With new technology making it easier for consumers to avoid advertising aimed at reaching them in their homes, a New Jersey company has created a method for delivering the ads via satellite to public gathering places.
Advertising company OOH (Out of Home) Vision Networks LLC developed the concept and is building a network of advertising systems in more than 100 diners in affluent areas of New York, New Jersey and Connecticut. The system is designed to bring the advertisements to what OOH Vision characterizes as a captive audience.
“The advent of technology such as [digital video recorders] and on-demand services inside of the home have put the advertising industry in a very awkward position,” Robert Goldner, vice president, Operations at OOH Vision, said. “The technology promotes skipping of commercials, so advertisers aren’t getting the bang for the buck they were before. Here, you don’t have a fast forward or skip button.”
OOH Vision, based in Hazlet, N.J., originally sought to build its network through terrestrial high-speed links. But Helius Inc., which is providing the servers that collect and play the ads, directed OOH Vision toward Microspace Communications Corp., which specializes in point-to-multipoint delivery of digital communications via satellite.
OOH Vision sells the ads, and can remotely place the content in a Helius server located at Microspace’s Raleigh, N.C., facility. Microspace then delivers the content to the individual locations via leased transponders aboard the AMC-1 satellite.
The typical system OOH Vision installs in a diner consists of three to six televisions, a hard drive provided by Helius that receives and disseminates the content to the screens and a small satellite dish for receiving the satellite signal.
Diner customers are then bombarded by the satellite-delivered video, which each television screen divided into three segments, Goldner said. Advertisements in a crawl format scroll across the bottom of the screen. The other two sections of the screen are devoted to information the building owner provides and information such news, sports scores, and traffic and weather reports targeted for each location.
“What we are striving to do is capture a minimum of 80 percent of the customers,” Goldner said. “If a typical diner has 1,300 customers, that guarantees 1,000 patrons per day per diner who have the ability to see ads. We are selling 15- and 30-second ads on a seven-minute loop, which guarantees every patron sitting in the diner sees an ad an average of 5.71 times while they are sitting there.”
The content can be tailored for each location. The Helius server located at the Microspace facility keeps track of which advertisements and information to be delivered to each location, Goldner said. OOH Vision explored delivering the content via a terrestrial network, but opted for the Microspace system because of cost, officials said. The Microspace satellite system allows OOH Vision to spread the cost across the network.
“The first circuit is very expensive, but the rest are free,” said Greg Weaver, senior account manager for digital signage and networks at Microspace said. “Once they pay for the pipe, every time they add another location they are just spreading the cost over the network. Once they reach a break-even point, they start putting money back in their pocket. As they add more locations, they save that much more.”
OOH Vision began individual system installations in late 2005, and has 26 diner systems in the network installed so far, Goldner said. The company has contracts with more than 100 diners and is expanding its network every few weeks, he said.
OOH Vision buys the hardware and software to run the system from Helius and pays for the installation, Goldner said. The company shares the revenue from the advertising sales with the diners, but Goldner would not divulge the revenue the company has earned through the venture.
While there are other opportunities to establish similar advertising systems, OOH Vision has chosen to concentrate its efforts on its current project, Goldner said. “There are a lot of other deals on the table right now, but we have blinders on and want to make sure our 100 diners become a success,” he said.
Microspace and Helius are free to pursue other opportunities, officials said. “It looks like this is beginning to pay off, and I think this is one of the key markets we are going to be chasing here in the next couple of years,” Hurt said.
Microspace announced March 15 a deal with Kyle Private Networks LLC of Miramar, Fla., to provide a similar system to more than 500 retail stores across the United States. The content will consist of beer and liquor advertising and related information, and Kyle expects to expand its network to more than 3,000 stores by 2006.
“This is a reaction to [digital video recorders], and I think you will see advertisers drive this expansion and the most economical way of doing this is via satellite,” Weaver said.
Helius also is actively looking for other customers for the service, Mike Tippets, senior vice president of engineering at product strategy at Lindon, Utah-based Helius, said. “I hope to find another 100 OOH Visions,” he said. “That company will always have a special place in my heart, because they found this. But in the digital signage world, satellite is the perfect distribution method,” and there are plenty of opportunities.
The audiovisual industry, which includes digital signage, produced revenue of almost $19 billion in 2004 in North America, according to the International Communications Industries Association’s 2005 Market Forecast Survey. That number is expected to grow at an annual rate of nearly 10 percent for the next five years.