Digital Signage: Traditional Media Show More Signs of Weakness, But OOH Ad Networks May Offer Hope

More signs of the uncertain times ahead for traditional media in this country have emerged over the past few weeks.

Belo, which owns newspapers like the Dallas Morning News, the Providence Journal, and the Press Enterprise, as well as owns and operates 20 TV stations, said Oct. 1 it was splitting its holdings into two companies: The New A. H. Belo Corp., dedicated to the print properties, and Belo Corp., which will run the TV business.

Then E.W. Scripps said it would take a similar path Oct. 16 when it announced that it would break into two companies: E.W. Scripps Co., which will consist of about 20 newspapers and local television stations, and Scripps Networks Interactive, consisting of Home & Garden Television, the Food Network and Shopzilla.

At about the same time as the Scripps announcement, McClatchy Co., the third largest newspaper company in the United States, said its quarterly profits dropped 55 percent for the third quarter, a result of a weakening advertising market.

It's clear traditional media companies are suffering a significant decline in readership and advertising lineage. Many of the dollars once spent on newspaper ads are being redirected into emerging new media like the Internet as media consumers increasingly log on to online sources to catch up on their world. Hence, companies like Belo and Scripps are separating business units into stand alone companies to cordon off the drag on their revenue and sustain shareholder value and interest.

These are among the largest media companies in the nation. If they aren't impervious to the change brought on by new digital media, it's unlikely other traditional media companies will be able to continue down the same path they're on without making some course corrections along the way.

To be sure, Internet advertising is taking a sizeable bite out of the dollars once devoted to traditional newspaper, television, radio and magazine advertising. Another emerging digital media competing for its piece of the ad budget is out-of-home advertising, and more specifically out of home video advertising on digital signage networks.

In late January, the Out-of-Home Video Advertising Bureau (OVAB) formally launched with the mission of helping to provide standards and best practices for the newly emerging slice of the advertising industry. It was created by many of the largest out-of-home video advertising networks to remove impediments to the growth of the new ad medium.

One of the chief missions of the group is to help advertisers and those who run out-of-home video advertising networks work together "to plan, buy and evaluate the effectiveness of these mediums," said Mike DiFranza, president and general manager of Captivate Network, one of the 10 companies that founded the group.

The contrast couldn't be more apparent: On the one hand, many traditional media are scrambling to restructure so they can decouple business units with the potential to be profitable from those suffering from the re-allocation of advertising dollars to new digital media. On the other, a group like OVAB has emerged to help the fledgling medium of out-of-home video advertising build the advertising "street cred" that traditional media long ago mastered.

While it's a long shot, perhaps there's an opportunity for traditional media and emerging media, like out-of-home video advertising networks, to help each other. Why shouldn't traditional media integrate out-of-home advertising networks into their media offering? Certainly, they have the ability to generate content for the medium, they have the relationships with local businesses to both sell the advertising and secure locations for new signs on the network, and they have well-established market research resources to assist in building new audience measurement metrics. Conversely, why shouldn't emerging new advertising markets welcome the participation of tradition media, which can leverage its strengths to assist the new medium in its maturation?

Syndicate David's articles