Upstarts: Nontraditional Ads
It's an Ad, Ad, Ad, Ad World
New types of ads -- and new kinds of advertising companies -- are popping up everywhere. Resistance is futile.
You'll find them at the bottom of the holes on golf courses. On the roofs of taxicabs. On fresh fruit. On hotel-room key cards, supermarket floors, even beach sand. Ads infinitum.
Or so it seems, as ever more inventive start-ups in the advertising arena, seeking to make their messages stand out amidst the traditional marketing clutter, slap commercial pitches on almost anything that doesn't move -- and on many things that do. "There's so much entering the marketplace right now that it's hard to keep up with it," says Dave Yacullo, president of Outdoor Services Inc., a media management company that has begun tracking what some are calling ambient advertising. (See " Your Message Here," below.) The 1999 totals weren't in by press time, but Yacullo estimates that the gross billings for nontraditional ads grew by at least 20% last year, more than triple the increase for billboards, bus shelters, sports stadiums, and other traditional "out of home" venues.
Observers cite several reasons for the ascent of ambient advertising: the glut of promotional messages from conventional ad media; an increasing desire to microtarget consumers at or near the point of purchase; and the bulging promotional budgets of emerging dot-com companies, which, by the way, are stampeding past their own medium's banner ads, which shows...what? Antsiness over sluggish click-through rates? Or simply a desire to enlist marketing vehicles as novel as their own E-ventures?
Of course, these new modes of advertising won't stay nontraditional for long. They'll either fizzle and fade or sizzle and go mainstream -- the latter being the primary goal of the purveyors of offbeat advertising media.
"We believe we have the most crucial piece of real estate in the media world," proclaims Richard Rebh. "Right where every manufacturer wants to be, right in front of their product, right at the moment of decision."
Rebh is CEO of Floorgraphics Inc., in Princeton, N.J., which installs colorful two-by-three-foot self-adhesive billboards on the floors of supermarkets, drugstores, and mass merchandisers. Billings last year reached $26 million, up from $8 million in 1998, the company's first full year of selling, and should exceed $50 million this year, according to Rebh.
But hitting the ground running wasn't easy. Previous attempts by other companies required tearing up supermarket floors to install the ads, leaving scuff marks on the concept. "It's taken a long time and a lot of missionary work and education to demonstrate the sales lifts," says Rebh, citing the early skepticism of retailers (trained to keep floors clean and uncluttered) and consumer goods companies ("You want people to walk on my brand?"). Rebh claims to have hundreds of studies showing that his ads produce a 25% to 27% sales increase, nearly the same lift that the instant-coupon machine gives, but at full price. "Other advertising products, like ads on shopping carts, give only about a 10% increase," he says.
Dot-coms are stampeding past their own medium's banner ads.
Floorgraphics gives participating stores a cut of roughly 25% of the ad sales, which typically cost advertisers about a dollar a day, including all production and installation costs, for each mini billboard. Figuring on 20 floor ads per store (but only one to a category) and a 2,000-store supermarket chain, Rebh cites a sample chain cut of $3.5 million a year -- straight to the chain's bottom line. "With traditional grocery margins at 2% to 3% you'd be talking about over $100 million in gross revenues to achieve that bottom-line lift," he says.
Although some retailers seem to prefer to keep their terra firma untouched by commercial messages, Rebh believes most will come around to this win-win proposition, which he believes he can grow into a $250 million to $300 million business.
The company has already executed a Hansel-and-Gretel-like trail of SpaghettiOs for Campbell Soup Co., affixing a series of decals leading to the mother ad at the foot of the shelf display. Rebh also envisions creating illuminated ads and electronic ads that could be remotely changed, and interactive ads that consumers could step on to alter the message or even register a preference. In other words, as far as he's concerned, the floor's the limit.
A second bold new ad medium is often located between floors. Anyone who's ever stared mindlessly at the wall inside an elevator can identify with Michael DiFranza's entrepreneurial "eureka!" Almost three years ago DiFranza stepped into the elevator at his office building, noticed everyone fidgeting or checking their shoe shines, and asked himself, "What if there were something worth looking at during the ride?" By the time the elevator doors opened, DiFranza had much of the basics of his new business thought out.
Tapping flat-screen technology and the Internet, DiFranza's company, Captivate Network Inc., hopes to profit from a classic captive audience. The start-up, based in Westford, Mass., places interactive screens on elevator walls that grab the eyes of vertical commuters with weather, news, and traffic reports -- before the commuters get stuck in a jam.
Nearly a year into developing the concept, DiFranza and his two partners were themselves in a jam. They were almost out of money, and they'd hit a brick wall at Boston-based venture capital firm Advent International -- until they exercised a bit of start-up chutzpah. They talked the building manager at 101 Federal Street in Boston -- where Advent then had offices on the fifth floor -- into letting them install a prototype in one of the six elevators that serviced that floor. Programming appeared on the screen the same morning that Advent's investment committee was meeting to consider the Captivate Network investment. "It was the buzz of the building," says president and CEO DiFranza. "By that afternoon, we had an oral deal with Advent and another firm for a seed round of $1.5 million."
A new round of funding will bring outside investments to nearly $50 million, which will allow the company to triple its workforce of 50 and rapidly expand its product to elevators beyond those in Boston, New York City, Chicago, and Stamford, Conn. Next stop? San Francisco, Los Angeles, Denver, and Seattle.
