CREATING A LOCAL DIGITAL NETWORK by Scott Bell

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Is there a playbook for developing a successful indoor digital advertising network? I believe so, and I’m willing to share my experience with you today. So considering that I compete in the indoor digital signage business, why would I offer our recipe?

First, I won’t be sharing anything today that you can’t learn by looking at one of our screens or visiting our website, and second I want local indoor digital to grow and thrive. The only way this happens is if operators adopt some continuity, use a similar playbook and drive customer value. I’m not saying our playbook is perfect and doesn’t have its flaws, I’m just expressing that there have been many attempts at local indoor digital but few are making it work.

Here’s my top 10 list (in no particular order) for creating a successful Local Indoor Digital Ad-Supported Network:

1. Make it low touch. Create a network that limits the amount of time in the field making service calls due to equipment malfunction or content updating. Believe it or not, I’ve met folks that run 100+ screen networks with thumb drives. Also, purchasing the off-brand equipment from H.H. Gregg may present some issues as well. My suggestion is to build the network with the intent of owning and operating it for 20+ years. If you were making choices based on that assumption, you would invest in commercial-grade screens, implement RS232 CommPort capability and deploy scalable software that will fit your needs no matter how large or small your network. Remember, as a local ad-supported indoor operator, time and efficiency is of the essence, so spending time driving from one venue to the other making service calls can be costly. Rule #1: Set up your network as if you will own it 20+ years from now. Make investments that will limit your service calls.

2. Creating a “network effect” is important. The first consideration should be the size of the network you are investing in. Are you planning to deploy a 25-screen network or a 125-screen network? This decision should be based on the market size, but it’s important that you create a “network effect” that reaches a nice percentage of the market’s population each day. The reason a “network effect” is important is because local businesses oftentimes make advertising decisions based on their own exposure to the advertising product. They then ask themselves, “Will this advertising work for me?” If the advertiser is rarely exposed to the indoor digital screen(s) because your network isn’t large or dense enough, you will run into roadblocks when selling simply due to lack of exposure. Rule #2: Make sure your network is large enough to reach at least 5-10 percent of the local population every day. If you don’t have the capital to make an investment of this size, start with a small market or suburb and create a dense network.

3. Choose your battles wisely. Put some thought into where you will set up your network and if you can take advantage of media gaps in the market. Are there areas of town where billboards don’t exist and reaching on-the-go consumers is difficult? This presents a tremendous opportunity to set up an indoor digital network and compete with print publication. Rule #3: Develop your market’s network by choosing communities and neighborhoods where reaching consumers is difficult with traditional media.

4. Understand your cost of sales. Over the years, I’ve been exposed to digital signage companies paying their sales teams 40+ percent of incoming revenue. Unfortunately, having such a high cost of sale isn’t viable or scalable when operating a local indoor network. So how do you get around this considering local indoor is sold via a direct sales team? Well, this takes me back to Rule #1; make sure your network is large enough to generate enough revenue to support a healthy living. Also, consider entering or layering in multiple revenue streams in addition to direct advertising. Some examples could be selling weather, sports and news sponsorships (monetize every content space you have) or offering a managed subscription-based digital signage solution for businesses to promote their products and services specifically.  Rule #4: Develop a network that can produce enough revenue to support a direct sales team. In other words, having a 25-screen network probably won’t feed two account executives.

5. Create a hyper-local content strategy. In addition to local advertisements, what other content are you going to provide? Consider a partnership with your local broadcast company so you can run local news content, calendar of events pages and locally sponsored weather and news opportunities. Anything that you can do that provides local value for the viewer creates more value for your customer’s advertisements. Rule #5: Feed the beast with hyper-local.

6. Understand your pricing and don’t undervalue. If your local broadcast company is selling advertisements at a $12 CPM and the niche publication is two or three times that, why are you pricing your ads at a $0.50 CPM? Not only is this damaging your revenue potential, it’s also creating the perception of “cheap” in the eyes of the consumer. Digital signage has tremendous value for advertisers and developing a CPM pricing structure that is competitive with other media outlets not only shows your prospect that you have a pricing strategy but that you have confidence in the products ability. Rule #6: Develop a CPM pricing strategy that can be communicated and defended and is competitive in the marketplace.

7. Keep it Simple. This may sound vague, but simplicity should be the goal of every aspect of your local indoor digital business. This covers your pricing model, loop strategy, screen layout, content development, etc. Can you explain your pricing model in 30 seconds? Do you have a pre-defined loop strategy that considers dwell time and can be explained quickly? Are you using multi-zone or full screen ads (I suggest full screen in many applications)? Who’s developing your content, and are you spending an exorbitant amount of time and money creating content for customers who can only afford “free value-added designs?” Rule #7: Don’t overcomplicate the back-end processes and customer-facing details.

8. Set Expectations. When working with local direct customers, setting expectations can be critical for customer retainment. The $300-$750/month customers will most likely be your bread-and-butter customer base, which creates challenges when striving to deliver measurable results. Think about it: a 20 percent return on investment for a customer spending $300/month will be $360. For an advertiser that generates sales of $500,000 per year, this return isn’t enough to get them excited and probably won’t be noticed. That’s why educating the customer on the importance of long-term community branding and exposure is an essential piece of a successful advertising mix. Rule #8: Set expectations through transparency and educate the customer on the benefits of branding.

9. Choose your venue verticals. I’ve been exposed to different venue strategies over the years and believe that most find it difficult to specify their niche. I believe that you can set up your network in multiple venue types but it needs to be done with purpose and scale. In other words, placing screens in as many restaurants, bars, gas stations, doctors’ offices, hair salons and oil change facilities as possible will make it difficult to sell space. You need to have a story and reason behind why you choose bars over gas stations or doctors’ offices over restaurants. And it’s important to choose venues with high traffic and long dwell time … this is your value proposition. Simply put, placing a screen in the ENT Doctor’s office with 25 daily customers won’t drive enough value for a local car dealer’s advertisement. Rule #9: Find specific venue types that drive high traffic and long dwell time and focus on that.

10. Sell your ass off! So you have your network set up and you feel good about it. This is where the rubber meets the road. Get ready to make 30-50 sales calls per day starting out. As a local network operator, you are going to fight an uphill battle in an effort to educate the public about the value of the product. This will take time and effort to accomplish but it will also take a certain drive and personality type. I’ve seen many sales representatives come and go over the past several years but the sales representative who is a high driver with thick skin can thrive in this business. Rule #10: If you are willing to make more sales calls than your competitors, can clearly communicate the value in the product, can brush off 30 “No Thank Yous” every day and still wake up ready to get after it, this business may be for you.

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