agencies and brands directly. I invite you and everyone that reads this article to join the conversation at the "In-Store TV Professionals" group on Linked In.
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0 Howie Feltersnatch 2009-02-14 00:01
Lionel, you are 100% right, there needs to be a way to measure it and it starts with the 10 million dollar buy by Schering. That is the only thing the digital companies get, data. The 10mm is value only, the digital networks have offered their networks for free. If this test goes wrong this you can say good bye to some of the smaller DOOH's.
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0 londoncreative 2010-08-29 08:47
Hello Friend, how r u ? Local [[http://www.londoncreative.com|Advertising Agencies]] are crying foul after Travel Manitoba awarded a Vancouver advertising agency what could be as much as $2 million worth of work.Our service offering includes strategic communications, direct response advertising, branding, digital, broadcast, multi-media and results based solutions both in the UK and across the world. Thanx
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0 Maple Street Studios 2012-03-29 16:18
We're totally with you there Lionel. We're always amazed when companies believe they've successfully advertised their product just because they've bout x million dollars worth of air time - DOOH is just the same. Great Article. Thanks. p.s. We're an award winning creative agency specialising in sound - check us out ;)
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