Digital out-of-home: Who makes it work?

The world is getting more crowded by the minute. And while some facets of life seem to be more distant and disconnected than decades ago, there’s a growing field of technologies and new human user interfaces that is bringing commerce and people together like never before. [original link at iMedia]

Although the end business goal might be to sell, sell, sell, digital in-store marketing tools have adapted to the demands of a more educated, research-minded, and networked population. Simple messages don’t always deliver on the goals of marketers, particularly when the target audience wants to be enriched in the subject matter.

Enter the era of digital in-store marketing.

Adam Broitman, director of strategy and ringleader at Crayon, has been researching this burgeoning marketing channel alongside iMedia and has developed his own research and some interesting observations.

“Digital in-store presents a curious but very compelling circular movement from where we were at the onset of ecommerce,” Broitman says. “When ecommerce became a formal discipline, one of the core objectives was to emulate the type of experience that one might have in a physical retail store. Of course, the human user interface had to be adapted to create a metaphor for real-world shopping, but the end state consisted of logic that was synonymous with what you might find at a traditional retail outlet (shelves, register, customer service etc.).”

According to Broitman, with the rise of digital in-store, we once again find ourselves trying to parallel one experience with another. Many of us have become so accustomed to shopping online that for any digital interface to truly engage us, and effect our purchase decisions, it must be on par with the best online ecommerce solutions.

“Digital interfaces in stores must be familiar to consumers in order for them to be effective, and in order to make these interfaces familiar, they must emulate some of the logic that we find online,” Broitman says.

In the world of digital in-store, or out-of-home, there are numerous companies making waves (and money). iMedia spoke at length with Intava, Ecast, and Adcentricity to capture a sense of where things are headed from all sides – for a company that builds dynamic touchscreens, one that manages a nationwide network of stations in the hospitality industry, and one that sells digital ad space across North America spanning 140,000 screens.  

Bellevue, Wash.-based Intava creates and maintains on-premise digital and interactive media systems and has been in the out-of-home space since 2004. The company’s CEO, Troy Carroll, says Intava differentiates itself from others in the field by offering customized marketing opportunities and a range of metrics that matter most to marketers.

“We’re technology designers that think like marketers,” Carroll explains. “We’ve really put a lot of focus on adding to the marketing side.”

Traditional agencies are even showing interest in Intava as a path to add in-store to their catalog of services.

“We record virtually everything,” he says. “It’s interesting – what a customer values varies customer to customer.” Because of that, Intava captures data on everything from sheer usage to transactions and the value that one of the company’s products might give to employees at their place of work.

Intava mostly serves retail, specifically the wireless industry, bars, and restaurants. “We are pulling in external reviews, user ratings, giving people the ability to give feedback and ratings right there on the screen,” Carroll says.

Despite all the improvements that have been made to the Intava platform over the years, there is still no integration between the online world and in-store screens, Carroll says.

Carroll admits that Intava has yet to find a company that’s sophisticated enough to pull it off. But one of their customers is undertaking a massive IT project that they’re hoping might be able to deliver a truly integrated approach.

Perhaps most interesting is Carroll’s perspective on where things are heading.

“In the future, the preferred access point is going to be the mobile phone,” he says, adding that it’s certain to be the next major phase for in-store reachability. “To me, in the long run, it’s no question.”

In his mind, there’s no question about whether it will happen, but rather when it will happen. 

So although Intava has seen tremendous growth of late, is there already an end in site for its current business?

“It’s a question I’ve asked myself many times,” Carroll says. “I don’t know. These screens have a place. They are going to exist in some form.” Beyond that, he chooses not to look too much into the crystal ball.

Retailers are finding the most success when they use the platform to provide services that act as a companion to a store visit. “That’s what retailers should be thinking about. It’s more of a pull thing. It can start out really basic like  an inventory check,” Carroll points out.

“I’m dubious about the prospects of pushing the marketing message to the consumer… A person sitting at their desk or in their home behaves completely different than a person standing in a store, especially if they have a kid hanging off of them,” he says. “They did not come to the store to use a computer, they came to shop.” Oftentimes, you’ve only got two minutes to capture a consumer’s attention with the screen, and people are not easy to reach in a retail environment.

Based out of San Francisco, Ecast manages a large share of the out-of-home market, particularly in the hospitality industry where the company’s network of more than 10,000 bars and nightclubs delivers interactive music, games, entertainment, information, and yes, interactive ads.

