Marketecture: Get Smart. Fast.
00:01:44 · Ari Paparo, Tim Rowe
[00:01:44] S0: I'm I'm going to Staples today. I I am getting some legal pads. I'm gonna... I'm doing some prep work. I bought a laser printer. That was my big prep work this week. Bought myself a laser printer because I just printed out all the all the exhibits. It's gonna be ridiculous. Alright, Tim. Out of home, man. Like, tell me why we should care. Let's just start there. I'm... I've decided to take a grumpy approach to this meeting because, like, everyone tells me I should care about out of home. They've told me for twenty years, and now I've got the man. So convince me why it's, like, the most exciting thing I've ever heard about. [00:02:12] S1: No pressure. Convince you why. The case for digital out of home out of home in general remains that it's the most powerful connected broadcast channel in the world. If you wanna reach a lot of people with a unified message, out of home might be one of the most stable scalable ways to do it. So I think it's wildly underpriced. It's incredibly efficient from a media delivery standpoint. There's probably no better builder of top of funnel than offline attention. So those are some of the reasons why I think digital out of home is relevant. [00:02:46] S0: Alright. How how big is it? How big is the digital out of home market?
00:02:46 · Ari Paparo, Tim Rowe, Eric Franchi
[00:02:46] S0: Alright. How how big is it? How big is the digital out of home market? [00:02:49] S1: It's not it's not big enough. It's not big enough. It's about 21,000,000,000 globally. It's about 5,000,000,000 here in The US and while that number continues to grow up into the right, it's the only traditional format that continues to grow. Share of wallet continues to decline. It's about 5% share of wallet globally, it's 2.4% share of wallet here in The US. And what's scary is by 2028, even though that number is gonna continue to move in direction that looks good, that 2.4% share of wallet is [00:03:20] S2: gonna drop to 2%. So it's got challenges. Point of clarification, the 5,000,000,000 in The US, is that digital out of home or is that all of out of home? And if if it's... [00:03:29] S1: That's digital out of home. Digital out of home. All of out of home, it's about 10,000,000,000. [00:03:34] S2: Okay. So it's like half of the market? [00:03:36] S1: Yes. Half of the market going to digital out of home and a growing percentage being transacted programmatically. Is the same globally? Same globally in terms of transacting programmatically, is that the question? [00:03:49] S2: No, just market size. Is it basically like this is you know, digital has eaten half of it? [00:03:53] S1: It's about... It's... Yeah, that that that as a rule I think is is is fair. [00:03:57] S0: So my, my perception of the segmentation of the market is that there's really three segments, and you can tell me if I'm right or [00:04:04] S2: wrong.
00:04:04 · Eric Franchi, Ari Paparo, Tim Rowe
[00:04:04] S2: wrong. [00:04:04] S0: Segment number one is just in cinema, which actually is surprisingly big. You know, those ads you see before the movie plays. The segment number two is really high end, like JCDecaux, you know, integrated units or or Times Square. And then segment three is small screens everywhere else. Is that an accurate way to look at I [00:04:24] S1: think it's an incredibly way... Accurate way to look at it. If you think about in cinema, it's got that high dwell component. The large kind of spectaculars premium inventory, it's got high impact, so it's that credibility builder. And then there's a lot of screens kinda in between. And Octopus, I think, you know, in the in the the rideshare TV is that one to one kinda lean in or even a lean back content experience where you can convert riders into users or sign ups or or what have you in that experience. So I think those three buckets are accurate. So why isn't [00:04:58] S0: it growing faster? It seems like I see more screens every day. Yeah. You know, Octopus didn't exist ten years ago. You didn't have in in cab ads nearly as present. I hear about new new ideas and out of home all the time. Shouldn't it be growing faster?
00:04:58 · Ari Paparo, Tim Rowe, Eric Franchi
[00:04:58] S0: it growing faster? It seems like I see more screens every day. Yeah. You know, Octopus didn't exist ten years ago. You didn't have in in cab ads nearly as present. I hear about new new ideas and out of home all the time. Shouldn't it be growing faster? [00:05:10] S1: There are too many screens. There's the hot take. There's too... There's just too much. And there's too much and it's fragmented. We'll talk about it, I'm sure, at some point, but the majority of of digital out of home programmatic is actually transacted on the PMP. So it's still being sold hand to hand combat in the trenches. There's a lot of fragmentation in terms of networks. And then one of the the big challenges that most of the companies think of themselves as real estate investment trust. They think of themselves as REITs. So they don't act like media companies. They don't make decisions like media companies. They make decisions like REITs. And I think that that holds the industry back. Speaking of [00:05:51] S2: offline, the two things that come to mind when I think about out of home in addition to what you said, you didn't actually mention, which are billboards on the side of the highway and then, you know, place based stuff. So malls, speaking of REITs. Are those not like on the radar in terms of like being large enough for digital? Is that like the other half of out of home?
00:05:51 · Eric Franchi, Tim Rowe, Ari Paparo
[00:05:51] S2: offline, the two things that come to mind when I think about out of home in addition to what you said, you didn't actually mention, which are billboards on the side of the highway and then, you know, place based stuff. So malls, speaking of REITs. Are those not like on the radar in terms of like being large enough for digital? Is that like the other half of out of home? [00:06:14] S1: So there are some scaled networks in that where we see the the biggest growth coming from I think is the DSPs being able to aggregate a lot of that fragmented supply, take regional malls and regional footprints and put it together as, hey, this is convenience store media. This is mall media. So so combining those those otherwise fragmented networks has been one of the advancements, but still one of the biggest challenges. [00:06:41] S0: When we when we walk through the supply chain from, like, where the dollars come from, where they go to? Is it easier to start on the sell side or the buy side? Maybe maybe sell side. So someone owns real estate. Yep. So you said REITs. So so billboards effectively are owned by real estate providers. They own a building. They own a they own a piece of land, whatever. Do they generally get into the out of home business themselves, or do they then contract with somebody? [00:07:06] S1: Typically, it's through a partner. So a lot of the big billboard companies that you'll see or or even in big cities, it's a public private partnership that's bringing those things to market.
00:07:06 · Tim Rowe, Ari Paparo
[00:07:06] S1: Typically, it's through a partner. So a lot of the big billboard companies that you'll see or or even in big cities, it's a public private partnership that's bringing those things to market. [00:07:16] S0: And it differs by spot. So, Eric, you were saying earlier, you have an investment in the bar, common restaurant. Yeah. Tave. So there are different companies that are now putting the billboards in place, and they do the maintenance of the hardware in some cases or... But but they they have the ad SDK, stuff like that. Then how does it sell? So you then bring in a programmatic exchange and or you have your own Salesforce? [00:07:41] S1: Yeah. There's a lot of small networks that are just, hey, let's plug in the programmatic and we'll take what we can get. And then there's more scaled mature networks that say, hey, we've gotta go out and we've gotta be our own brand champions here. We've gotta tell the story and convince people why this media space is valuable and they're they're seeing [00:07:59] S0: a lot of success. What the leading programmatic companies?