Advertising: Bridging the Gap Between Small and Large Networks

Our freemium-based business model comes at a price. Roughly 5% to 10% of our users on the AWS-powered servers pay any type of monthly subscription or hosting fee. That’s completely fine and we expect it to be that way, but there are downsides. Most of the free accounts are VERY small (typically <10 displays). Where small networks get really hairy is with the advertising and attempting to make money using their signage. Small networks are seen as a hindrance to scale and more difficult to manage. Below I discuss some of the difficulties in running small ad networks and some solutions on what to do about it. I’m looking for feedback as well in the comments, so feel free to weigh in. 

Small networks have a few things going against them. Typically, their run by less sophisticated systems and sometimes less sophisticated people, but not always. The main problem with being small from a media managers perspective is that it’s nearly as much work as a larger network in terms of working with people, managing documents and getting things implemented–especially if the lack of sophistication previously mentioned is included in the network. It’s like corralling monkeys, but many groups of monkeys. In short, small networks simply lack the benefits of scale.

What are the benefits of large scale digital out-of-home networks?

1.  They can demand higher revenues from advertisers because of their broad reach
2. Large networks are less expensive to operate on a per-capita basis than their smaller counterparts
3. Large networks can typically produce better metrics
4. Unlike small networks, the big boys have a better ability to get noticed, toot their own horn and get in-roads into advertisers
5. Large ad networks can also access ad buyers more easily and they’re better accepted by third-party advertising aggregation systems

The struggle for the small ad networks still remains. How do you create a product that provides real-world ad re-targeting with the power of programmatic ad buying but give it to the small guys? Other “network aggregation” solutions of the past have tried and failed miserably. Many of those that have replaced them have moved away from the smaller, harder to manage and altogether less profitable smaller networks. Regardless of the CMS platform, those that aggregate and provide ad sales for networks typically don’t play well with smaller networks.

What to do about it…

Running a smaller network is difficult enough. There have been some mediocre attempts to create an adsense-like model for digital signage where a small mom-and-pop business can buy and install a digital sign and immediately get some type of ad-sharing benefit from placing the screen in their establishment. That would bode similar to adsense model for many web property owners who’re able to monetize above the cost of their digital real estate. Once we bridge that gap in digital out-of-home, the industry would explode–similar to the web. It’s not there yet. Here are a few reasons why:

1. Metrics. There is no single successful way to measure a small network’s foot traffic. When I say affordable, I mean as cheap as a web-cam or a simple facial tracker that doesn’t cost more than $10 to $20. Cost is a factor and the quality of metrics is a factor. Right now many larger networks rely on Neilsen audits to provide info on metrics and meta-data. Such a process is simply not feasible for the one-offs. Automating it is doubly difficult because the technology must be trustworthy. It’d be easy to run a proof-of-play report on a screen that was in your home closet without the right marketing automation for DOOH in place.
2. Meta-Data. Meta data could include longitude and latitude of the display screen, type of location, qualitative demographic information and much more for advertisers. Each display location would need extensive report
3. Platform integration. Less-sophisticated users will find it difficult to justify spending time on DOOH projects when they need integrate with an API (when in most cases they must learn to do so or hire it out), provide the data previously mentioned and run their existing business. Plug-and-play doesn’t exist because it’s much to hard. There are too many moving parts and differing technologies to do it right for the SMB.
4. Plug-n-play. This is perhaps all-encompassing. The units need to work out of the box.
5. Aggregation. Not all networks run on our platform (though they should). That presents a problem for integrating and aggregating various networks. Some, like Vukunet, have tried, but it’s a very difficult monster.

The whole conundrum is very “chicken-vs-egg.” Part of the problem with that is many larger advertisers STILL may not be interested in smaller networks even if they do have all the right components. The theory that “if you build it, they will come” could work in theory, but it’s been tried in practice and we’re still not there yet. When will we get there? I don’t know, but when we do, I would like to see a demo.