Ad Management Drives the Digital Place-based Media BusinessBy Lyle Bunn Lyle@LyleBunn.comOctober 2012

As ad-based Digital Place-based signage has matured in serving almost $1 billion annually that agencies and advertisers now come to network operators’ table with, and retailers increase their investment in dynamic media, networks operators are called to deliver better planning, placement and performance information. The ability to conduct advertising commerce effectively and efficiently fundamentally defines the success of an ad-based Digital Place-based network. The growing needs of advertisers mean that the “Ad Manager”, or the “Inventory and Campaign Management” capabilities of the Digital Place-based Network is a primary enabler of customer service and the achievement of network operators’ business goals.

Four situations are advancing the requirement for highly effective and efficient ad management on the part of digital place-based network operators.

a) “The cheese is moving” to cite the 1998 Spencer Johnson book. The way in which place-based medium is being used for messaging and engagement by inspired marketers is placing new demands on network operators to be more responsive and of higher value toward campaign outcomes.

b) The double-digital annual growth in advertising spending requires that the network operator be very effective and efficient in seizing/serving business opportunities.

c) Beyond existing ad-based networks, the opportunity for revenue gain and to support partners and suppliers is driving “corporate” networks that were originally designed for internal patron, staff and student communications to move forward with ad-based operations. Serving advertisers is more demanding than posting messages.

This paper reflects that:

An Ad-based network needs operating efficiencies and economies to be successful. Corporate networks will require Inventory & Campaign Management at levels not typically

considered as they move into sponsored content and ad-based business models. Transitions to more operable, enabling ad management infrastructures have been effective. Proven suppliers and capable support for the transition to the Ad Manager, Inventory and

Campaign Management “layer” exist.

In all cases the operating infrastructure must be able to accommodate “media business” requirements. Several options exist to accommodate the needs, including a software “layer” that sits on top of the existing Content Management Software. In examining this option, alternatives do exist against the considerations of business need, current infrastructure and operations and future network directions.

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1. The Starting Point

The road to ad-based network success starts with clarity of the business opportunity, network model and approaches. Simply “hanging up a shingle” that exclaims “open for ad business” without considering media commerce elements renders the network unable to succeed in revenue achievement and operations, providing little value to investors. The entire workflow and the business requirements are complex and must be highly integrated while responding to the needs, processes and language of different advertisers and their agencies. Ad based networks are much more complex in operation than corporate systems that can simply use their Content Management System (CMS) to schedule and deliver content to one or more displays.

A cost-benefit and SWOT (Strengths, Weaknesses, Opportunity, Threat) analysis will indicate investment-worthiness on the part of the network to move to a new ad-based operating level or enter ad-based network operations.

Andy McRae, General Manager of Dot2Dot Communications, which has the world product mandate for the Ad Manger layer of Scala says. “It is not the Ad management layer but rather the business model that matters. The technology simply serves it. We’ve seen more and more networks – a growing proportion of planned network that are planning for ad and sponsored messages. Virtually every large network we look at is integrating advertiser service into their network and business model”.

Brian Dusho, CEO of Broadsign, a third party digital place-based ad management platform launched in 2004, notes that “Where BroadSign sees a lot of activity today is in networks converting legacy in-house platforms or stale playlist-based software to full ad management platforms. They have a need to automate campaign execution, inventory optimization and performance reporting in order to scale their business.” The conversion process often begins one of three ways: when a network has reached a maximum scale and needs automation to continue growing organically, a non-digital network is looking to deploy a digital network with all the advantages that entails, or a network runs multiple unconnected platforms and needs a common platform to drive efficiencies. “Many of the inquiries that we are getting are the result of the merger or acquisition of networks, and from corporate networks looking into new revenue streams following the continuing rise of digital place-based as a first class citizen in the media mix,” added Brian.”

Daniel Fleischer, Director of Business Development of Montreal-based Ayuda Media Systems, which has expanded its base from ad management of billboard and static signage to include dynamic signage agrees. “The bulk of the business is still coming from ad-based networks who really are “media companies”. We see corporate networks approaching Ad-based Digital Place-based to manage the ad element of their business and sell their inventory”. The workflow is complex. Networks shifting from corporate or patron facing to Ad-based operations fail because they do not realize that there are different business processes. Without an ad manager layer, all you have is a system to play content on a screen. The ad manager layer adds the uniquely important capability of allowing the user to view scheduling from a client perspective, rather than from a network perspective”.

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2. Ad Manager Requirements

Networks must consider the entire scope of the ad-based business processes and the way in which the Ad Manager, also called the Inventory and Campaign Management layer, handle these elements to enable media commerce.

Elements include:

Inventory of all managed media assets including dynamic, static, video walls, mobile, tablets and other media channels included in the messaging, engagement and campaign capabilities that the network operator offers to advertisers. This includes inventory avails (not just full screen, but each available partial screen, and the types of media in each zone), loop policies, day-parting capabilities, category separation, advertiser separation and ad specific scheduling features.