Bob Cooney, VP of business development and operations at the company, tells iMedia that Ecast serves 1 billion interactive ads each month via DoubleClick’s DART program, although not all of them are paid for.

Cooney says ecommerce has forced the hand of retailers. “They need to engage the customers in the store to close the sale,” he says. “One of the ways we do that is by bringing in relevant advertisers into this engaging application. We can really highly target down to what that user experience is and deliver a highly relevant audience to that advertiser.”

Ecast has invested almost $100 million in its platform over the last eight years and $120 million is managed each year through its network, Cooney says. What began as a digital pay-to-play jukebox grew into a scalable platform that eventually caught the interest of advertisers.

“Once we got to 10,000 locations (in 2007), we were in as many locations as there are Starbucks,” he says. “One of the nice things about the platform is that we can target by region, demographics, and down to the user level… You really have to be smart and savvy in how you deliver that to not turn them off.”

While the company aims to maintain 10,000 locations in the hospitality market, it’s eyeing retail for its next phase of growth. “We think that there’s a natural place in a grocery store for a virtual wine connoisseur,” Cooney says. “We can bring cost-saving measures to free up employees to serve other customers. That’s an area where we feel we’re going to get some traction early on.”

Because Ecast’s platform is built around touchscreens “we can give highly granular data to all the stakeholders,” he explains. “The fact that it’s totally measurable at every level is something that separates it from almost every other out-of-home media. It’s really the web brought to the out-of-home market. We think that we give them a platform and tool that not only reaches them, but gives them ROI.”

From its headquarters in Toronto, Adcentricity manages more than 140,000 out-of-home screens spanning 89 network partners across North America. The company acts as a buying and planning agency for companies looking to buy ad inventory on these platforms – essentially a one-stop shop for in-store digital screens.

“We have an enormous ability to enable the selling and advertising on all these platforms,” says Adcentricity’s President and founder Rob Gorrie.

“While the science part of our business is really about the planning and buying, realistically this business is as much art as it is science,” he says. “These networks are all completely different, they have different capabilities, some have Bluetooth, some have touchscreens. The easiest way to look at this is sort of wrapping it into that new media triad because these are all connected and they can be activated by mobile.”

The number of eyeballs you can reach at these locations is staggering, he says. “This business gets results. It’s very efficient. It’s a cost-effective inventory, and it’s a great place to be spending your money these days,” Gorrie says. “We’re sort of the dark horse of digital.”

The average CPM at one of the locations that Adcentricity manages is between $7 and $12. However, a medical office, for example, commands CPMs of more than $30. 

The number of screens under Adcentricity’s umbrella grew by at least 20 percent last year, Gorrie says, but he adds that there’s a lot of supply. Some of the older networks have put the brakes on installing in new locations.

At last count, there were 1.8 million screens operating in North America. By 2012, that number is expected to be close to 10 million.

“Nothing ever happens very quickly in retail,” Gorrie says, and some retailers take a couple years just to implement their plan after testing. “No matter what, you’re always talking about the top 20 or 30 markets to start.”

Gorrie says Wal-Mart is by far the largest retail implementation of digital in-store screens. The company is currently installing its second generation of screens.

Even with all these screens constantly delivering entertainment, information, and marketing opportunities, many brands are “sitting on the sidelines,” Gorrie tells iMedia. However, financial services, mobile device manufacturers, and electronics makers have been very quick to adopt.

While some out-of-home implementations have been a success by any measure, there’s plenty of business that pulled back after putting their hat in the ring. “There’s a lot of roadkill along the way,” Gorrie says, adding that it mostly depends on the company type and what its objective might be. Some companies have seen a 73 percent lift in sales, he says.

Bringing everything full circle
“We have come full circle (in a sense) in terms of digital commerce,” Crayon’s Broitman says. “Ultimately, the result will be true cross-channel integration (we have been hearing about this for a while, but we are only now beginning to realize what this means) in a ubiquitous computing environment. The lines between the real world and the digital world will become obscured, leaving us with the challenge of creating a seamless experience.”

And while we still have a long way to go, he adds, there are many companies making in-roads to real success in the digital in-store space. Part of the ultimate success of digital in-store will lie in how effectively retailers are able to leverage the mobile phone. SMS, QR Codes, and other methods will help bridge the gap between the retail store and online shopping.

“Over the next five to ten years, we will see various manifestations of digital in-store – stay tuned, it will be an interesting ride,” Broitman says.

Matt Kapko is deputy editor for iMedia Connection.

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