Opportunities Current and Future with Digital Advertising

News has been emanating out of Zurich (Ramistrasse to be exact) that Strategic Capital Partners Portfolio Management AG, has been approached to be a placement agent for an up and coming digital advertising company.

Read on…..

There is a growing feeling in the advertising world that companies and brands that fail to dig into digital media network advertising and learn how to take full advantage of it will be left behind. This attitude (and the dangerous reality behind it) is the engine that will power the digital advertising network industry for decades to come.

Consequently, providers of the products and services necessary to tap into the rewards of digital networks can expect a brisk demand. And because digital display advertising networks are still in their infancy in terms of potential market penetration, that demand is not expected to diminish anytime in the foreseeable future. Indeed, it will grow.

Of all the components of the out-of-home digital network puzzle (displays, content creation, content management and computer-routing systems) content management is the piece which promises the most opportunity for innovation and consequent financial rewards. Activity by major international technology players to invent and improve digital display technology, digital content creation packages and computer-routing systems has been robust for decades, largely because of their tie-ins with the computer industry.

However, now that these innovations have been appropriated for use with out-of-home digital advertising networks, the need for systems to manage these networks has heated up. This demand for management systems is relatively much newer than the demand for the other components of digital advertising networks. Consequently, it has been the weak link in the overall system.

“Currently, dissemination of advertising content is limited to old-style technology, requiring significant manpower and lacking both appeal and flexibility,” explained a spokesperson for the 1-2-1 VIEW™ Corporation. “Moreover, due to the limitations imposed by these problems, it has been limited to certain target markets involving massive numbers of people, like transportation stations and public areas in a few large shopping malls. Software tools with the ability to change or update content have previously been viewed as out of reach or too expensive and labor-intensive.”

This situation is changing

Products like those developed by 1-2-1 VIEW™ are resolving limitations of this kind with content management systems that give advertisers immediate access to target demographics, along with complete flexibility of content, timing, responsiveness to and interactivity with the target audience, and instant, accurate viewership measurements. Operated through remote management and monitoring technology, the 1-2-1 VIEW™ system permits remote management and performance monitoring, updated in real time. The system’s accurate tracking functionality make quick adjustments to programming schedules possible. Operations are facilitated through central administration, which obtains the files to be played from the storage computer and schedules them to be shown at the local zone or zones selected by the advertiser. The central server pushes the scheduled content to the distribution zones. The servers at the local zones then play the files when any terminals send requests to the server in the scheduled hour.

The benefits of this type of system are obvious: dynamic updates and localized message delivery by segment, time of day and location; complete control by advertisers and operators of ad rotation, location, time of day and frequency; the ability to adjust campaigns instantly from central operations or remote locations; accurate and real-time tracking of viewership, with results securely viewable over the web by advertisers; optional interactive features giving interested viewers a chance to receive additional follow-up information or purchase incentives; and relatively low up-front technology costs with the ability to scale up quickly due to the Internet-based delivery mechanism.

The total control, programming flexibility and interactivity offered by emerging content management systems can make today’s digital out-of-home advertising networks highly effective. Campaign results can be tracked in real time. Media play-out statistics can be collated and analyzed based on various categories to ensure full accountability and facilitate accurate billing.

Clearly, the world of out-of-home digital advertising networks is rapidly expanding, generating opportunities that are open-ended.

Profitable Channels claims that new digital media, including out-of-home digital advertising networks, is the fastest-growing slice of the marketing and communications pie. The firm points to the Veronis, Suhler, and Stevenson 2006 Communications Industry Report, which forecasts a growth rate of 20 percent per year for new digital media. Profitable Channels also notes that Veronis, Suhler, and Stevenson, along with several other industry sources, have forecast that “within five years, marketers will shift as much as USD 40 billion of traditional media spending from traditional advertising media to new media.”

The opportunities in out-of-home digital advertising networks are not only open-ended in nature, they are international in scope.