Data, data, data! Data fuels the media plan/buy and then supports invoicing. Media planners and buyers expound on the critical importance of the Ad-based network operator providing information about viewers, locations, the context of engagement and the projected and actual impact of media presentation and interaction with displays. While they speak of “data,” it is clearly emerging that the value proposition inherent in data at its growing levels of value from data to statistics to information to knowledge to wisdom, are the request for business intelligence, impact assessment, actionable intelligence and predictive models. The Ad Manager layer, when applied, offers network operators the capability to support their offer of “flighting” with data asked for by the advertisers.

Proposal Preparation / Offer including inventory elements as well as pricing tools, advertiser content portals, campaign Management, booking/reserving functionality, predictive analytics.

Scheduling / Flighting including direction of the ad to the playout manager, rules-based scheduling, ad start/stop instructions, category separation, advertiser separation.

Invoicing / payments including proof of play/performance, impressions, GRP/reach/frequency metrics, invoicing/billing, viewership validation, impact assessment, agency commissions, revenue share payment calculations.

Reporting including loop saturation, occupancy reporting, financial reporting, commission tracking, inventory utilization and revenue/yield management, business intelligence, and engagement indicators. Reporting could be as “dashboard” or reports.

Andy McRae offers one example of the value of reporting. “We recently looked at salesperson performance reporting for a network operator. On the surface the “best” salesperson looked apparent with the highest sales volume. But, we looked at the bigger picture, (as the ad management must do), which included reporting on who sold at a level closest to rate card, who used up the biggest percentage of inventory, who used up the inventory that had the greatest value and what profitability they delivered for this inventory. In looking at the bigger picture, the apparent best salesperson was actually the least value of everyone on the sales team.”

3. Assessing Options

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Supply capabilities vary depending on the market focus and the service emphasis of each provider, and capabilities exist in suppliers beyond those referenced in this paper.

William Barbieri, Senior Vice President, Strategy & Product Management of DS-IQ recommends that, “The ad manager must have a user-orientation that is campaign-centric, rather than content-centric so that it is intuitive to the marketer/business user. The Ad Management layer enables media commerce and serves advertisers well when it includes elements such as business intelligence and predictive analytics”.

“Ad-management goes beyond traditional content management,” notes Dusho, “network managers quickly develop an appreciation for the automated rules-based management approach of a real digital place-based management system compared to the manual brute-force approach required by one of the many CMS software solutions in the market today.” He goes further to say, “the ability to scale on a reliable and recognized third party platform allows networks to adapt to major trends in the evolution of the ad market and move faster towards compliance with new industry standards on a stable, solid platform.

Fleischer observes, “A digital network benefits when the Ad Manager layer is tightly integrated with the CMS. An ad manager can be added on top of the CMS as a layer but efficiencies are offered when they are tightly integrated and scalable. “Modules” allow network operators to choose elements of functionality that suit their needs as their needs increase”.

He adds, “When you consider that dates/times, locations, & slots need to be sold as opposed to just scheduled, you have an entirely new set of variables to address. This is why the ad manager layer is such an important piece of the CMS and should not just be considered an add-on, but is core to how the system is set up for scheduling, providing reports, etc.”.

Barbieri of DS-IQ cites an example of the dexterity and functionality inherent in a retail-based inventory and campaign management platform.

“Imagine that back to school season is coming and there are a series of “back to school” campaigns that you want to air, but there are a couple challenges to doing that on a national or even regional level. The timing of when school starts differs which means that you’ll want to start and end the campaign in different markets at different times. Can you target based on those conditions?  Many can say yes, but it gets harder still. Product doesn’t always get to every store as it is supposed to.  Product runs out at certain stores. Product sells at different rates in different stores and at different rates at different times. Each of those data streams (inventory avail, inventory stockout, product velocity) can be a dynamic targeting condition that informs which ads should play when and where. Doing that right means the difference between a successful campaign and an unsuccessful campaign. That is what an intelligent ad management system (such as offered by DS-IQ) can enable”.

a) Media types

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Many brands, retailers and marketers are increasingly looking to their “owned” communications devices such as their website, mobile app and on-premises dynamic signage to achieve their re-visit, branding and merchandising goals. “Owned” media is activating loyalty and conversion while fueling “earned” media such as opt-in, referrals, positive word of mouth, “likes” and social media benefits.

As dynamic signage increasingly is part of the “Paid-Owned-Earned” media model (see this explained in the paper The Power of "OWNED" in the "Paid-Owned-Earned" Media Mix available at http://www.lylebunn.com/Pages/aboutus.aspx), network operators are advised to consider their maximum value to advertisers and their location agreements. This increasingly means managing other media types such as static signs, video walls, mobile, tablets, etc.

