Big 3 TV Nets Follow Consumers Out of the Living Room

ABC, NBC and CBS Set Up Screens at Grocery Stores, Gas Stations, Malls

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NEW YORK (AdAge.com) -- The big broadcast TV networks have a natural expertise in helping marketers reach potential customers as they sit in their living rooms, but now they want to follow those consumers out the door. In recent months, the three oldest -- Walt Disney's ABC, General Electric's NBC Universal and CBS Corp.'s flagship operation -- have set up ventures to place ads on screens that consumers might watch as they fill up at the gas station, hunt for produce in the supermarket or shop at the mall.
CBS sells ads at 10,400 outlets, including GameStop stores such as this one.
CBS sells ads at 10,400 outlets, including GameStop stores such as this one.

"It certainly is getting competitive in a hurry," said Ed Pearson, senior VP, ABC New Media Sales. The push comes as TV networks have been crimped by ratings erosion and technology that allows consumers to skip ads or watch TV through digital media. "How do the networks reach the consumers when they are on the move?" asked Virginia Cargill, president of CBS Outernet.

The TV outlets want to use the screens to promote their shows, of course, but also employ them to wrangle more advertising from marketers who are placing more emphasis on getting promotional messages in front of consumers when they aren't in front of the TV. And they face competition from players that are already established, including PRN, a Thomson-owned unit that works extensively with Wal-Mart Stores.

None of the networks is brand-spanking new to the idea of getting its material seen in nontraditional venues. NBC has long had a deal with United Airlines to run content, while CBS has supplied programming to American Airlines. Forrester Research expects consumption of video content to rise 25% to five hours per day by 2013, compared with the four hours watched in 2008 -- driven in part by the ability to place relatively inexpensive display screens in any number of venues.

In September, CBS announced it would purchase SignStorey, now known as CBS Outernet, a company that distributes programming and advertising to retail stores, for $71.5 million in cash. The unit sells advertising on in-store TVs at 10,400 grocery stores, GameStop stores and AutoNet service-center waiting rooms and has partnerships with several other venues. More opportunities are on the horizon, Ms. Cargill said, such as using content from local CBS stations and other providers.

Larger packages
In January, NBC held an upfront presentation to tell marketers about the many partnerships that allow the network to place ads on TV screens in supermarkets, schools, gyms, taxicabs, arenas, near gas pumps and elsewhere. The company has a series of partnerships with various out-of-home networks and even owns some of its own assets, such as a Times Square sign and a hospital network aimed at parents of newborns. Mark French, senior VP-general manager of NBC Everywhere, said more advertisers are looking to such assets as they try to develop large-scale packages with individual media companies.

NBC has held discussions about an alignment with the Kroger supermarket chain, according to a person with knowledge of the talks, but Mr. French said his group holds discussions with numerous parties, and NBC is happy with a partnership with PRN that encompasses more than 1,000 supermarkets. A spokeswoman for Kroger, which has more than 2,000 locations, could not be reached for comment.

ABC similarly has partnerships that allow for placement of ads at golf courses and travel destinations, in retail outlets, taxis, gas stations and in Times Square. It is mulling the idea of making an acquisition, Mr. Pearson said, something that would allow the network to be "more involved than just content and sales."

As these media behemoths ramp up their activity further, they threaten to take share from the smaller companies that have long provided services and ad space in stores and the like. "With the clout of an NBC or an ABC, [clients] are going to do that first," said Michelle Katz, an activation associate director at Publicis Groupe's MediaVest. "That's who the client is comfortable with."

Small fraction
It's unclear that success in the out-of-home arena will be rocket fuel to TV-network finances. While extending into nontraditional venues "can't hurt," said Michael Nathanson, a media analyst at Sanford C. Bernstein, selling ads on out-of-home screens "will not move the dial, as the network revenue ad base is in the billions. At most this could be 2% to 4% of their base business."

CBS, which reported second-quarter earnings July 31, said revenue at its outdoor operations rose 8% in the first half of the year, to nearly $1.1 billion, up from nearly $1.02 billion in the same period a year earlier. Revenue from TV operations rose 1% to about $4.8 billion from about $4.7 billion.

Outdoor advertising has shown gains while other media have not. Spending on outdoor advertising rose 4.9% in 2007, to about $4.02 billion, according to TNS Media Intelligence. Ad spending on TV overall, meanwhile, fell 1.7% to about $64.4 billion.

If this sector is to gain more traction in the marketplace, marketers will have to agree on standards of measurement. Does an impression at a gas station equal one at the gym? Does an ad viewed in the back seat of a taxicab have as much power or meaning as one seen in a hospital room? If the Out-of-home Video Advertising Bureau, an industry trade organization, "could pull that off in 20 months, I think that's pretty impressive. That to me would really be one of the primary milestones," said NBC Universal's Mr. French.
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