Asia, for example, is and will continue to be a fertile field for growth in the industry. Population growth there is strong. Plus, the public has fallen in love with electronic communications and has a high level of technical literacy. The demand for instant, leading-edge communications in all sectors of Asian consumers’ lives is robust.

China, in particular, continues to offer growing opportunities for digital signage deployment. Outdoor media there is used effectively to advertise high-end products, particularly in the country’s increasingly fragmented advertising environment. Billboards and digital displays in public transportation systems are now the most sought after of the major media platforms in Mainland China.

All other media in China, in fact, have suffered a steady decline in growth, while outdoor advertising has achieved remarkable growth rates over the past several years. The rising income levels of higher-end Chinese consumers is expected to continue to pull them away from their televisions to other forms of entertainment. The circulation of magazines and newspapers (except for the local daily publications) is declining. In contrast, China’s outdoor advertising market is attracting more and more advertising dollars as companies search for new methods to target the right customers. Advertising media such as out-of-home digital networks are therefore becoming increasingly attractive – even necessary – in modern China.

China is certainly not alone in its growing dependence on digital network marketing. PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2006-2010 report pointed out that EMEA is the largest out-of-home market, which includes digital advertising networks. The report indicated that the area’s 2005 total of USD 7.8 billion is expected to grow to USD 11.2 billion in 2010 at a 7.4 percent compound annual growth rate. Increases averaging 8.3 percent compounded annually are projected for the United States and Latin America. Canada will grow at a 6.6 percent compound annual rate and Asia Pacific will grow by 5.8 percent annually, said the report.

While these figures are healthy, it is important to note that the digital network sector of the out-of-home market is predicted to enjoy significantly higher growth rates than those forecast for the overall out-of-home market.

An Obvious Conclusion

Investing in communications stocks and mutual funds is one of the real growth opportunities not only in the Asian stock market, but in other capital markets worldwide. Some of the most dramatic growth curves for new companies around the globe have been, are being, and will continue to be posted by communications companies. Providing out-of-home digital advertising networks is one of the freshest and most promising opportunities for growth within this broad sector.

The track record of the out-of-home digital advertising network industry is compelling. Its future is promising. Businesses that fail to take advantage of the power of digital advertising networks will find themselves at a distinct disadvantage compared to those that do.

The verdict is clear: Well-managed companies that offer effective, innovative products and services to support this still-young industry can expect unbounded future opportunities.

Remarkable Growth. Limitless Potential

Digital Advertising companies are where you should place your strategic capital.

