Honolulu Star-Advertiser’s new digital billboard advertising networks have been nothing short of game changing for the news media company.
With more than 100 digital screens residing in various retail outlets in the Honolulu marketplace playing 15-second videos on a three-minute clock, the videos are shared between the publisher, retailer, and vendor/advertiser. The news media company has plans to grow to 500 outlets in the near future.
On Wednesday, May 30, Dave Kennedy, chief revenue officer at Honolulu Star-Advertiser, presented a live Webinar for INMA members. The Webinar went into detail on the news media company’s new in-store digital billboard business, which is 100% incremental revenue and taking money away from TV, agencies, and other digital platforms in the market.
The Honolulu Star-Advertiser’s Digital Billboard Network is a revolutionary advertising platform being employed at check-out counters in grocery stores, at gas stations, drugstores, fast-food restaurants, and other locations.
“Currently we have 116 screens on Oahu,” Kennedy said. “I want to talk a little bit about taking the offense instead of the defense. We’ve been chasing our tails in the digital world with trying to create new revenue. We’ve been able to take advantage of a new media opportunity in digital billboards.”
The network consists of location-based, digitally placed advertising in retail stores. “We are extending our newspaper audience, and being in stores like Jamba Juice, we are reaching a new and younger audience.”
Video ad spending is on the increase and is projected to increase over the coming years, especially with platforms such as Netflix and Hulu. Kennedy mentioned the move toward shorter video spots — 15 seconds instead of 60 seconds.
The digital out-of-home market is forecasted to reach US$26.2 billion by 2023. Kennedy explained how this is monetised by the Honolulu Star-Advertiser.
They call it the “Trojan Horse” because it allows the company to get into retail stores and reach their customers. A technology called Siteview — a digital demographic detection technology, using facial recognition to determine demographics of the viewer — is what gives the team the capability to do this. It does not capture photos, just purely utilises the data in two-second real time.
“We worked with Phoenix Vision, we created this and started selling it to retailers,” Kennedy said.
A snapshot of their figures from the Digital Billboard Network so far:
- Launched October 2017.
- 116 screens total today.
- Audience as of April 2018 was 959,708 viewers, with 3,233,892 impressions.
- 65 advertisers, and 85% of them are new customers.
“A lot of these customers are new, and they’re coming from TV and radio, which is what we all want,” Kennedy said.
The team utilises the Standard Retailer Clock, which operates in seven-minute increments. The model found to be successful puts 15 advertisers per network, which loops after the seven minutes to show to new customers as they move through the store.
Network Operating System (NOC)
This is the technology used to monitor the video billboard racks; it notifies them if something is not working, lets them view the advertising loops, and returns data reports — which Kennedy called the Money Maker.
“There’s no media, not even newspapers, that can tell you who saw your ad, whether they were male or female, and their demographics.”
These full data reports can be broken down by network, advertiser, and campaign.
Participating retail stores include Jamba Juice, CVS Long Drugs, Don Quixote restaurants, and Aloha Island Mini Marts, to name just a few. “We’re getting ready to launch a network of about eight screens in Maui, so we’re going statewide,” Kennedy shared. “We’ve also seen a slight increase in newspaper sales at these racks as well, because they’re drawing attention.”
Case study: King Windward Nissan
This automobile dealership is generating US$1,250,000 of new business through the digital billboard network (DBN).
“As you can see, we did a four-page overrun that is in the racks where the video ad is playing,” Kennedy said. This client has taken more of their budget out of television advertising to put it into the video ads and newspaper print advertising.
“That’s a real, true success story to show you how we package DBN,” Kennedy said. “It’s also given us a real in with clients who maybe didn’t want to put money into print advertising.”
The Honolulu Star-Advertiser also creates branded content that appears on the Digital Billboard Network. The news media company provides its top-five stories of the day, and these are turned into branded video content, which plays on the billboard network.
“You don’t have to call this a ‘digital billboard network;’ that’s just the name we came up with, but you can call it anything you want,” Kennedy said. “It’s really a branding opportunity for you as well.”
The retailers see a benefit also; for example, the network provides free Wi-Fi for the store. Jamba Juice, for example, did not have Wi-Fi before. The Honolulu Star-Advertiser now provides the small business free Wi-Fi through the billboard network, and the customer must watch a video ad to connect.
Become your own broadcaster
Kennedy shared the main benefits of employing such a digital billboard advertising system.
- Build out your digital billboard network.
- Garner quick new revenue.
- Robust content management system.
- “SiteView” powered by Phoenix Vision.
- Identifies age and gender of viewers.
- Advertisers and retailers receive monthly reports.
“I haven’t had a retailer tell me no, so that has not been difficult,” Kennedy said. “I have three networks completely sold out.”
Rate card model
If one network has 25 racks, with 15 advertisers per network, that generates US$21,000 per month in revenue for that network. The growth trajectory is projected to go from US$1,008,000 in 2018 to US$4,032,000 by 2021.
News media business model
Kennedy shared the revenue model, which is highly profitable. “If you’re interested, we can introduce you to Phoenix Vision and you can negotiate with them.”
- Advertising revenue (with 100 racks): US$840 per rack, per month — equating to US$1,008,000 gross advertising revenue per year.
- Digital rack expense: US$999 per rack, equating to US$99,900 per year.
- DMA exclusivity capital expense: US$35,000 for the first year (US$20,000 in subsequent years).
- Phoenix Vision/SiteView usage and maintenance fees: US$250 per screen, equating to US$300,000 per year.
“We’re already making money, we’re already having great success,” Kennedy said. “It’s already a proven model for us. It has great revenue potential. The name of the game is audience — we are selling audience.”
INMA: You mentioned that currently you charge a flat-rate fee; have you ever thought of going back to a cost-per-view model?
Kennedy: Now that I have more data and am getting some consistency, that is something I am definitely going to consider going forward.
INMA: How have the broadcasters in the marketplace reacted to this?
Kennedy: The TV networks have definitely felt disrupted. At the rapid pace that we’re expanding, and right now we are getting as many views as any cable channels do, we’re right up there with the radio stations in the market.
INMA: What’s the advertiser churn rate?
Kennedy: With our first networks, where we weren’t quite getting the views or feedback that we wanted, and it was a new technology for them we had probably a 30-40% churn. But in the last 10 months, that’s gone down to about a 10% churn, now that we have the data and are seeing the results. Advertisers don’t want to lose their spots on the network. They love the reports, and they really like who they’re reaching with their messages.
INMA: Content: is it mostly advertising or what other content goes on the network?
Kennedy: It’s up to the retailer what they want to do. For example, Jamba Juice does a lot of community service and that’s what they want to put on the space. It’s up to the retailer what they want to feature. It’s their space. The content is pretty diverse, and what you want to do is engage the audience to look at the screen. So it’s not just commercials. It’s content they would be interested in.