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Letter From The CEO

The 4 Keys of Narrowcast Networks

A message from Keith Kelsen, CEO MediaTile

The opportunity for creating an on-air network is unprecedented. In the 1940's, during the golden era of television, TV tycoons ushered in an experience capturing huge audiences and large national advertisers. In the US, the big three TV networks ruled the airwaves. Then, in the 80's, it happened: the big three watched as their audience fractured into hundreds of target- specific channels with the advent of the cable network channels. A new breed of tycoons became the driving force in media. Right now, TV is splintering into new dynamic over-the-air narrowcast networks. And a new breed of Tycoons is on the rise.

Anyone who is launching a narrowcast network (digital signage network) is really launching the next generation of broadcasting. It is a channel for advertisers to reach their narrowly-defined audience while target consumers are in the marketplace thinking, participating, and experiencing in activities relevant to the advertisers and to the consumer themselves. Let's face it; the business of television is the business of advertising.

Some of the driving forces in creating these next-generation broadcast networks include the decline of prime time ratings by over 40 percent from 1977 to 2003; the advent of Tivo and DVRs, which allow the consumer to bypass commercials; the sheer number of channels available; and the fact that, according to studies, shopper recall is more than two times that of in-home TV.

In retail, brands spend $17 billion on shelf paper signs (point of purchase signs) every year. The problem is that 60% of brands never make it to the shelf. Digital Signage gives brand compliance. The brand sends its message and the message plays back on the screen. Advertisers are frantically looking for new ways to reach the consumer.

The creation of next generation broadcast networks require four elements for building a successful narrowcast network quickly: 1) Technology 2) Real Estate 3) Advertising and 4) Content.

Technology:

1) Choosing which Technology to drive this new found channel is not a trivial matter. The Technology includes Delivery, Content Management and Hardware. Choosing a technology that is easily scalable, inexpensive, and not an additional burden operationally to IT departments is critical.

Let's look at the available delivery technologies: Satellite, DSL, Cable, WiFi, and Cellular.

The first three require extensive, expensive installation of infrastructure that is operationally burdensome on an already taxed IT department. Another issue that occurs is in the sharing of DSL lines. Retailers have a very difficult time sharing mission-critical data lines with narrowcast network operators. Each of these solutions requires installation of a server, which delivers on-site content. In addition, running Ethernet cable to each behind-the-screen computer can be cumbersome and very expensive. WiFi can be a great solution for multiple screens in one location, but risk factors include security threats and a lot of IT headaches. Cellular installation is the easiest of all solutions; it delivers secure high bandwidth files (HD quality) directly to the display with an integrated player. Just add power and your display is instantly connected.

Choosing a content management system is a daunting task. Demo-ing each software and learning its features can be time-consuming and frustrating. Key things to look for include: a web- based application; the ability to Schedule to groups of screens and with Playlists; an easy- to-learn interface; easy uploading of content with support for a variety of content types; ability to isolate users based on function (since the person loading content is never the same person scheduling, in a large operation); reporting capability for keeping track of ads run.

A lot of content management systems come from television-modified applications. Look for something that was built for narrowcasting and has features that you need.

Integration of LCD panels and computing hardware is the ultimate answer for ease of installation, operations, and monitoring. Make sure that the hardware features you need are included. The complete combination needs to be modular so that computing power can be swapped out easily.

REAL ESTATE:

2) Real Estate is where the displays are placed. Whether in airports and public spaces, at the retail shelf, in a hotel lobby, outdoors, or in a veterinarian clinic, real estate is the key. Right now, there is a race to capture as much real estate as possible. Once the screens are installed, that venue is tied up and the likelihood of changing technology, hardware and the operator is minimal. To secure real estate you need a strategy, a business model and some capital. There are many different models to make this work; from no charge to the holder of the real estate, to share in the profits, to share in the time on screen. The rules are going to change according to the type of network you are putting in. The fastest way to get there is to do the pilots with real advertisers.

ADVERTISING:

3) Advertising pays the bills! Need I say more? OK! Sounds simple, but different venues require different models. Have your advertising component worked out before installing a network. 'If you build it, they will come' is not a rationale for launching a network. Speak with potential advertisers in advance. If possible, get commitments based on delivery of locations. Base your model on ramping up locations and advertisers. Involve Neilson and Arbitron for certification of traffic, eyeballs on your network. These are the analysts that the advertising media buyers depend upon to buy time. Media-buying standards and measurement will evolve, making narrowcast networks palatable to planners.

CONTENT:

4) Content is the touch point for the consumer. The consumer does not care about the previous three categories. Content needs to be engaging, and it needs to be relative to the consumer (i.e. not just a bunch of ads on a screen). Consider producing content that is relative to the environment and to the people there. Inform the consumers about new products, create product reviews, and keep in mind that the consumer is in the market place looking for new products; sometimes the product is the star. Entertain them with stars, movies, concerts, sports, and content that is integrated with the products. Think "storymercials". Bring real stars to the screen. Consumers love Hollywood; take advantage of that in an integrated model.

Enhancing the experience for the consumer is the number one objective of retailers today. Throughout the nineties, retailers hustled for growth by focusing on cost efficiency, range rationalization, inventory management and space optimization. Retailers now realize the futility of competing on price and are looking at alternate means of differentiation enhancing in-store experience, by delivering relevant and compelling content.

Take for instance a major drug store chain with a Photo Area, a Cosmetics Area and a Pharmacy. Content in the Photo area featuring a star promoting scrap-booking will sell more relative items than featured photo tips. If I am a drug store chain, I want to impress upon you the warm and fuzzy personality of my own brand. A personality's star-power in the Cosmetics Area and Pharmacy will enhance the store's brand.

In a Dentist's office. you might provide a seamless integration of entertaining content and product information to people in the waiting room. Combining product placement within storymercials is what compelling content is going to be all about.

I'll say it again...Anyone who is launching a narrowcast network or digital signage network is really launching the next generation of broadcasting. Make it all that it can be and set the new standards that will drive this industry to huge success!

Signing off for now,