In a January 10, 2007 article in The Wall Street Journal, Shira Ovide wrote, “Last year was a stellar one for companies that specialize in out-of-home advertising, a longstanding business of selling ad space on billboards, posters and other public spaces. Companies in the once-sleepy business posted double-digit percentage growth in profit and stock prices.”
Ovide went on to explain that while overall spending on advertising is generally expected to slow in 2007, forecasts claim that spending on out-of-home advertising will be the second-fastest growing marketing sector – right behind the Internet.
Importantly, this growth “is not only sustainable, but also is accelerating thanks to the introduction of digital billboards with television-quality ads that can be changed,” Ovide emphasized.
Some industry analysts place out-of-home advertising on an even higher pedestal than online advertising. In a September 12, 2006 article issued by New York-based MediaPost Communications (an organization that helps its 50,000-plus members plan and buy traditional and online advertising), Joe Mandese wrote, “The hottest form of digital media on Madison Avenue isn’t online. It’s out-of-home. Digital out-of-home networks are popping up virtually everywhere: in stores, in theaters, in health clubs, in office buildings, and perhaps most importantly of all, on media planning flowcharts.”
The lure of digital advertising media is a worldwide phenomenon. Screen Expo Europe, held in London for the past two years, has attracted armies of suppliers, users, retailers and network owners in the digital advertising industry – over 3500 pre-registered visitors from 39 countries in 2006.
The popularity of out-of-home digital networks over a growing spectrum of industries and venues comes as no surprise to marketing professionals. Technological advancements, which have accelerated over the past two years or so, falling prices, fragmentation of traditional media advertising, and excellent results from out-of-home digital networks, have fueled the growth and transformation of digital signage deployments. No longer is this relatively new medium reserved for a niche of the industry with stand alone, one-screen installations. It is now a world-wide, multi-industry trend that taps into the power of networked systems with hundreds or even thousands of
screens.
“We’re really very excited about the potential that digital affords our industry,” said Paul Meyer, president and chief operating officer of Clear Channel Outdoor Holdings Inc., the titan of the worldwide out-of-home advertising industry. “Over time, it's going to be truly transformational.”
Pete Winkler, director in the entertainment and media advisory practice at PricewaterhouseCoopers, concurs. “While there’s been a lot of hand-wringing about the health of print and TV advertising,” he pointed out, “there’s a bit of glee and unbridled bullishness on [the health of] out-of-home advertising.”
The overarching shift to digital technology is largely behind this renaissance of an old and established industry. PricewaterhouseCoopers’ report, Global Entertainment and Media Outlook: 2006–2010, makes this clear. “Virtually every segment of the entertainment and media industry is shifting from physical distribution to digital distribution of content,” said Wayne Jackson, global leader of the firm’s Entertainment & Media Practice. “As this shift continues, we see more revenue opportunities for entertainment and media companies.”
Profitable Channels is a marketing services company that helps some of the world’s top brands reach their markets better and grow faster at lower costs. In a report on the out-of-home digital advertising networks industry, the company pointed out that marketers are investing billions of dollars in them because these networks “solve many of the problems plaguing traditional media and deliver five unique capabilities: measurable sales impact; point-of-purchase proximity; customer targeting; purchaser relevance; and local sales support.”
The report went on to say, “These networks are valuable marketing and communications channels – providing superior cost to sell, market coverage, marketing-resources control, and alignment with customer behavior relative to other media. They are a high-return media investment, delivering greater relevance and more measurable sales impact closer to the purchase decision-making point to marketers that rely on retail channels or target high-value clients.”

Out-of-Home Digital Advertising Networks Defined

Prepared for Strategic Capital Partners Portfolio Management AG by Osborne Reports

In a nutshell, out-of-home digital advertising is a marketing medium that delivers messages (content) targeted to specific segments of the public defined by demographic attributes, values and preferences, and does so using electronic displays that are networked to computers that control what is displayed and when.

Displays

The term display can describe a number of different types of electronic signs. These include LEDs (light-emitting diode) displays, LCDs (liquid crystal displays), CRTs (cathode ray tubes), plasma screens, projection systems, and electroluminescent or electronically activated ink panels. Not all of these are “digital” in the strict technological sense. But the term is used as a blanket description, not only because most displays are now, in fact, digital, but also because the trend is overwhelming in that direction.
Displays can range from monochromatic to full-color, and from small screens that are placed for individual passenger viewing to giant billboard-sized or even building-sized screens that can be seen clearly from blocks away. Creativity and technological advancements are cutting a broad path for diversity in the types, sizes and capabilities of screens.
For example, Adwalker, a Dublin-based company, makes a special suit with a screen built into the chest area. These walking advertisements may soon be seen in British airports and other highly trafficked venues. The digital-age sandwich boards can be hooked up to a portable printer and a credit card reader, allowing the Adwalker to print out coupons or sell things like rental cars to vacationers as they wait for their flights.
The French out-of-home advertising giant, JCDecaux, which recently won a contract to place 1,600 digital advertising screens at London’s Heathrow Airport and other locations, is producing screens with interactive capabilities and Bluetooth technology. A communication link between these screens and mobile phones is one application of this interactivity.
How “smart” have displays become? While there is nothing new about placing posters in restrooms next to mirrors, above urinals and in stalls, advanced digital displays in these same locations can now speak and sing, emit fragrance and dispense samples.

