OOH today: money, Deep Throat and Jerry Maguire
Looking at the latest digital developments in out-of-home, Dominic Mills wonders if the sector can show its private equity owners the money fast enough
Walking round London last week, I saw one vision of the future of OOH – or at least a part that opens up the path to a tech-driven, data-opportunity, future.
In fact I saw two examples of it: one (in Holborn, by the underpass close to Red Lion Square) was new and gleaming, the other somewhat shabby (and in the equally shabby so-called mid-town area between Holborn and Tottenhan Court Road).
Phone Box 2.0: neither modern, nor particularly salubrious
The latter was black(ish), covered in graffiti and with the word ‘Wi-fi’ on the top.
The former, tall (3m high), shiny, sleek and very modern-looking.
Phone Box 3.0: modern and cool
Both are, or were, phone boxes – think of them as Phone Box 2.0 and 3.0 respectively. The sleek one is part of Primesight’s InLinkUK network, based on parts of the BT phone box estate. They’re new, only in London and Leeds as I write, and there’s currently just over 100 in operation.
We know OOH has evolved rapidly from paper-and-paste estates into the digital era, allowing the medium to move from a static, broadcast-oriented proposition (see the stats further down to get a sense of the scale of this change) into something that combines broadcast with more response-driven, localised or immediate executions. The missing link is the ability to maximise the gathering of consumer data and then put it to use.
This is where the phone boxes come in. But what have they got to do with Deep Throat and Jerry Maguire?
Deep Throat’s advice to Woodward and Bernstein, the reporters uncovering the Watergate scandal (and I see there is a film of telling that story just out), was ‘Follow the money’. The most famous line in Jerry Maguire is ‘Show me the money’.
Let’s start by following the money, in this case the private equity money that has flowed into the UK OOH industry. As we currently stand, four of the five big UK OOH owners (JCDecaux the exception) are owned by private equity; this may change depending on what happens to Clear Channel and if Exterion goes public or not. But the trend is clear.
Primesight, for its part, has been owned by private equity player GMT for some years. Last month, Ocean was sold by one private equity investor to another. [Correction: Ocean was sold on 28 March by Searchlight to Ocelot, a special purpose vehicle that will lead to its listing on the London Stock Exchange. Apologies for the error.]
Why does this matter? First, let’s frame this through Deep Throat. Private equity money goes where the opportunities are, and heads towards the pot of gold that is most promising. For investors who want to ride the digital advertising bandwagon without throwing money at start-ups, OOH is thus a good place to start.
Second, converting the legacy OOH estate to digital or building new digital inventory is expensive and the enhanced returns it offers may not be immediate – scale, for example, doesn’t come overnight – so owners need deep pockets and to look at a longer time-frame for their returns – hence the attraction to private equity, providing they can control their impatience.
Back to InLink, aka Phone Box 3.0. These are neither cheap to install nor, till there is sufficient scale, an immediate return. But the potential is there: BT’s phone box estate comprises 19,000 units (who knew, eh? – but I wonder how many work), and by the end of this year Primesight aims to have 450 in London, as well as developing Leeds, Glasgow and Newcastle/Gateshead. Primesight reckons 200 units gives it sufficient scale to attract national advertisers.
How do they work? Think of them in terms of the wired city of the future. Each unit has a 1-gig fast wi-fi capability, a rapid phone charger, free phone calls and a tablet screen for consumer use (in addition to outside panels) where advertisers can place meaningful content and/or promo offers for, say, shops, cafes or restaurants in the vicinity.
They’re also a huge opportunity to grab data that can be put to immediate and potentially meaningful use – as good, I think, or greater, than the current data OOH can get hold of from consumers.
The boxes are certainly driving use, higher than I expected. Primesight figures for the 9 months from June 2017 to end February 2018: show 47,000 wi-fi subscribers; 1.02m wi-fi sessions; 220,000 tablet sessions with an average duration of 77 seconds; and 230,000 free phone calls. (Note: this excludes the ‘French Spanking Sessions Just Around the Corner’ cards I saw in the Holborn unit. But, hey, Primesight sees the units as part of a general social good, and open-minded citizens might include this sort of activity in that category).
Hmm, not exactly the kind of advertising Primesight wants to sell
And this is where Jerry Maguire comes in. Clearly, Primesight will have to ‘show the money’ to both its investors and, in terms of media ROI, to advertisers. I think both cases are reasonably obvious. The units offer both a higher CPM opportunity, especially linked to the data, as well as new-revenue streams.
This could be, for example, in a general sense for the OOH industry, by raiding promo or couponing budgets that currently go elsewhere; or, specific here to Primesight, taking share from rival formats such as bus shelters and roadside 6-sheets. Primesight needs to demonstrate some decent case uses to advertisers, but for many the units represent a low(ish)-cost chance to derive ROI from a more performance-driven environment.
The catch is whether, in what many expect to be a tough year, OOH can show its owners the money fast enough. Although we won’t have access to the figures, there’s a reasonably sure-fire way to tell: if the private equity investors start getting out, or if the rate at which they transfer ownership amongst themselves accelerates, then you can bet it isn’t all going to plan.
By the way, if you want to get a sense of the transformation of OOH from ‘classic’ (they hate the term legacy) to digital, I found these figures covering the period 2014-2016. Roadside 48s declined by 39%, roadside 6 sheets by 15%. By contrast, digital roadside 48 sheets increased 140%, and digital roadside 6 sheets by 390%. The problem: the digital base is very low and classic inventory seems to be retired faster than digital is added.
Nevertheless, since digital revenues are now (as of end 2017) 50%+ of the total revenues, the investments are clearly paying off.
A new agency job: Head of Integrity
Strictly speaking, you can’t compare the goings on at The&Partnership with the Australian cricket team’s ball-tampering escapade, except to say that the miscreants have one thing in common: a surplus of fuckwittery.
However, I noticed that the Australian cricket authorities were quick to unleash their secret weapon at the problem: a Head of Integrity.
So the solution for agencies is obvious. Forget this waffly stuff about codes of conduct; agencies should hire their own ‘Integrity Czars’ – indeed, they could recruit whole units of integrity – although this new function should be kept well away from pronouncing on the integrity of agency business models.
There’s only so much integrity agencies need, after all.