One benefiiciary is Channel M, which announced today that Intel Capital has invested in it. Los Angeles-based Channel M is one of a number of companies in this space. Another is Ripple, whose president, Ali Diab, I met last week. (our past coverage) Channel M runs national brand ads on displays inside 20,000 retail locations such as Macy's or Blockbuster. Ripple, by contrast, has about 1,500 displays in place at coffee shops and bookstores where local advertisers entice customers to get a bagel next door.
Danoo, a Kleiner Perkins-backed company with displays in stores such as Lee's Deli; Premier Retail Networks, which has display at big chains such as Wal-Mart and Circuit City; Gannett's Captivate Network, which puts displays in elevators; and Gas Station TV, which lets you watch at the pump. Reactrix, meanwhile, builds ads into interactive games that people can play in public places such as floors through laser projectors on ceilings.
According to market analysts eMarketer and PQ Media, the out-of-home video industry is expected to grow to $2.25 billion and $3.22 billion, respectively, by 2011.
To date, Channel M has raised $24 million in three rounds, said David Teichner, CEO of the "out of home video" company. (our past coverage) The company claims it reaches more than 100 million customers each month with its 20,000 displays. Besides Intel, investors include Ascend Venture Group and Vintage Capital.
"It's all about reaching consumers in different ways, " Teichner says. "It's an exciting time, like the Wild West, for this industry."
Channel M tries to create compelling video and audio that consumers will watch, such as movie trailers. Then it splices ads, usually custom ads for the specific retailer, into the video. The company has been around since 1997 and it has 60 employees.
Part of the key is finding people waiting in line because they're a captive audience. Ripple also needs a high-speed Internet connect, such as DSL or Wi-Fi, to feed its video content to the screens. The company hones in on local ads, like people who want to send birthday messages to their friends through services dubbed ShoutOut.
"We don't do 50 panels that show national ads," Diab said. "Ours is more like a community bulletin board."
But Ripple also has big national advertisers as well such as Ford, Wachovia Bank and Live Nation. Diab says the cost to advertisers is about $2 per CPM, or $150 a month for 30,000 impressions. Ripple, like others, validates its impressions through Nielsen Media Research audits. It checks with retailers to get transactional data to determine how effective its ads are. The displays also have webcams to determine how much people are actually watching them (but the video data isn't stored). With the right connectivity, it takes maybe 45 minutes to set up the screens, at a cost of about $2,000, Diab said.
Asked about possible recession impact, Diab said he doesn't believe ad spending drops during recessions. In any event, he said that ad dollars are shifting from traditional media to new media such as "out-of-home" advertising. He noted, "Our ad recall is over 50 percent." (photos: Ripple)