Content

The images shown on digital displays are referred to as content. These images consist of text, graphics, animations, photos, video clips, live broadcast feeds and more. The possibilities are virtually limitless.
Numerous software programs are available that allow everyone from beginners to experienced graphic design professionals to create content.
Many of the same software tools used to create graphics for print and broadcast media are used to produce digital display content. Those who generate this content, however, should be aware of the specific parameters and limitations of the different display types. Adjustments may have to be made for resolution and colors, which may show differently on an LED screen than they would on, say, a plasma screen.

Content Management

The process of directing, timing and scheduling content is called content management. This is almost always done from a computer at a remote location, allowing advertisers to customize the content and immediately change or update what is being shown. One display or a vast network of displays can be controlled from a single computer.
The first out-of-home digital advertising displays were stand-alone units beset with a number of limitations and drawbacks to their effectiveness and operational efficiency. Content generally played in a continuous loop, rarely giving viewers the chance to see the entire presentation from start to finish. Because most content played over and over again, people who frequently saw these displays learned to tune out and tended to not pay attention to the advertisements. Moreover, these stand-alone units did not give advertisers flexibility of time and location of content play. This made it impossible to target specific market segments and to modify and update content accordingly.
Forward-thinking companies are now attacking these drawbacks, bringing digital network content management to a higher new level. 1-2-1 VIEW™ Corporation is one of the frontrunners in this rapidly evolving arena. Previously part of BNS Corporation, a leading IPTV technology and solutions provider in the Asia Pacific region, 1-2-1 VIEW™ was recently acquired by an aggressive company with capital and growth aspirations, while BNS retains an approximate 20 percent stake. Headquartered in Hong Kong and with offices throughout Asia, 1-2-1 VIEW™ has developed a digital signage and media management system with one-to-one targeting and real-time effectiveness measurement capabilities.

Computer-Routing Systems

Computer-routing systems are the hardware and software technologies that enable communication between the displays and the computers from which they take their signals. These systems are used by those who control the content of digital displays to deliver the coded signals from real-time or prerecorded sources to the displays. They can be wireless (wi-fi) or telephone-like wired systems. They often use the Internet for remote communications.

The Digital Advertising Network Revolution

Prepared for Strategic Capital Partners Portfolio Management AG by Osborne Reports

In downtown Shanghai, a digital screen 16 stories tall faces the Huangpu River. It is mounted on the Aurora Building. On the face of this behemoth electronic sign plays an ever-changing series of advertising messages and images.

In Manhattan, a taxi pulls to the side of a busy street to pick up a passenger. Fixed on the roof of the cab is a bright digital sign, flashing a succession of colorful, attention-grabbing ads.

On the wall above a row of urinals in the men’s room of a popular London night club, flat-screen digital displays expose their captive viewers to a sequence of marketing messages targeted specifically to men. In the ladies’ restroom on the other side of the wall, similar wall-mounted displays revolve through a very different set of digital advertisements – messages targeting women.

Getting the right messages to the right people at the right time has been the goal of advertisers since prehistoric man began drawing pictures of bison on cave walls. The object of the marketing world is still the same, but the tools have changed dramatically. Instead of painting on rock walls, growing numbers of marketing specialists are displaying bright, moving digital messages on the faces of electronic signs, which can be mounted almost anywhere.

Clearly, one of the most exciting and fastest-growing tools in the advertiser’s toolbox today is the “out-of-home digital advertising network.”

This refers to a network of digital signs located outside people’s homes – signs that deliver images and messages using electronic screens. These networks permit central system management and remote scheduling of content to deliver targeted messages to specific locations at specific times in order to pinpoint audiences. Out-of-home digital advertising networks are also referred to as “narrowcasts” or “captive audience networks.”

Like their painted or printed poster, placard and billboard antecedents, the purpose of digital advertising networks is to get sales messages to people who are likely to be influenced by those messages, at the best times and in the best places. But that’s where the similarities end. Digital signs take advertising to a new level. They are bright and alive. They move. They change. They grab and hold attention longer than lifeless printed advertising can.

Thanks to technological advances in recent years, digital signs and networks of multiple digital signs can now be cost-effectively placed almost anywhere people will see them – even above urinals.

