In a budding industry, many opportunists float around, figuring out ideas and paths to success. While digital out of home has been around for a while, it is still very much in a stage of development. For some DOOH networks, success for these opportunists comes faster: a good niche, well-executed planning and top-notch sales people [...]
In a budding industry, many opportunists float around, figuring out ideas and paths to success. While digital out of home has been around for a while, it is still very much in a stage of development. For some DOOH networks, success for these opportunists comes faster: a good niche, well-executed planning and top-notch sales people can take a network to profitability in under a year. The majority of networks develop at a slower pace, and a lack of investment understanding and an inability to let go of control can in instances cripple a profitable idea.
There is no one-size fits all for business models. The most elastic plans can be helpful, but stretch it too far and it can break. This is true for the digital out of home industry just like any other, the same start ups go through the same paths. Bob Burtis, an equity expert working with emerging media, says “you have people who are very good at understanding the audience of their network, but really just don’t know how to present themselves to an investor.”
Burtis points out that in problematic cases “it’s really the owner/inventor who is not in general the best spokesman for the team, because they often feel that their product is never fully developed.” To break the cycle, it is important to understand when raising funds becomes necessary. “You produce a revenue model when you want to start selling your products, you’ve got customers lined up, then you package this and go to investors.” The due diligence process is a rugged path, and takes a substantial amount of time and effort. Owners who are passionate tend to become emotional and then there is always the valuation process and negotiation.
A revenue model is one aspect (early stage or angel), a revenue stream is better (venture capitalist). Burtis says that “if you have some cash flow, the time frame to raise equity is six to 12 months.” But getting money alone is not enough. Burtis recommends finding a strategic investor rather than a passive one, “a partner that provides help.” That is, investors who understand the industry, have their own connections and are more engaged. This can open doors and prevent a lot of problems. Burtis estimates that DOOH networks should achieve profitability in a two to three year period.
What he is seeing however, is an inability to convert a product idea into a realistic revenue model. “The companies I see fail to convey their execution plans properly, they are not willing to go out and get the correct advice to package themselves properly,” Burtis admits. When pitching a revenue model to investors it is in fact just like any other product that can be sold. Go to investor workshops, listen to other presentations and refine your pitch. You only get one chance to make a first impression.
There are unique challenges to the DOOH network community Burtis adds, “the technology curve is sharp: strike fast,”SWAT” ” Sell What is Available Today” you’ve got to be able to bring a product to market and have second and third generations.” Successfully communicating this in an investment pitch is crucial to gaining support and a clear understanding of what will be required of the additional funding.
Additionally, “the factors that have caused digital signage companies to stumble have been under capitalization, lack of financial controls and poor execution They need to take the time to understand their customer needs and processes. Each vertical is different, financial, retail, service, transportation and medical to name a few.
To reach Bob Burtis, feel free to email him: firstname.lastname@example.org
Tony Hymes is the Editor of the Digital Out Of Home industry website DOOH.com. He produces introductory videos of the companies working across the space from digital signage hardware providers to content companies, DOOH networks, consultants, and software groups. Tony Hymes writes extensively about the strategies behind DOOH advertising, digital signage networks and deployments, and customer engagement trends.