One key to advancing the business was eliminating cumbersome and costly cables in favor of wireless content transmission. Also key, of course, were ad sales. They've only just begun, but DiFranza's plan is this: A particular ad will run every 15 minutes, Monday through Friday from 6 a.m. to 7 p.m., for a month and will cost anywhere from $500 for placement in a medium-size building to $1,500 for a large building. (Expected billings in 2000: $5 million to $10 million.) Individual messages will last 10 seconds each and fill the bottom fourth of the screen. So a typical elevator ride of 35 to 45 seconds will deliver three-plus commercial messages to a choice demographic: professional men and women ages 25 to 54. "These are people whose very next stop is their desktop computer with high-speed Internet access," says DiFranza. "We're a natural ad vehicle for the dot-com companies."
And for plenty of others as well, DiFranza crows, thanks to an almost scary ability to microtarget a building's tenants. "If you're a BMW dealer, and you want to target only buildings with investment bankers in them, on bonus day, I can do that," he says.
A new network of stations
Microtargeting of consumers is a touted advantage of a new form of advertising aimed at drivers in 48 of the 50 states. Except in Oregon and New Jersey, where laws forbid it, most motorists these days pump their own gasoline and daydream while they do so -- a reality not lost on a growing number of companies eager to fill the downtime of those filling up. One such start-up, Alvern Inc., in Houston, sells what it calls FillBoards, roughly three-by-five-inch ads that fit inside a special frame on the pump nozzle.
Perhaps even more ambitious is the Pump Radio Network now being assembled by Advanced Information Systems LLC, in Midland, Mich. The company's patented battery-operated Fueling Talker attaches to gas station pump nozzles and airs four 20-second and two 10-second ads while the premium unleaded flows. From a lone test station in 1997, the company expanded throughout Michigan to 50 locations in 1998 and 150 last year, when ad sales surpassed $1 million. This year the company plans to speed a national rollout by selling franchises.
Advanced Information Systems gives participating gas stations the first and last spots free for their own marketing message -- a powerful tool, according to CEO Mark McKinley, for coaxing consumers into a station minimart. Picture the growing number of credit card-activated pumps, which obviate the formerly obligatory trip to pay the cashier, and McKinley's sales wedge becomes clear. "We've documented a 245% increase in bread sales at a convenience store in Saginaw and a 300% increase in cappuccino sales at a Shell station in Midland," he says.
And what works for the minimart, McKinley maintains, can also work for, say, a local dry cleaner, which can use the Fueling Talker to air neighborhood advertising at a small fraction of the cost of a citywide radio spot. "We saw a 40% increase in dinners Tuesday night at a restaurant called Shooters after we ran their ad offering special kids' meals," says McKinley. And the focused station-by-station demographics that his network provides enable a company like Procter & Gamble to strategically push its premium Millstone coffee at one gas station while banging the drum for Folgers across town.
Sure, the marketers among us are always looking for new and unusual ways to reach consumers. But isn't it kind of scary? Interactive ads in bathroom stalls? Marketing messages while you pump your gas? Promotional plugs on the very food you eat? Is there no escape? Well, there's probably no cause for great alarm, at least for now. Ambient ads have a long way to go before they give billboards and bus shelters a run for their money.
1998 Estimated Out-of-Home Ad Revenues by Media Type
|MEDIA TYPE|| GROSS BILLINGS
|% OF TOTAL|
*Includes ambient advertising.
Source: Outdoor Services Inc., New York City.
Do Ambient Ads Add Up?
Fred Bertino, president and chief creative officer of Hill, Holliday, Connors, Cosmopulos Inc., a Boston-based advertising agency, recently spoke with contributing writer John Grossmann about the proliferation of ambient ads.
Inc.: What's driving the surge in nontraditional advertising?
Bertino: Clearly, it's harder and harder to break through to reach people, but I also think that the location where your brand shows up says something about it. If you want to introduce a new brand, you don't necessarily want to show up on an old traditional medium.
Inc.: Is this stuff gimmickry or genius?
Bertino: Both. I think by year's end, maybe sooner, we'll start to see which are the hits and which are the misses. The problem is measuring results. There are no cost guidelines, no rate cards yet. Everything's still kind of negotiable.
Inc.: Is this a supplement to or a replacement for traditional advertising?
Bertino: A supplement. The smartest brand-building campaigns express one core idea across as many points of customer contact as possible. People are always looking for new ways to get across their messages, and they're willing to try new things. But I think the fact that all the dot-com companies are reaching to television first says a lot.
If the new ad companies have their way, you won't be able to escape the onslaught of marketing messages. A sampling of the latest ad locations:
|COMPANY||AD MEDIUM||EARLY ACHIEVEMENT|
| C& E New Media Inc.
|Supplies and restroom walls in bars and restaurants||Bar glass promos for ESPN and movie debuts|
| Beach 'n Billboard Inc.
|Blanket-size impressions on public-beach sand||Skippy peanut butter, Snapple, and ABC-TV ads at Seaside Heights, N.J.|
| Fruit Label Co.
|Stickers on supermarket produce||Ads on 15 million apples for Ask Jeeves search engine|
| PoleMax Media Group LLC
|Wraparound banners on protective padding placed on gas station and convenience store light poles||Four-color ads for McDonald's, Gatorade, and the Texas Lottery|
| KeyAd LLC
|Plastic key cards and key card folders for hotel rooms||Trade show exposure for Sterling Truck Corp. at the Great American Trucking Show|