Author: Lijie Zhu , Forbes Councils
Our world is changing, and technology is the new currency. While McDonald's and Burger King duke it out over how many digital outdoor screens they can advertise on to attract more customers, a brand new and disruptive advertising concept has already unfolded in the far east. Take a minute to imagine an innovative technology that can control digital outdoor screens by using an app on a smartphone while you walk on Sunset Boulevard in Los Angeles or 7th Avenue in New York's Times Square. Would you be attracted to this technology? The digital outdoor advertising industry is already undergoing what could be one of the most profound transformations in its history, and it seems this will be a positive change.
A significant amount of capital was invested in the digital advertising industry in the past decade. In 2008, DoubleClick, an online advertising servicing company, was acquired by Google for $3.1 billion in cash. This acquisition suggests that technology giants have high expectations for online display ads. What's more, institutional investors have already made considerable investments in the digital advertising industry. For example, one of the world's top investment banks, JP Morgan Chase, holds nearly 16% of the outstanding shares of Clear Chanel Outdoor Holdings and roughly 10% of Outfront Media. Both are public companies in the outdoor digital advertising industry and headquartered in the United States. In addition, the asset management giant Blackrock owns 8% of the outstanding shares of Lamar Advertising Company, who owns more than 330,000 displays across the United States, Canada and Puerto Rico. So, it is apparent that institutional investors are quite positive on the growth prospects of the outdoor digital advertising industry.
What is driving this industry evolution? Simply put, it's financial technology. In the United States, the import of big data accelerated the development of outdoor digital advertising, allowing digital advertisers to do an even better job of targeting users with personalized ads. Using real-time data in ads also captures the attention of customers to influence their behavior while they are out and about. Interacting with customers for brand or campaign promotion through digital screens is a powerful way to attract customers. However, in China, a developing Asian country with a 1.7 billion population, a more disruptive digital outdoor advertising concept -- the digital advertising distribution platform -- has been created and is considered the most important revolutionary concept since online shopping.
It may be an appealing time to invest in the digital advertising industry. For those who were previously unfamiliar, Alibaba's IPO on the New York Stock Exchange has brought more people to understand what the Chinese internet looks like. One of the reasons Alibaba enjoys enormous success is because it has created an online sharing platform -- Taobao -- which is an online website where 300 million products were listed for sale by March 2013.
The digital advertising distribution platform is a perfect combination of the internet and digital outdoor advertising. In China, Focus Media has been the leading digital outdoor advertising media company, its business scope including an LCD display network, a poster frame network, a movie theatre network and an in-store network. Focus Media mainly helps brand promotion for Fortune 500 Chinese companies, but this business strategy is different from the digital advertising distribution platform, which was created by China Information Technology (CNIT), a Nasdaq-listed Chinese company. According to the concept of the digital advertising distribution platform, CNIT produced cloud-based terminals and created an app, aiming to help businesses to distribute advertisements beyond time and location at a lower cost. The business strategy is like Alibaba's Taobao, which targets customer groups such as large individual merchants, in China. CNIT's business model -- online to offline (O2O) -- however, is different from Taobao, which uses a customer to customer (C2C) model. CNIT’s online app also needs offline, cloud-based terminals to realize the advertisement distribution.
The digital advertising distribution platform could be an enormous success, because it changes people's way of life, helping individual businesses to easily become advertisers using a mobile app to distribute advertisements through digital screens beyond time and location in China. Using the built-in analyzing function in the mobile app allows individual businesses to target users with the personalized ads that they most likely want to see.
No one can predict the future. But, from recent achievements in online sharing platforms, including such companies as WeWork and Alibaba’s Taobao, the concept of online sharing has been brought into consumer’s consciousness. So, do not be surprised when you see your neighborhood beginning to utilize digital outdoor screens.