Digital advertising displays can be placed in a wide variety of venues – from the roofs of moving vehicles to the sides of skyscrapers. Plus, multiple messages for multiple advertisers can be displayed sequentially on the same digital sign, or concurrently in different panels of the same sign if the display area is large enough. These messages can be programmed on a scheduled basis to maximize effectiveness by targeting various audiences with different content at different times, and the schedules can be controlled via a number of types of communications media from a single computer in a strategic location. Importantly, digital messages are easily updated with user-friendly software systems.

In contrast, changes or updates to traditional printed messages must be designed, approved, produced and finally installed – a time-consuming and expensive process.

The fact that digital signage can be so easily, quickly and inexpensively changed and updated underlies one of its most compelling characteristics: Information and entertainment can be mixed with advertisements to capture and hold viewers’ attention, making the advertisements more effective. (This applies, of course, to those displays that are placed in areas that are conducive to longer viewing periods – airport terminals, for example, as opposed to freeway billboards.)

A network of digital displays in a chain of fitness centers could run a series of health and fitness tips, news programs, important membership notices or any other content that would grab the attention of its members, interspersing it with advertisements for the nutritional supplements and training programs offered by the centers, as well as current and coming membership promotions.

A chain of women’s fashion stores could show the latest clothing trends and makeup tips in strategic, high-traffic areas within shopping centers, mixed with advertisements that would draw consumers into the stores and convert local foot traffic to buyers. Providing the right mix of entertainment, information and promotion will attract more visitors. In shopping malls, for instance, experts claim that 60 percent of programmable time should be reserved for advertising and 40 percent for programming, which could include music, short movies and live news.

To fully understand the attraction out-of-home digital displays exert on today’s advertisers, the contrasting disadvantages of traditional advertising media must be mentioned. Television advertising, for example, has become increasingly costly, while audiences are using technology such as Tivo, DVR and on-demand programming to avoid having to watch ads. Plus, with so many options for entertainment these days, once-large audiences are dwindling in many markets. Targeting is another problem for traditional television, newspaper, radio and general consumer magazine advertising. Some marketing professionals claim that mass audiences do not exist, so why place expensive ads for lawn-care products or hemorrhoid remedies on the television and radio, or in newspapers and magazines, when only a fraction of the viewers or readers would be interested in them, let alone want to buy them?

Out-of-home digital advertising networks are stepping in to fill the void. Electronic displays carrying advertising messages are popping up almost everywhere. “Everywhere” includes stores, malls, airports, restrooms, hotels, theaters, taxis and buses, restaurants, bars, fast food stores, office buildings, doctors’ offices, gas stations, convenience stores, train stations, bus terminals, subways and other venues – even on cell phones. In addition, many traditional roadside billboards are going digital.

The great bandwidth dilemma – IBM and CodecSys to the rescue.

News has been emanating out of Zurich (Ramistrasse to be exact) that Strategic Capital Partners Portfolio Management AG, has been involved with a company (for which the Swiss asset management group has been working a placement agent with their early funding) that may have found the answer to a growing question within the broadband industry, i.e. what can we do about the bandwidth dilemma?

You may well have noticed that we live in a world where impatience is the norm. Non of us seem to be willing to wait for anything, stand in line, or tolerate anything that we deem to be second best.

Wait three months for my new car to be delivered? Forget it! I’ll take that one over there...

Wait fifteen minutes to be seated at your favourite restaurant? No thanks, we’ll eat elsewhere!

Don’t shake your head, I bet this sounds like you!

Anyway, can you imagine the intense frustration of saving up and spending out on the latest all singing-all dancing High Definition TV, only to find that there are still very few channels with the capacity to broadcast in HD! (By the way, a word to the wary, if you’ve never watched HD TV - don’t ! ... at least not yet, because doesn’t seem to be any going back to normal, grainy TV after your first experience without being overcome with feelings of immense frustration and loss.)

So what’s being done by our broadcasters to provide more HD channels? Well, unfortunately, at the moment they can do very little. ‘Surely, you must realise how much bandwidth is taken up by an HD channel compared to a regular channel,’ they cry.

