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Selecting and packaging high-value locations for a DOOH network

March 9, 2012 by Joe Matriss — Editor, DOOH.com

The term critical mass is highly subjective. When viewed as the break-even point for the growth and rollout of a network, it is difficult to understand that sometimes the whole is less valuable than the sum of its parts.

Take a look at the outdoor billboard industry. Boards are classified by their individual values into tiers. Often, the boards are sold in bundles, with a few lower-value spots tacked on along with a more desirable one. The operators do not often sell across their entire catalog of placements. This is because not all locations are created equally. The more high-value locations, the easier it is to sell everything.

Digital out-of-home networks are in effect the same thing but treated much differently. As networks roll out they are usually focused on growing to the largest possible number of impressions, almost always by finding new locations to put screens. But putting up digital signage hardware and the requisite delivery systems and support can be expensive. A good strategy is to increase impressions by maximizing the value of each location.

Segmenting off the highest value locations means finding which ones can command a higher CPM. Putting the top locations together into a package and selling them at a lower cost than the total network but at a higher CPM is a good way to help advertisers feel like they are receiving the best value for their money. Also, when these packages are being presented, listen to the advertisers and what they say. Inevitably there will be some locations across the network that they don't like as much, i.e. areas with low foot traffic or undesirable demographics. Advertisers additionally can provide guidance on which locations a network should pursue. Listen to the advertisers and their needs.

If there is consistent feedback that certain locations are not adding value to the overall network, and their presence is in fact causing a devaluation of the CPM a network can charge, it must be rebalanced. It is very costly to keep screens up that do not get included in buys, so there are a couple of things a network can do. The first is to "bonus" lower-value locations by means of saying "If you buy these 100 top locations at X rate, we will bonus you another 20 locations for free." A more radical but very sensible step is to remove the digital signage from an undesirable location. The capital investment is heavy to roll out a network, so take advantage of the money already spent and move things around. Keeping screens in place just to wait to see if the value as an advertising venue will improve is the long road to achieving the critical mass.

About Joe Matriss

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