McRae notes, “When an Ad-based network gains the location agreement, it naturally would ensure that the network operator could and would offer message presentation and engagement media beyond dynamic into static, video walls, mobile etc. Leverage the media assets” McRae advises.

Barbieri adds, “The multi-channel element includes a wide range of passive display devices, and “audience of one” devices such as mobile, email, tablets, shopping assistant, etc. Dynamic media amplifies value in the paid-owned-earned model.”

“People like the idea of a holy grail for ad management – but realistically, the communications inherent in the “paid-owned-earned” media model do operate differently as they deliver different business value. Digital place-based must deliver well on its core value proportion. The transition from simple message presentation to truly empowering in-store media is built on business intelligence-based inventory and campaign management. Some channels are more logical to incorporate on the in-store system”.

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By better linking “paid”, “owned” and “earned” media, marketers and communicators seek to gain greater value from their overall media investment toward “engagement” with better audience targeting of customers, patrons, staff

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b) Existing Infrastructure & Integration

Past investment in technology and content management infrastructure should factor heavily into defining an improved operating capability, but not at the cost of best meeting business needs. Caution is warranted. Incremental improvement may have high opportunity costs while also committing the network to perpetual inefficiencies and distorted, un-natural business processes. Existing infrastructure offers the potential for upgrade, but more likely the potential to add modules or an additional layer of functionality.

The addition of functionality must bring with it the improved capability to integrate with other operating systems and inputs that enable the network to provide higher value.

William Barbieri notes “there is high importance of links to the point of sale system as a core intelligence attribute as well as inventory, external conditions (i.e. weather) and other dynamic targeting variables. DS-IQ’s intelligent ad management system, for example, enables much more relevant and effective DPb campaigns at scale as it includes the ability to ingest many different information streams, make sense of it, and deliver on the promise of relevance”.

“Dynamic ad provisioning” uses data to configure and compose messages. In a simple example, cold outdoor temperature could trigger an ad for soup. Variables from other systems and databases such as pricing, point-of-sale, inventory, loyalty, anonymous viewer analytics, foot traffic, etc. could all serve as input to make a specific ad more relevant.

Barbieri adds, “Our retail and on-premise customers have told us it’s not enough to just sell ads. They want their networks to be synchronized to their go-to-market and selling imperatives. At DS-IQ, our ad management system not only manages ad inventory but also incorporates data to dynamically schedule campaigns when and where they will be most effective. We have open APIs to enable CMS partners to incorporate DS-IQ as part of a winning whole solution.” DS-IQ provides the ad management layer and programming intelligence for the Wal-Mart SMART Network which is perhaps the most successful retail network, with an audience of 140mm shoppers and multiple, distinct channels that can run campaigns individually and in concert. c) Ad Management options

“Suppliers of this layer” advises McRae, “bring a key value- they bring knowledge of the business and its processes. A failing of the many ad-based networks is that they think they can just slap up a screen but the “business behind the business” of ad management is the key”. Considerations such as advertising priorities, ad-based processes and literacy about analytics and metrics” are key inputs. Vendor selection considerations should include their experience in ad-based businesses, deep knowledge of dynamic media systems and processes, ability to leverage and link with other capabilities, and a keen, real-world understanding of where flexibility is needed”.

Denise MacDonell, General Manager, DOOH/Digital Signage at Harris Corporation, Broadcast Communications reflects that “The definition of ad based is evolving rapidly, going beyond throwing ad messages up on the screen - that definition is generally a poor execution – it is more about sponsorship and ways of enhancing content for promotional value.

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Consumers must see “paid” content that is in the context of information and the overall experience that the network delivers through better context and the tying together of ads and content to provide a better experience. Ad management has got to be integrated with CMS so ad and content strategy are blended. This requires the CMS to enable monetizing and attribution of all screens regions that are addressable and targetable”. “For example”, she says, “at the 7/11 convenience store network of 4100 locations which is operated on the integrated Infocaster CMS and Punctuate Ad Manager platforms provided by Harris Corp., the state lottery might have a “slide in” of prize value along with an ad encouraging ticket purchase”.

i. Make-Buy

“Some key elements of the make-buy decision” as we see it says McRae of Dot2Dot Communications, “has the network operator answering questions such as a) What business are we in; advertising or software development? b) How valuable is the time it may take to get to market and c) should we incur the cost of development as a total dollar commitment and as a percentage of operating cash.”

Fleischer says, “The Ad management layer provides value beyond just the CMS through the ability to automate the entire ad sales. Also, operational workflow could replace numerous other systems, which range from expensive custom built software to droves of separate spreadsheets. Ultimately, the ability to consolidate a significant portion of an operator’s ad-related operations are what constitute the value of the ad manager layer. Usually, without a proper ad manager product, everything that falls outside of simply scheduling content to screens is tracked manually, which is time consuming, expensive, and drastically inefficient from an operational perspective”.

ii. SaaS – Cloud

“SaaS” (software as a service) and “cloud-based applications” are generally synonymous terms. They offer ready availability, possible cash flow advantages and built-in quality of service.