But do you?

No, probably not; we just want to watch! Let’s just say you could squeeze three regular channels using the same space taken by that one big fat HD channel – and this is the problem which has so far left the broadcasters scratching their heads ... at least it has until now.

After hearing from Strategic Capital Partners AG, we had a look around and the whispers in the technology industry tell us it may well be true! That we are shortly going see the launch of the IBM Bladecentre QS21 server. A server which is to be targeted directly at the video streaming and broadcasting industry. These new servers will finally be able to live up to the claims on the box because of a revolutionary, new technology called CodecSys from Broadcast International Inc. (BCST.ob).

The combined IBM/BI product line will provide encoding and transcoding solutions for worldwide broadcast, cable, satellite, IPTV, telco, wireless and streaming customers, as well as applications for business/enterprise communications, training and digital signage. For example, a telco will be able to deliver HDTV over DSL connections, and, where cable/satellite operators now have one HD channel, they will be able to deliver six different HD channels at the same quality – great stuff!

So how does it work?

Well, rather than relying on any single of the latest codecs to transform our viewing pleasure, the CodecSys technology uses a multi-Codec approach, employing a real-time artificial intelligence system to manage libraries of standard and specialized codecs. This fully patented system dynamically changes codecs or codec settings - on the fly - on a scene-by-scene or even frame-by-frame basis. And it would seem there are a multitude of applications waiting for this holy-grail technology that may finally unlock the blockage in our bandwidth-hungry age. It will allow a plethora of companies to create excellent quality video and audio transmission at a fraction of the bandwidth that, until now, has been traditionally required.

As an application its future appears rich and varied, however, the boffins in Broadcast International have firmly set their sights on the video streaming and broadcasting market as the first area to conquer, teaming up with no less than ‘Big blue’ to establish a joint development team and shortly the launch of the QS21 server.

While IBM’s cell blade technology looks set to turn the traditional server market on its head across their new range, the CodecSys technology in the QS21 server will provide the ultimate, highest quality in full-screen, full-motion video at the lowest possible bandwidths allowing the broadcasting and video streaming industry to finally expand along with consumer needs.

All of which means of course that you may begin getting a lot more High Definition channels on that huge great HDTV of yours!

Be clever with your strategic capital and partner with a green initiative

Specializing in the outsourced management of water services for municipal or industrial clients, Paris listed company Veolia (VIE.PA), is one of the world leaders in engineering, design and construction projects for environmental facilities and water treatment plants.

In a world of investments more and more of us are seeking to place our strategic capital in companies that will not only leave us with a better, cleaner, healthier planet, but will also return a good profit on our portfolios and our investment dollars ... or Euros in the case of Veolia.

Established for more than 150 years, Veolia can rightly claim to be one of the world leading environmental companies. They have recently been selected to supply 3 million inhabitants with drinking water in Tianjin, one of China's most rapidly growing and important economic cities. The contract, for a period of 30 years, is worth an estimated cumulated turnover of around 2,65 billion Euros for Veolia Water, and involves a participation of 49% in the Tianjin Shibei Water Company Ltd.

Investment into the company? Well, if you had placed €1000 euros in January 2006 and sold it today, you would walk away with €1,769. Not a bad return for helping save the planet.

Another Parisian listed company that you might want to turn your investment eye upon as you seek to save the world, is Alstom (ALO.PA), a global leader in equipment and services for power generation and rail transport.

Interesting, but green? Well yes. Set to become a major player in the world of wind turbines, the company claims a ‘reputation for setting the benchmark in innovative and environmentally friendly technologies to meet the growing demand for clean and efficient electricity and rail transport technologies.’

Great, but what about the investment? Well, our €1000 invested in January of 2006 would now be worth an incredible €3,846!

Both these companies appear to be worth continued interest and if we had invested in January 2006? Well a little profit taking is never a bad thing but the outlook continues to be solid for both allowing us continued expectations of profit, and a good nights sleep while we save the planet at the same time.