Hyperlocal Online Ads Are About to Get a Lot Bigger — Billboard-Sized

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In case you haven’t heard, most sophisticated marketers love advertising online (I think there’s something to this whole internet thing). Over the past couple of years marketers have gained many tools in the online ad space that allow them to do programmatic buying. This means real-time data, real-time feedback and real-time optimization.

The same shift to programmatic buying is about to happen with what’s known as “out-of-home” advertising. The next time you are in your doctor’s office, at the mall or at the local sports arena, the ad that you see on a plasma TV display or a digital kiosk could have been purchased and placed there using the same type of system advertisers are using today to buy and place online display ads.

Vistar Media has begun laying the pipes to enable real-time bidding on this so called “fourth screen.” The founders at Vistar are no strangers to real-time bidding two of them having founded Invite Media, one of the first demand-side platforms that was eventually sold to Google. They hope to use their learning from the online display space and apply it to out-of-home advertising.

The Future of Out-of-Home Advertising
It’s easy to understand the impact that creating a real-time exchange for buying and selling digital out-of-home advertising can have. Especially once it’s all connected.

Anyone who has seen Minority Report is familiar with this scenario, except thanks to mobile phones an eye scanner might not even be necessary (although it’s still a possibility). At some point it might be possible for Walgreens to know when a user who has their loyalty application on their phone walks by a kiosk in a mall and Walgreens’ ad server could bid to serve a customized ad to that user based their loyalty data — all very similar to what advertisers can do in the online world.

But that might be further down the road. “I don’t think we are going to see Minority Report stuff for quite a while. What we will see is a better understanding of the audience,” Jeremy Ozen, Co-founder of Vistar Media told Street Fight.

For now, he says marketers can target by the type of venue, daypart or location. Where it starts to get interesting, just like in the online display space, is with data. By bringing in first-party or third-party data, you can target specific malls that have a specific retailer or type of retailer.

While it might seem like an easy step to just make online ads bigger, the process is much more involved. Over the past year Ozen says the team at Vistar worked to “connect all the dots” between the various networks that run digital out-of-home advertising.

One of the biggest hurdles in making it truly real-time is that while most of the systems are connected to the internet, they update the ads they serve on a time-based schedule. For example they might only download new ads every hour for the following hour.  “Even if i knew the the specific person was in front of the screen I couldn’t get them an ad quick enough,” Ozen said.

Truly Hyperlocal Ads
A big component of digital or non-digital out-of-home advertising is location=based targeting. Advertisers can pinpoint specific DMAs, ZIP codes, or even a latitude/longitude and a radius around it. By making the media planning programmatic, using out-of-home ad exchanges allows for digital tools to be used for targeting and placement of location-based ads.

If it sounds a lot like mobile, it should. The problem with mobile is that it still doesn’t always have ample volume of users when you look to target down the radius level of given locations. Out-of-home advertising has the volume. Lots more people will walk by a plasma TV in a shopping mall then might see ads on their mobile phone while at the mall. At least for now.

This relationship to mobile is actually allowing them to build the exchange for mobile and video buyers. It really can become an extension of existing buys. Just as we look to context to help drive an online or mobile display campaign, programmatic out-of-home buying can do the same.

“Is it relevant that they are on ESPN.com? Yes. Is it relevant that they are in a sports arena? Absolutely,” said Ozen.

An Exciting Space
As someone who has spent a lot of time diving into the ins and outs of the online display ecosystem, I think it’s going to be very interesting to see how the tools built for online display can be adapted to out-of-home advertising.

Imagine a local restaurant owner who realizes he has a lot of open tables on a given evening. He pulls up his computer and places an ad on the plasma screens at the theater venue down the street offering a special to the theater patrons hoping to drive traffic into his restaurant. It’s been difficult to get local businesses excited about serving ads based on a CPM on various websites, but I don’t think it will be tough to sell them on getting their ad up in venues like theaters, gyms, mall or even billboards.

The other exciting element is that out-of-home does not suffer from one of the biggest problems that the online display space has; the supply problem. Publishers keep producing more and more ad inventory, which causes CPMs to decrease because the demand just isn’t there. While there will be more digital out-of-home ad units installed over the next couple of years it will be easy to control the supply more so than anyone can in the online display space. When was the last time all of the online ads for a given DMA were sold out? How about billboards in a given DMA? Supply control allows for pricing control.

Online publishers have been trying to combat the supply problem by creating larger ad units that they can sell at a premium. This model is a step in the right direction for publishers. This new programmatic buying of out-of-home advertising is doing the same thing — just with much larger ad units.

Matt Sokoloff is a 2012-2013 Reynolds Journalism Institute Fellow working on a project to help local independent websites and bloggers gain additional revenue opportunities. Matt’s background is in building digital products for media organizations. Read more about Matt’s current work here and talk back at [email protected] and @MattSokoloff on Twitter.

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