“We provide all this functionality at a lower cost of entry compared to home grown systems or on premise applications by providing our platform at an affordable monthly fee” explains Brian Dusho, CEO of Broadsign, “by providing our platform via a software-as-a-service, also known as cloud, model”

“When an operator like BroadSign-powered JCDecaux, arguably the largest OOH company in the world operating in over fifty countries including the UK, US, France and China, decides to employ the SaaS model over all other options - this speaks volumes” notes Dusho.

iii. Premises

Many networks define their Content Management System and Ad Manager systems as core

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business and operating assets and as such, prefer to buy (or license) these software elements.

The same assessment criteria that apply to other core operating systems such as accounting, payroll and inventory would apply as a network considered its preferred option.

iv. Ad Sales Agencies and Aggregator

Services such as those provided by VUKUNET, DOMedia, rVue, Adcentricity and others are primarily focused on ad sales.

To varying degrees, integration of the infrastructure of their client networks’ with their own operating infrastructure enable inventory and campaign management along with flighting and billing. The onus is on the network operator to describe their viewership and playout locations, to provide proof-of-performance and manage content presentation through their own content and network management system.

A review of aggregation services is outside the scope of this paper.

4. Business Value

Three primary motivators exist for assessment and upgrade of the Ad Management capability by the Network Operator including:

a) The need to operate with greater efficiency in ad sales and media commerce.b) The growing requirements on the part of advertisers for better decision-making input and

responsiveness to their needs.c) The requirement for better corporate management, decision-making and ROI assessment.

Some benefits are apparent, such as increased revenues, profitability and decision-making that better serve network investors.

Beyond this, Ad Management unlocks the growth potential of a media network, allowing the network to better focus on its core businesses, which include increasing ad sales, increasing viewership and increasing value to their customers.

It also positions the network operator to play a more central role in on-premises viewer messaging and engagement in the context of “paid-owned-earned” media. This could mean access by the network operator to revenues beyond their “core” dynamic display message presentation capabilities, and the leverage of their ad sales resources.

Improved management and growth in ad revenues and client services also enables new revenues for the network operator in service areas such as content strategy and creation, data analysis and business intelligence, campaign management and engagement strategy.

4. Plan of Action

The road to ad-based network success starts with clarity of the business opportunity, network model and approaches. A cost-benefit and SWOT (Strengths, Weaknesses, Opportunity, Threat)

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analysis will indicate investment-worthiness on the part of the network to move to a new ad-based operating level or enter ad-based network operations.

“I’ve seen too many startups test and review a variety of software options without clearly understanding what their sales model will be” says Fleischer of Ayuda Media Systems”, adding “how they will build their venue base and attract advertisers while still keeping an eye on realistic profitability”.

Fleischer adds, “Regardless of what the approach is to implementing ways to sell their valuable screen real estate, I think a good technology partner is just that – a partner who shares its experience working with other successful ad networks, in addition to providing great technology”.

In summary, improved Ad Management, Inventory and Campaign Management are a key part of maturity of Digital Place-placed networks and the evolution of corporate (patron, staff, student) networks.

The key question as posed by William Barbieri of DS-IQ and with which all Dynamic Media suppliers agree is, “Can it evolve at the speed of digital marketing”?

More information on this subject is available through discussions with suppliers, independent advice as offered by Dynamic Media specialists (including this author), and education sessions on the subject including the following:

The SPEED On! education program is a Feb. 26, 2013 pre-show session of Digital Signage Expo. This advanced training program will address areas of network optimization, including a case study up content management upgrade. See http://www.digitalsignageexpo.net/speed-II-digital-signage-training

The monthly webinar series for Ad-Based Network Operators addresses network management and operational issues. For past recorded and upcoming sessions see http://www.digitalsignagefederation.com/dsfbunnwebinars . This webinar series is sponsored by the Digital Signage Federation (DSF), Digital Place-based Advertising Association (DPAA), Intel, Synnex, LG Electronics, NEC VUKUNET and Dot2Dot Communications.

The author: Lyle Bunn (Ph.D. Hon) is a principal advisor, analyst and educator in North America’s Dynamic Place-based media industry, having assisted hundreds of organizations in their project planning and optimization, trained several thousands professionals and published over 200 articles and whitepapers related to place-based media. See www.LyleBunn.com for other resources or contact Lyle@LyleBunn.com. The author acknowledges the contributions of Ayuda Media Systems, Broadsign, Dot2Dot Communications, DS-IQ and Harris Corp to this paper.

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