If You’re Not on the Plan, You’re Not in the Buy

Advertising revenue has become a critical issue for Digital Video Advertising Networks (VANs).
Significant amounts of money are being invested in building out network infrastructure on the premise that advertising revenue will flow onto the balance sheets. In concept, these business plans make sense, but the reality is far more complex.

Over the past few years hundreds of VANs have emerged, covering multiple consumer touchpoints. Every stage of a person’s daily routine has been mapped, from commuting to work to their social interactions, consumers are regularly being intercepted by messages. If you can name a location it’s more than likely that a network is either already in place or it’s in the planning stages.

So it’s somewhat of a paradox that VANs are facing difficulties. On one hand there’s clear evidence that digital out-of-home media are highly effective at reaching consumers who are spending an increasing amount of time outside of traditional media targets. As pointed out in a report in 2007 by Patrick Quinn of PQ Media Research, “Americans spend twice as much time outside their homes and workplaces today than they did just a few decades ago.” But despite this trend, advertisers and their agencies are requiring more proof that the medium can indeed deliver. In many ways digital out-of-home is being held to a higher standard than traditional media, while traditional media continues to become less effective. In the meantime, VANs are caught in the middle waiting for advertisers.

At a recent conference held in New York by Strategy Institute called Brand Activation—Using Digital Out-of-Home Media, media buyers and planners met with leaders from the out-of-home industry to share their insight. The conference highlighted the perceptions held by brand managers and their agencies regarding digital out-of-home advertising.

The Brand Perspective

In many ways 2008 represents a tipping point for the digital out-of-home industry. Brands have been testing digital out-of-home (DOOH) media with great success. DOOH has passed through the bubble phase of its existence and has emerged as an effective medium for many brands, but in pointing out its success, other issues have emerged too.

While brands have been experimenting with VANs, they tend to be cautious about how they engage the medium and are not yet fully committed. As a result, no real line item currently exists in marketing budgets for video advertising. When budgets are assigned, they tend to be more campaign-specific.

“If you’re out there trying to shave off a percentage of your TV budget in order to find dollars to budget for digital out-of-home, you’re in the wrong game,” said Alan Schulman, SVP Executive Creative Director of imc2.

To complicate the issue even more, there is a lack of understanding about digital out-of-home media, which has led to the medium being planned too much like traditional media. Companies are often organizationally challenged when it comes to planning for digital out-of-home. It’s not always clear who is responsible for managing the budget and creative strategy.

The full impact of the digital out-of-home medium is not always fully realized. Campaigns often use repurposed content from traditional media rather than creating content that is specifically tailored to the medium. It takes about 7 seconds to make a connection with a consumer using digital out-of-home media, so repurposing a 30-second TV spot is not going to be as effective. Opportunities to connect to consumers with a relevant message are being missed.

“Relevance matters,” said Tim Hanlon, EVP at Denuo. “People need to trust the message and it better be accurate. Creativity needs to be of a higher order, it better pop.” John Paulson, President of G2 Interactive, put it this way: “Consumers expect a level of relevance and value in exchange for their attention.”

Digital out-of-home media offers new opportunities for brands to connect with customers by engaging consumers in a more memorable way through interactive experiences. Mobile marketing, SMS messaging, proximity sensors, and touchscreens are just a few examples of technologies that can extend the experience. “Anything that gets the consumer to interact with the message leads to a more memorable experience,” Mr. Schulman of imc2 said.

Brands today need to think about all points of consumer contact, from traditional media to alternative media. Digital out-of-home enables advertisers to reach consumers through geographically targeted messages that can supplement a brand’s national message.

The Agency Perspective

The dynamics of the market are changing and requiring agencies to rethink their approach to the media buying and planning model. There are several forces at work that are driving this change. Continued fragmentation of the media has created a high level of complexity for media planners. Because of fragmentation, there is a need for agencies to gain a better understanding of the digital out-of-home landscape requiring an ongoing process for education about these new alternative channels.

“The challenge with the traditional media planning model is that it tends to isolate available mediums rather than encourage an integrated approach to customer communication. The most effective campaigns we’ve witnessed have been those that place the consumer at the forefront of the planning process and then determine the most effective ways to reach that audience, whether that’s through traditional media like television or emerging alternatives like VANs. In most cases, it will take a combination of media to both break through clutter and engage the consumer,” said Laura Brooks, Director of Marketing and Public Relations for DOmedia, an online marketplace of out-of-home and alternative advertising media.

“Without a doubt, the current fragmentation and lack of standardization within the medium poses an obstacle for agencies that might consider adding VANs to their media plan recommendations,” added Ms. Brooks.

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.

“Measurement is a broad subject, but can be broken out along three key advertising sales needs: getting on the media plan; negotiating the media buy; and securing a renewal. If an agency is not familiar with the network or how it works, it will be nearly impossible to justify adding it to the media plan. VANs can provide case studies documenting their reach, footprint, awareness, and engagement within the venue along with some type of effectiveness measure. Providing this information will allow an agency to determine if the network is a fit for their client, “said Rob Winston, Senior Accounts Manager, Arbitron Out-of-Home

Right now there is no consistent and comparable method available so media planners can make an informed decision, but this is about to change.

The Nielsen Company has announced the creation of a new service aimed at measuring advertiser-based video networks. The new service, called Nielsen On Location Media, will track video networks in hotels, health clubs, retail outlets, arenas, gas stations, and other commercial locations. The initial coverage will follow six networks that include Gas Station TV, The Hotel Network, Arena Media Network, OnSpot (Simon Malls), Buzztime, and IdeaCast’s Airline TV.

“These network reports will utilize a hybrid methodology that will incorporate Nielsen InStore traffic estimates or real world ‘verifiable truths’ where possible,” said Paul Lindstrom, SVP, Nielsen On Location Media. “This real world information such as set-top box data from hotels, health club membership swipes, gas pump transactions, ticket sales, and interactive plays will be combined with demographic data in a patent-pending process that will ground the data and let us and our clients take advantage of the new digital world.”

The Nielsen On Location Media reports will be distributed to all Nielsen agency clients for use in planning, buying, and evaluating the medium. Nielsen On Location Media joins other Nielsen services that measure media outside the home that include Nielsen In-Store, Nielsen Outdoor, and the Nielsen – IMMI Out-Of-Home measurement service.

Another big development is the forthcoming release of the Out-of-Home Video Advertising Bureau’s (OVAB) Guidelines for Audience Metrics and Measurement developed in collaboration with video advertising networks, agencies, and research providers. OVAB is an association that has become a central resource for education and information on video advertising networks. The association has established an agency advisory board for research and standards and has online tools available that include a network planning guide and a glossary of industry terms.

The Out-of-Home Video Advertising Bureau will be hosting a Digital Media Summit , a day-long event to be held in New York on October 29, 2008. It is expected that the Guidelines for Audience Metrics and Measurement will be officially released at this event.

The Nielsen and OVAB reports will mark a significant advance in justifying the ROI for video advertising networks. Steve Kerno, VP of Analytics, Media, and Marketing Optimization for Organic said. “At the end of the day, if you can’t measure it, you can’t manage it.”

                         The Agency Perspective  Continued —>